Wed 26 Sep, 2018
Tips on Managing an Investment Property
Whether you’re a first time property investor or a well-seasoned one, effectively managing an investment property can be challenging. And it can get even more complicated if your investment property is held within a self-managed super fund.
However, efficiently managing an investment property is crucial to ensuring the investment generates income. If your investment property is not well-maintained, it may not yield the returns you had hoped for. That’s why it’s important to learn the ins-and-outs of managing an investment property.
If your property is held within an SMSF, properly managing your property is both crucial for your investment returns and for keeping your investment compliant with the ATO. Download our free guide to learn more about how you can purchase an investment property with an SMSF.
In this article, we’ll discuss explain the need-to-knows about managing an investment property to help prepare you for the rollercoaster ride of landlord-hood!
Tips on Managing an Investment Property
Your first responsibility as a property investor will be to find suitable tenants to live in your property. This can seem like a difficult and taunting task at first. But with proper due-diligence, and if your property is located in prime location, finding tenants may be slightly easier than originally anticipated.
When looking for suitable tenants for your property investment, you have two options. One, working with a property management agency, or two, finding tenants yourself.
Many Australian property investors choose to engage an agency to assist with tenant sourcing, as they have access to databases of qualified tenants. They’re also well-versed in screening applicants, and will give you the best chance of finding responsible tenants.
A property manager who is familiar with the local area will also be able to assist in establishing the rental value of your property. This can ensure you receive the right amount of rental income from your property investment.
It’s also worth reviewing how much you’re charging in rent at the end of every tenancy or year. Keeping on top of your rental income will ensure you’re yielding the correct market value for your asset.
If you chose to find tenants yourself, it’s important to take proper measures to ensure you choose the right tenants. For example, ensure you conduct thorough background checks on each tenant living in your property.
Squirrel says: Don’t forget SMSF members cannot lease property held within an SMSF to any family members. They also cannot live in the property themselves either - sorry!
Getting Landlord Insurance
Keeping your investment safe is another important tip to consider when managing an investment property. While conducting thorough background checks on your tenants can help to keep your property safe, your investment will still not be protected from the unexpected. That’s why it’s a good idea to invest in landlord insurance for your investment property.
Landlord insurance is a type of policy that protects you and your tenants from incidents that occur within the property. This could be anything from a red-wine-meets-white-carpet accident, or more serious events like fire and flood.
Choose your policy carefully as you both protecting your property and the welfare of the tenants who live there. Ensure the property complies with the stipulations within the product disclosure agreement, too. This will help avoid any nasty surprises should you have to make a claim.
Squirrel says: Landlord insurance is not only very important, but can also help save you money in the case of an unforeseen event.
Getting Legally Savvy
As a landlord, it’s crucial to familiarise yourself with the tenancy laws in their state or territory. These include laws such as eviction notices, bonds and property damages. Being familiar with these laws can help you in the case of complications with a tenant.
For example, sometimes a tenant will refuse to leave a property when need to. Complications like these will leave you in the hands of your territory’s legal procedure to evict the tenant. This can result in a long legal process that includes notice letters, court hearings and other ensuing procedures.
Squirrel says: Don’t be afraid to seek professional legal advice should you need to.
Maintaining Your Property
As a landlord, you have a responsibility to provide a property in a fair condition. Unfortunately, tenanted properties are more likely to experience heavier wear and tear than owner-occupied properties. This is due to frequent resident turnover and multiple people living in a small space.
Keeping on top of maintenance issues as soon as they arise can minimise cost and impact further down the line. You can also engage with a property manager to regularly inspect your property can minimise disruption to you and your wallet.
Condition reports are infinitely valuable in attributing responsibility for works that fall outside of normal wear and tear. Dented walls, carpet stains, smashed windows – you name it, tenants can do it. By making sure you can prove it’s not your responsibility to fix, you can protect yourself from forking out for tenant damages.