5 factors to consider before becoming a landlord
If you are weighing up diversifying your investment strategy and purchasing a rental property, it is important to be aware of many factors that will impact your journey as a landlord before you jump into the property investment pool.
It is not as simple as purchasing the property, finding a tenant, and then sitting back to relax while the rent covers the mortgage. You may find a great property that has no repairs and an excellent yield which will mean that there are minimal future costs, however, the reality can be far different.
Work out your investment strategy
Your financial advisor will help you plan out your strategy and understand your affordability for purchasing an investment property. They will likely provide you with a budget that you can work with and may even make recommendations on areas for investment that may fit with what you are after.
Where you purchase may determine the price that you pay for the property and the yield that it may have the potential to make each year. It is wise to research areas and speak with agents about returns before purchasing so that you can work out if the property is likely to be positively or negatively geared.
Be mindful that rents will increase in line with demand and not necessarily when interest rates increase which may impact your affordability.
Make allowances for ongoing costs
When you make an investment in a property, the assumption is that there will be tenants in the property paying rent to you or through an agent throughout the life of the investment. As such there will be usual wear and tear on the property and costs to consider can be as simple as a leaking tap or appliance repairs to extensive items like roof repairs, fencing, or a burst hot water system.
As a landlord, you are responsible for the repairs on these items, and it is smart to allow a buffer from the rent that is put away to cover minor or even major repairs that may need to be done.
There will also be a life span on items like paint, carpet, kitchens, bathrooms and appliances and a savings buffer to plan for these future items will save future stress if it is already planned for.
Find a great property manager
Employing a great property manager to manage your investment is one of the best decisions that you can make as a landlord.
A professional property manager is well versed in the requirements of the legislation to cover you in case anything goes wrong at the property and will provide professional recommendations and advice on what needs to be done to maximise your investment.
For the minimal cost that you invest in fees, they will find and help you select great tenants and work through resolutions should the unexpected happen. They will also work with trades to find competitive prices when it comes to repairs and maintenance.
They can also advise you on the current rental market and advise if the rent needs to be increased depending on market conditions, and the current tenants in the property, working with you to find the best solution.
If you are looking for your next investment, contact our sales team to talk about our available properties. They will also connect you with our property management team to discuss your investment property options.