If you do it right, purchasing a property and renting it out can be a great source of income.
The tenants pay off your home loan, all the while you benefit from capital gains.
However, do it the wrong way, and it can be quite a costly headache.
Here, we give you the top six tips every landlord needs under their belts before purchasing a rental; property.
1. Take your time to find the perfect property
So you’ve made the decision you want to purchase a place and rent it out. Congratulations! However, it pays to know a thing or two before putting pen to paper. Ask yourself: where do I want to buy? Which areas produce the greatest rental yields? Can I afford where I want to purchase?
Blogs and market reports can be a great assistance. Once you’ve found your dream property in a profitable and affordable location, check out the surrounding amenities. Schools/developments/public transport/nearby shops are all great assets, and help boost the attractiveness of your property to renters.
2. Happy tenant, happy life
We’ve all heard the horror stories when it comes to shoddy renters. That’s why it pays to hold out and wait for the perfect tenant who will take care of your property and pay their rent when its due.
Take time to review their application, meet them in person, and always request the following information:
- photo ID
- reference letters from previous landlords/employees
- pay slips to prove a steady income
3. Get the property in tip top shape
There’s a lot of confusion between landlords and tenants surrounding who pays for what and when. That’s why you should make every effort to make sure everything’s working before the tenants move in. You can’t claim general wear and tear on the bond. The rule is anything out of your tenants’ control such as electrical, plumbing and structural problems falls under your realm.
4. Collect a bond
A bond acts as insurance in the event of any damage to your property. Most landlords accept one month’s rent from each tenant - which is then handed to the state’s residential tenancies bond authority.
Typical instances when accessing the bond is required:
- damage to the property
- clean up expenses
- unpaid rent
- unpaid bills
- tenant leaving the property without notice
5. Hire a property manager
Property managers essentially take all of the stress and hassle out of the process for you by mediating between the tenant and yourself. The cost is a small percentage of the weekly rent, and for the price you usually get the following:
- helping find a suitable property
- advertising for tenants
- collecting bond and rent payments
- liaising with tenants
- arranging repairs
6. Consider making your property pet-friendly
There simply aren’t enough pet-friendly rental properties to keep up with demand. So by allowing furry friends in, you not only increase the pool of interested renters, but you can also push up the price. If you’re worried about damage caused to the residence, you can always ask for a bigger bond, and conduct more frequent inspections. Research has shown pet owners make great tenants who are willing to abide by the rules.