So many things sound good on paper don’t they?
Take property investing as just one example:
Step 1. Buy a house
Step 2. Get someone else to pay it off
Step 3. Sit back and reap the rewards
As anyone who has ever attempted the above little scenario can tell you, the whole process is much more fraught than it appears and getting yourself into a comfortable situation as a landlord takes, research, informed decision making and a bit of luck.
After all, another thing that can appear good on paper is a tenant.
Even a serial killer can enhance the positives and downplay the negatives. Imagine reading this on a tenant’s reference:
A fanatical cleaner. Constantly washing walls and cleaning the carpet
Always working in the garden.
Travels a great deal
Has visitors rarely
Is looking for a long term rental
Sounds pretty good doesn’t he? So how do mere mortals like you and I avoid all the pitfalls involved in property investment? Let’s have a look at the best strategies to minimise your risks and lead you to a better investment experience.
Presentation – Making a first impression count
The initial step you need to begin a successful tenancy, is to prepare your property so that it presents appealingly. This doesn’t mean spending a fortune on expensive fittings and carpets as these are likely to be treated less delicately than they would be if you were residing in the property. A good clean can make a dramatic difference – my ‘go to’ resource for both incoming and outgoing tenants is Melbourne Bond Cleaning from Whizz.
A property that appears to be well care for will draw a better tenant and attract higher yields so garden maintenance and repairs to the property are crucial.
Agent – A vital link
Once you have readied the house, it is time to begin researching the best real estate agent for your needs. Fees for leasing agents will vary slightly but your main concern should be that you have a hard-working agent who will keep on top of any issues like rent arrears, maintenance repairs and regular inspections. A good agent is a valuable asset and can give you peace of mind that your property is being watched over.
Since it is unlikely that you will be attending Open Houses on your property, your agent’s opinion on prospective tenants can be your best guide. YOU will only see the written applications – the mohawk, piercings, tattoos or pack of dogs sitting up in the car, which may have influenced your final selection, will be noted by your rental agent, so it pays to heed their observations when it comes to selecting a tenant.
It is not that I have anything personally against people who sport the above characteristic but I do question the mentality of choosing not to downplay these things when applying for a rental property.
Price – It can pay to be flexible
Many landlords can’t see the forest for the trees when it comes to pricing their property. Take this as an example – if you ask $350 per week for a property and it languishes on the market for a month versus asking $320 per week and leasing it immediately, then you have missed out on over $1,000 in incoming rent. Although you ended up with $30 per week more in rent, it would take you many months to recoup that money.
Also make allowances for perfect tenants.
If someone comes along with an immaculate, checkable reference then it can be wise to snap them up, even if that involves lowering the rent. Better to have the rent at $320 per week and actually be receiving it regularly than have a tenant contracted for $350 per week, who doesn’t actually pay it. Better to have a little bit of something than a whole lot of nothing.
Becoming a landlord is a bit like riding a bike – you can have a few false starts, but once you know what you’re doing and things are set in motion, it tends to run fairly smoothly. Having a trustworthy, hardworking agent watching your back combined with a reliable tenant is a winning formula to make your property investment a successful and profitable venture, now and into the future.
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