Top 5 Tips for First-time Landlords.
In real estate, there is no such thing as beginners luck. With property magazines and real estate experts left, right and centre, it’s clear that to do well in this world you’ll need to be well versed in its game. Renting out your property is as challenging as managing any other business, so rookie mistakes are futile to successful investments. Making sure you have a clear understanding of what’s ahead as a first-time landlord ensures that these risks are minimised.
So, to save you the trouble, we’ve compiled a list of top 5 tips from industry experts and seasoned landlords to bring you the best landlord advice. Here’s what they had to say:
First-time Landlord tip 1: Location, Location, Location.
With twenty years experience in Sydney’s real estate markets, Doug Archer from Sydney Search suggests that serious landlords should put the money where it matters most, the location of their property investment.
“Selecting the right area to buy into and, even more importantly, the rental market you are investing into is vital. Understanding the demographics of who will be renting the property and being confident of a long term supply of quality tenants.
Once you understand who the tenants will be, it’s crucial that the right type and size of the property is sought to satisfy that demographic. Inner city professionals want one & two bedroom apartments while families in the suburbs need houses with more space and proximity to schools and transport.
Buying the right property, in the right area for the right tenants is the trick.”
First-time Landlord tip 2: Treat your Investment like a business.
Treating your investment property as a business is a mindset that will productively change the trajectory of your investment. Investment strategist of B in Property, Yex Sahin, says:
“Increasing your income is vital for your investment property, just as it is for any business, and that’s achievable through your rent and tax. Make sure you’re taking the highest rent possible and claiming all expenses. A depreciation schedule is also a must if you’re going to claim every dollar you’re entitled to. The aim is for your rent and tax to outweigh the cost, and we call that positive cash flow. That will make it easier to run your business and re-invest in it by purchasing your next property.”
First-time Landlord tip 3: Gear your property for long term success.
First-time Landlord tip 4: Stay on top of maintenance.
Echoing James’ advice about gearing your property for success long-term, Jane Slack-Smith from Your Property Success insists that nipping issues in the bud will save you thousands later one.
“First-time landlords, need to concentrate on making their property continue to work for them. So get onto maintenance issues quickly, insist on 6mthly (at least) inspections so that issues don’t get out of control and become too costly, which can happen very quickly. i.e. people subletting, damage to the property, or even as simple as a broken appliance.”
First-time Landlord tip 5: Create a Cash Flow Summary
Last but not least, having a holistic view of how your property is doing will allow you to assess what’s doing well, what you’ll need to improve on and how you can make your investment work better for you. Accredited Property Investment Advisor, author and Property Mavens Founder, Miriam Sandkuhler says:
“Its important investors have a clear idea of how their property will perform, so I strongly advise creating a cash flow summary. Management fees vary between 5.5 – 8.8% of the annual rent and are paid monthly. However, many other costs need to be factored into owning a property such as:
- Leasing and re-leasing fees
- Council rates
- Insurance (Landlord and building insurance for houses, Landlord insurance only for
- Water rates (if the property is not separately metered, you will also be liable for water usage)
- Vacancy periods
- For apartments, there will also be Owners Corporation fees and possibly special levies (e.g. to paint the block)
Also, note that some management fees do not include the following and will incur additional charges:
- Condition report photos
- Insurance claim preparation
- Statement fees
- VCAT preparation and attendance
- Registered post for Notice of Rent Increase and Notice to Vacate”
Keeping these tips and tricks in mind before you start your landlord journey will help ensure that you’re earning the most that you can from your hard earned investment. They say hindsight is 20/20, but there are no rules that say you can’t learn from other’s mistakes to succeed on your first try.