Investing in property is not a spectator sport, you need to be involved. Not in every detail, and not particularly often, but there are some decisions that need your attention, and it’s at these points that you can make a successful property investor.
As a property manager with 16 years’ experience I wanted to share my insights into what I’ve learned that separates the happy, profitable investor from the frustrated, unprofitable one.
By this I don’t mean you roll out the red carpet when they arrive and pander to any request, because let’s face it, there have been some astronomically crazy requests from tenants.
You need to keep the property well maintained and act quickly when a repair comes up. Only use licensed, professionals to do the work and always check with the tenant that they are happy with the outcome.
I used to work with a landlord who fancied himself as a handyman and insisted on doing all the repairs himself. His favoured tool of the trade was spac filler. For him, there was no job that couldn’t be fixed with some spac filler.
Over time, the property fell into a miss-match of spac filled surfaces, tenants were harder to find and the repairs would never last. He would always complain about the frequency of tenant complaints and the cost to fix them.
If he had fixed them properly and quickly the situation would have been very different.
The people you approve for your property can make or break a tenancy.
It’s the responsibility of your property manager, if you are using one, to thoroughly vet each applicant and present you with their recommendation. All checks, professional and personal must be done with a full financial affordability report.
Having said that, it’s ultimately the investors decision, so take some time to review the information and if something doesn’t stack up, ask questions.
I met with an investor this week who was ‘pushed’ into taking a tenant as she offered to pay the first six months of a 12-month lease upfront.
She had never lived out of home before and the investor was not comfortable with this. By month seven, the tenant had broken the lease, was one month behind in her rent, left burn marks on the carpet and damaged the kitchen benches, leaving the investor considerably out-of-pocket and looking for a new property manager.
Getting the best tenant for the highest rent is a top priority for any great property manager but this is really hard to do when investors don’t see value in paying for marketing.
Targeted, professional marketing creates competition, and that will help achieve the best rent, plus provide you with the highest quality pool of tenants to choose from.
Your property should be professionally photographed, presented well at open homes and displayed on all the real estate portals and social media.
With downward pressure on pricing and fewer tenants in the market, now is the time to leverage marketing. It’s a false economy to try and save a couple of hundred dollars on marketing if your $600 a week property is vacant for another week.
You invest in property to make money, this may seem obvious but so many investors get caught up in the ‘great Australian dream’ of property ownership, they forget it’s all about the numbers.
Do annual reviews on your property’s yield and capital growth to understand how it is tracking.
There could be small, inexpensive updates you can make to your property to increase the rent and overall capital growth. You may be able to do a stint of short-term lettings to boost your rental income.
However, if your asset is underperforming then it could be time to sell, there is no point hanging onto a property for sentimental reason when it’s not making you money.
So, get involved, surround yourself with a brilliant team and kick some property goals.