Buying an investment property is a big deal. Ultimately you want to make a return on that investment, and the last thing you want is to make a mistake that can have a big impact on that return. It’s not uncommon for new investment property owners to make mistakes that can cost both time and money.
That’s why we’ve compiled this list of the most common mistakes we see, and how you can avoid them.
1. Relying On Free Portals To Advertise Your Property For Lease
Whilst there are many advertising and real estate portals that offer free or cheap services, the simple fact is they aren’t going to provide you with the best pool of potential tenants as they don’t get the traffic that realestate.com.au or domain.com.au get. If you want to catch a fish, you need to fish where the fish are.
The problem is that it can be difficult for an individual landlord to list their property on these sites as their services are typically limited to use by agents who pay a monthly subscription. The good news is, there are middle-man services available that allow the average Joe to list on these sites. Give us a call if you need more information, and we would be happy to provide some recommendations.
2. Using Unprofessional Photos To Advertise The Property
Your listing needs to quickly capture the interest of potential tenants, and your competition is not always limited to other properties for lease in the same suburb. You need to stand out from the crowd by posting beautiful images of your property that create immediate impact and a sense of connection. Many agencies don’t even use professional photos for advertising rental properties, so it’s really not that hard to shine.
Using a professional photographer is recommended, as they know how to get the best shots following the many design principles such as the rule or three, attention to lighting, depth, framing, etc. If you are taking the photos yourself, make sure your place is tidy and pay attention to the best time of day to shoot outdoors.
3. Not Completing Reference Checks On Prospective Tenants
Your objective is to find the best tenant, not just the first tenant. It is crucial that you perform some level of reference checking on all prospective tenants. The outcome of such diligence is a good tenant who pays their rent on time and maintains your investment property like it is their own.
Whilst there are databases of tenant history available, most of these services require an agency subscription due to privacy considerations. However, you are well within your rights to request some basic information from prospective tenants to help with the selection process. Here’s a list of things you should ask for:
- Previous rental history, including contact details of the landlord or managing agent
- Current employment details, ideally with payslips or a letter from their employee (including contact details)
4. Not Conducting Timely Repairs Or Maintenance
Not arranging repairs in a timely manner can be costly down the line. Firstly, there are emergency repairs that are typically required to be fixed immediately (such as electrical, plumbing, or gas). Secondly, delayed repairs can lead to bigger issues that end up costing more (like roof or bathroom leaks).
Also significantly delayed repairs can damage the tenant relationship. What might be considered an unnecessary expense to you, might be a big deal to the tenant. Remember, any repairs or maintenance you perform on an investment property may be tax deductible, so speak to your accountant.
5. Not Getting Landlord Insurance
For the same reason you get car or contents insurance, you need landlord insurance. This covers you for damage caused by the tenant, or for lost rent if the tenant skips town. We strongly recommend all our landlords are covered by landlord insurance. Then when Murphy’s Law strikes, you know that you won’t be left out of pocket.
6. Not Keeping A Record Of Everything
Should anything need to go through insurance or to tribunal, the more evidence you have, the stronger your case will be. Not keeping records could really impact your case if the tenant demonstrates better record keeping than you. Photos, letters and records of calls should all be kept and if possible backed up.
- Inspect the property before and after a tenant moves in, and take lots of photos
- Take before and after photos of repairs
- Email correspondence
- Rental arrears, notices and warnings
7. Not Having A Good Property Manager You Can Turn To
Managing your investment property yourself is a perfectly good strategy provided you have the time and patience. However, there is a lot of legislation surrounding the real estate industry, and it is constantly changing. Make friends with an experienced property manager who is willing to share knowledge in order to help you succeed. A good property manager will give their knowledge for free, because they know they will be the first one you think of when you decide to change your strategy.
Owning an investment property is an excellent way of setting yourself up for the future. But it can also be expensive if you make simple mistakes that are common amongst first time landlords.
Contact us if you have questions about being a investment property owner and we’ll be happy to advise you on how to get the most out of your investment property.