Could now be the right time for you to become a first-time property investor?
Earlier this year Perth was named the most attractive capital city in Australia for property investors, so if you’re thinking of investing in residential property in Perth you’re not alone.
Starting your property portfolio is an exciting time, but it’s important to be aware of your obligations in order to get the most from your investment. To help you get started, focus on these five simple things which can be the key to property investing success.
1. Be fair when setting and raising rent
The whole point of buying a property for investment purposes is so you can make money and set yourself up for the future. Property investors have the potential to make money in two ways: capital growth through property prices rising over the longer term; as well as regular income through rent.
Setting the rent in line with the market, and considering raising the rent according to current market conditions, can boost your income stream and help pay off the investment’s mortgage faster. But you do need to abide by the state regulations and laws.
While it’s easy to look at your investment property in black-and-white terms, remember that building a good relationship with your tenants is beneficial for everyone. Raising the rent is common and a necessary part of property investment, but it’s important to approach it in a sensitive and respectful way – after all, the costs of finding a replacement tenant can far outweigh the short-term benefits of a rent price hike.
There are different legal obligations depending on whether it’s a fixed-term rental or a periodic tenancy, however, in most cases you won’t be able to raise the rent within six months of the tenant starting their lease. You can read more about setting and raising rent here.
2. Find a good tenant – and keep them!
While offering a fair market price on rent will help when finding a good tenant, keeping them in your property for the long term takes more than that.
Key to this is to keep the lines of communication open. This starts from the beginning when you can make a good first impression. Let your tenants know they can reach out to you anytime – not just when there’s a problem with the property. It can also be helpful to reach out every couple of months to check how they are doing and whether there’s anything they want to discuss. This will avoid any hiccups down the track and means you can fix minor issues before they get out of hand.
3. Don’t ignore regular maintenance
Aside from rent rises, maintenance issues are arguably the biggest gripe for tenants. After all, just think about how frustrating it is when you’ve got a leaky pipe or a problem with the air conditioning, and you can’t get it fixed.
As a landlord, you’ll want to protect the overall value of your investment by ensuring the property is kept in good condition. But you also need to be attentive to a tenant’s needs – after all, it’s their home, and you want them to care for your property too. If there’s an issue that needs fixing, legally and ethically you need to be responsive to their requests.
So it’s crucial for both sides to stay on top of maintenance. In addition to getting the property into a good and reasonable state prior to your tenants’ move-in date, you should be aware of your obligations for things like plumbing, gardening and the hot water system.
You will also need to know the rules around urgent repairs. These include problems with essential services such as gas leaks, a burst water service or broken hot water system, dangerous electrical faults and sewerage leaks. If it’s an urgent issue with an essential service, you’ll have 24 hours to organise the repair and 48 hours for any other urgent issues.
4. Manage your depreciation schedule
Once you’ve started life as a first-time property investor, you’ll notice that tax time gets a little trickier. So before the end of the financial year arrives, make sure you know what you need to cover as a landlord.
One of the most important step is maintaining good records. A depreciation schedule will include all the tax-depreciation deductions available to you as a property investor, across both the building allowance and plant and equipment.
It’s an ATO requirement to create a depreciation schedule for your investment property, and the best time to get it organised is when you settle on the property. This will mean it’s in the best possible condition to understand your potential deductions, and there won’t be any tenants to disrupt when the quantity surveyor inspects the property.
5. Make your life easier with an experienced property manager
As you can imagine, juggling all of these tasks – and more – can take up a lot of your free time as a property investor. Employing an experienced property manager means they will take care of the heavy lifting, look after your tenants and your property, and ensure you always get the right advice according to the most recent legislation.
Start your property investment journey today
If you’re ready to become a first-time property investor, Rentwest Solutions can help you on the path to success. Contact us today and find out why we are the leading property management experts across the entire Perth region.