Set and Forget. It’s something you may regret.
So you’ve gone and got yourself an investment property. You done due diligence in researching an agent and they have it rented in a timely manner. I’d say you’ve earned yourself a break, not quite. Unfortunately being a landlord is not a ‘casual’ thing. You have to be on hand at various points and despite having a good Property Manager you should still be actively involved in the property. Having a PM does not mean that you have a ‘set and forget’ system, far from it. In actual fact some of the highest returns from owning a property can be obtained throughout ownership are often untapped by owners. This blog will show the importance of staying involved in your property and the negatives of forgetting about your investment.
A common pitfall for property investors is switching off after a tenant is secured for the property, actually some often do beforehand. Before a tenant is found it is very important that landlord remains active throughout the market process. First to ensure the advert is consistent with the terms of the lease i.e the rental amount, and any extras including such as gardening or pool maintenance. It is also important that the landlord is available to discuss any changes to the marketing, mainly pricing to move with the market. We have a previous blog highlighting this importance. Also, an owner should be available to ensure the property can be kept reasonable presentable. In this market where a property can be vacant for a number of weeks it might need a quick clean or even some garden work to make it look presentable. Once you have a tenant in, it may seem it is all home and dry. In some ways yes however in others it is just beginning. Your property is now rented and therefore now being used. This means that there is a higher risk of some items wearing or unfortunately some items can break, especially if it is a new build property. In this instance a landlord needs to ensure they are available to assist the PM in arranging any repairs.
Outside of the PM duties themselves, there are a number of things a landlord should ensure to keep on top it to get the most out of their investment (see previous blog for more info.) Refinancing would be a major aspect. An owner can refinance at anytime, and not only as they are in need of additional funds in their personal life. A refinance can be due to; lowering of interest rates, enabling the loan term to be shortened, switching from a fixed rate to variable or vice versa, or tapping into the equity. This would in turn give the market value of your property which is always beneficial to know in an ever-changing market. Unfortunately not all PM companies have the ability to assist with finance advise however Rentwest Solutions works closely with Custom Financial who are on hand to assist.
Another must with property investment is to review your property. Your property manager will be on hand to offer advice on how the rental market is performing and also how the tenants are however they can only offer information on one aspect of your investment, the returns. An owner should review personally. Off set the returns with the cost of maintaining, agent fees, any loan repayments, insurances, tax’s etc. Are you receiving a good return from your investment? Compare this with other investments you have? Just because you are receiving a high and consistent rent does not necessarily mean the property is a good investment. It is not always good earning $1,000 a week if you have to pay out $1,500 a week in order to do so.
What about when you want to sell your property? Let’s get one thing clear. Your PM is a Property Manager not a real estate agent, and vice versa. It can be taken personally to get it wrong. It is recommended to consult the opinion of a sales agent regularly throughout the time you have the property. You may be receiving a high return with good tenants and comfortable not selling however there may be a spike in that particular suburb which is inflating prices and likely to last for a limited time. This would be an opportunity to maximise sale returns. If you hold onto the property for a few more years and miss the spike the returns may not balance the opportunity cost lost. Selling a property is also the most efficient way to recycle equity and move up the property ladder.
Speak to the proactive team at Rentwest Solutions now on 9314 9888. This is a decision you won’t regret.