The property market can be a greatly rewarding venture for many investors. However, inexperience can easily lead to frustration and squandered finance.
Here are five common errors that you should avoid as a new landlord.
1. Getting emotionally attached to your investment property
It can be difficult to avoid sentiment when it comes to buying a property. The important thing to remember is that renting out a property is an investment and should always be treated as such.
Focus on the elements that will generate the best yield rather than letting your own personal living preferences creep in – especially if those touches are more polarising than practical, such as fluoro wall colouring or a spiral staircase.
2. Not having a depreciation schedule
A vast majority of property owners in Australia still do not correctly claim deductions on their investments. Having an effective tax depreciation schedule in place will help get the most value out of your property.
The schedule should be prepared by a qualified quantity surveyor and is designed to accurately reduce your taxable income in accordance with any building and furnishings you provide for the property.
3. Not keeping up with maintenance
A key element of property management is to stay on top of running repairs and property maintenance. Failure to do so can result in tenants becoming disgruntled or a lack of interest from prospective new tenants.
Inexperienced landlords are also at risk of underestimating these costs. Part of the maintenance costs should be factored into the rent value so you are equipped to deal with issues when they arise.
4. Not hiring an experienced property manager
It seems an obvious step, but it is a must for new landlords to enlist a capable property manager. Property is a significant financial investment and should be handled responsibly.
If you inherited a million dollars, you wouldn’t just stash it under your mattress. You’d place it in the care of a bank. The same applies for property investing. Don’t blunder ahead and assume you can handle everything yourself. An experienced property manager will have the requisite knowledge to help you along, including finding suitable tenants and keeping abreast of rent and repairs.
5. Not writing everything down
Should tenant-landlord relations take a turn for the worse, you will want to have documentation to support your position.
Any disagreements over unpaid rent or other grievances should be kept on record by the landlord, including emails, phone conversations and messages. In the event that things do end up in court, your argument will be greatly strengthened if you can back up or reject allegations with solid evidence.
For more information and expert advice on property investment, management and renting, contact K.G. Hurst today.