It’s not yet time to rest after doing the work to successfully secure your first investment property.
There are three important things you should do before you can enjoy the fruits of your investment.
- Get a property manager
Hiring a property manager should make your role as a landlord relatively stress and hassle free. You should start looking as soon as you’ve decided to purchase.
Property managers know the better neighbourhoods or streets and may help you in identifying where the better quality homes are located.
One of the best ways to find the best property managers is through referral. Ask your fellow investor who they use and whether they’re satisfied. You can also search online.
What are the qualities of a good property manager?
- They have to do what they say they will do.
- They have to have an extensive knowledge and understanding of related legislation.
- They need to have experience, preferably years of doing property management.
- They should be able to understand your unique situation, which means they should be good listeners.
- They should know what needs to be done to minimise any risk to you.
A good manager will also find a tenant who is ready to move in immediately after settlement day to maximise your rental return.
- Arrange insurance
Insurance is a must to manage your risk in what will be one of your biggest assets.
New landlords should have the right insurance in place to protect them from incurring massive debts due to unforeseen circumstances.
With landlord insurance, you are covered if your investment property is damaged by natural or man-made disasters like fire, floods, hail storms or high winds. Some of the things it covers include window breakages, a burst water pipe, a leak due to a broken toilet or washing machine.
By paying a little extra you can also cover rent default should you stop receiving rent payment from your tenant or loss of rent if your property becomes inhabitable due to a natural disaster.
The cost of your landlord insurance will depend on the value of your property and its risk profile. It is even tax deductible. Your policy is good if it covers tenant-related risks, including loss of rental income and damage to your property caused by the tenant or their pet.
It’s important to get landlord insurance as soon as possible after your property purchase because there can be some grey areas between the purchase date and the settlement date. That something could go wrong between those dates is not unheard of. Without insurance, you could get in big trouble.
- Save extra money for maintenance and unexpected expenses
Strata fees include a component called a sinking fund levy. This is due to the fact that even well-constructed buildings will need repairs and maintenance in the future.
This is the money set aside for “rainy day” expenses, such as new paint or new floor coverings, won’t not mess up your household budget when these items need to be done.
As an investor, you have to understand that there are some things you need to pay for over the course of the year. You will need a contingency fund to pay for those things, as well as ongoing expenses such as council, water and strata bills.
You invested in a property to make money, but you also need to maintain that property and that costs money.