We manage a lot of investment properties in the Perth property area. When we field phone calls from landlords who are tired of going it alone, we talk to them about the problems they have managing their own properties. If you are still going it alone, here are seven things you must do to prevent failure.
Treat it Like a Business
This is essential. If you don’t treat property investing like a business, you will not be successful. Why? Because your competition IS treating it like a business. We always provide our clients with our “Property Investing Success Plan,” which many have followed to amass very nice portfolios.
At the very least, you need a clear plan and a team of professionals to help you execute that plan.
Do Not Become Emotionally Attached to a Property
You should always use research and numbers to decide whether a property is worth putting in your investment portfolio. This is especially important for your first property, as it is going to be the beginning of your investment “career.” Don’t choose a neighbourhood or property because you like them or want to live there; choose it based on solid number crunching and research that stacks up to give you the highest possible chance of capital growth.
When you buy your property, don’t try to impose your personal taste on it. Go with neutral colours and conservative features.
Keep Your Property in Great Shape
Nothing can sabotage a budding career as an investor than shoddy maintenance that allows your building/s to deteriorate. Your building should always be in good repair. In addition, keep it painted periodically and make sure that your appliances are updated when needed. Failure to stay on top of maintenance and repairs will always cost you more down the road than if you had kept them current.
Don’t Make Friends with Your Tenants
This may sound callous or counterintuitive, but you can’t allow yourself to be friends with your tenants. The reason for this is that they will inevitably take advantage of that friendship, whether intentionally or unintentionally. If they are late on rent, they think that it’s “OK,” because you “understand.”
The best way to navigate this is to hire a professional property manager and never have direct contact with your tenants.
Hire a professional to make a depreciation schedule for you so that you can use it to offset against your taxes. A tax professional can find a lot of depreciation for you and save you a lot of money in taxes. This provides you with more short term revenue to invest.
Keep Your Rents Current
You should always know what the rental market will bear and keep your rents consistent with that number. This involves keeping a close eye on the market and not being afraid to raise rents when it’s time for a tenant to renew. Once again, the best way to do this is to work with a professional property manager who does this for you.
The best part: it is the property manager who informs tenants that their rent will increase. You don’t have to do it yourself and listen to the inevitable rebuttal. Plus a good manager will have already outlined their process for rent increases so the tenant will understand and expect it to occur in line with market rates.
Hire a Professional Property Manager
This is extremely important. You may think that you are saving a lot of money by “going it alone,” but you aren’t. In the long run, you are costing yourself money, time and effort by doing it yourself. A top notch professional property manager will always make you a lot more money than you spend.
Think of what the property manager does for you. They find qualified tenants for your home. They make sure you receive your rent on time and handle things promptly when you don’t. They make sure that your tenants aren’t destroying your home. They let you know when it’s time to do maintenance and even arrange to have it done for you. They take care of those 3:00 am phone calls for blocked toilets. They keep abreast of the rent market to help you maximise revenue.
Call 1300 472 427 to learn more.
Read an article to: “7 Cardinal Rules for First Time Landlords“