There is a lot to think about and consider when investing in property, however, below are a few tips and reminders to take into consideration.
Is there a current tenant or will you need to secure one?
Inheriting a tenancy that is in place can be great but can also pose risks for you too. If there is a current tenant in place, have you done your due diligence and considered factors like, are the tenants in arrears, is the lease fixed or periodic?
If the tenant is in arrears, has it been an ongoing issue or is it an isolated event as you may be relying on the funds to ensure smooth payment of any financial obligations you may have?
Additionally, how secure is the tenancy and how does this tie in with your investment strategy. You may purchase a property in good faith that the tenant will remain, but if they are on a periodic agreement there is no security that they will remain conversely you may have plans to have your own tenants move in and are locked into an agreement with existing ones.
Sourcing a tenant may be required and you may need to consider the amount of time that it takes to find and commence a lease to start generating income.
These factors may place some weight on your purchase and should be considered
Whilst there is an equitable interest when signing a contract to purchase a property in South Australia and a need to ensure appropriate insurance is in place to protect your interest, you should also consider extending your cover to include Landlord Insurance when the time arises.
Landlord Insurance, unlike a building policy, is utilised to provide you cover on tenant-based events such as rent loss, malicious damage and public liability.
There are a number of insurers available who provide cover and we would be most happy to share our experiences and recommendations,
Worst House On Best Street / Fixer-upper-ers
There are considerable expenses and outlays in purchasing a property, Stamp Duty, Deposits, LMI, conveyancers…. the list goes on.
When purchasing a property and leasing it out, you should also consider legislative obligations that may arise in the form of Maintenance.
Consideration should be made and taken into account for any possible maintenance that may be required to ensure you’re not caught with any hefty unexpected costs.
Self-managing or engaging a Manager
Managing a property can be great when things don’t go wrong, and the clear benefit is that you save on paying someone to manage your property and could tilt your yields slightly favourably if you’re comfortable with managing changing legislation and obligations, sourcing and vetting tenants in addition to spending the time to facilitate repairs and potential conflict if a disagreement arises.
Engaging a licensed property manager is beneficial to ensure you are arms-length in the transaction gives you back valuable time, access to the best property resources, marketing and technology, is tax-deductible but importantly provides you with peace of mind that a professional will guide and navigate you through legislative obligations and constant changing marketplaces.
If you would like to run any property management questions past us you can reach us on the below form or via our Contact Page