It’s not a ‘Set & Forget’ Strategy When it Comes to Property….
INVESTORS adopting a “set and forget” approach by taking little interest in their investment property could be costing themselves big.
While investors have flooded to the real estate market in recent years in a bid to get their slice of the property boom, industry experts have warned once a purchase is made this should be the beginning of a financial strategy to make yourself a decent return.
Property investors need to take an interest in their property to ensure they get good rental returns.
Landlord insurer Terri Scheer’s executive manager Carolyn Parrella said all investors who own either a house or unit should take continuous interest in their property to boost their financial benefit.
She said in turn it will keep tenants happy and potentially allow for rental increases and capital growth.
“Landlords who quickly tend to maintenance issues and complete regular upkeep for their tenants are more likely to have the rental agreement renewed,’’ Ms Parrella said.
“By spending money on a fresh coat of paint, rolling out new carpets or a makeover of the garden, landlords may be able to help their property remain attractive on the rental market.”
Property Asset Planning’s Director Brian Chant told us that property investors should treat their property portfolios like a business and remember that expenses are tax deductible.
He also said investors should carefully choose their property before going through with a purchase.
“Property Investors need the right team surrounding and supporting them. Having an ATO compliant depreciation schedule when you first buy the property is imperative to getting the maximum tax deductions possible.”
“Likewise …. An outstanding property manager is also important to make sure that you actually receive the income that you had planned on to fund any associated loan costs” he said.
Vera Pasquini is the Senior Property Manager at Property Asset Property Management. “Time and time again, people purchase a pre-existing property which may be 10 or 30 years old. These people have outlaid a significant sum for the property and many times, do not have additional money available for renovations or updates to the property” she said.
She went on to explain how important it is when selecting an investment property that investors not only look at the purchase price, but any maintenance or repairs that are immediately required before you can get your first tenant.
Brian told us that landlords who have a property more than 10 years old need to spend money on their properties in order to get decent rental returns.
“Purchasing a brand new property and going through the build process will mean that the landlords achieve the most tax effective outcome with very little additional ‘out of pocket’ required on the property in the first 10 years” he said.
Vera then said that a coat of paint after the first couple of tenants may rejuvenate the property sufficiently to attract the best quality of tenant and achieve the highest rent possible.
“By treating your property portfolio like a business and having a maintenance strategy in place for older properties, you set yourself up for success.”
“The old school approach of not spending a cent on the property with the risk of having tenants whingeing that something is breaking and the property needing ad-hoc repairs leaves you as the landlord getting hit with $100 call-out fees and maintenance that ends up costing a fortune! There is also a tendency to have a high turnover of unhappy tenants” She says.