For many, buying property in Australia presents a wealth of opportunity offered by few other investments. It’s no surprise then that becoming a landlord can be an exciting time, though there are plenty of ways to shoot yourself in the foot and risk a lower return. Here, we explore some of the most critical mistakes made by landlords, particularly when managing properties on their own.
1. Failing to properly screen tenants
The success of your property depends on rent coming in. While you may be anxious to usher in a new tenant and avoid periods of vacancy, it’s imperative that they are screened properly so you have the best chance of avoiding a costly mistake. Verify their personal information, do a thorough reference check and tick all the boxes before handing over the keys.
2. Assuming the property will always be rented
When you purchased the property, you should have already sat down to make some calculations based on your mortgage repayments. What you make from rent will inevitably offset your costs in this regard, but be wary: most investment properties go through short periods of vacancies at a minimum. Some endure months without occupancy, a problem many landlords faced during the pandemic. Always have enough income or cash reserves to cover your mortgage in the worst case scenario and don’t solely rely on rent.
3. Not considering property management
Many first-time buyers take on an investment property and manage it themselves. This can be achievable and provides great experience, but it quickly gets overwhelming – especially when looking after a portfolio. Investment properties essentially need to be run like a business with adequate bookkeeping, regular checks and fast responses to any issues. The difference in support between a good property manager and a bad one (or none at all) is night and day. Any professional managing agent worth their salt will be able to fulfil many of the landlord’s obligations, take responsibility for key processes and ensure the property is a cost-effective investment for the buyer.
4. Underestimating maintenance costs
Maintenance and repair is part and parcel of owning a property and it’s easy to underestimate how much you need to fork out. Part of this will factor into the rent you charge, but it’s also critical to have cash reserves to manage anything from cleaning and repainting to structural repairs and appliance replacements. Keeping on top of maintenance not only protects your property from long-term issues but also makes it more appealing to tenants.
Talk to InStyle Property Management today to find out how we can help you get the most out of your Adelaide property.