If you are thinking about investing in a property with a view to letting, you certainly wouldn’t be alone, as many Australian investors have rental properties as part of their investment portfolio. Like most things, the rental property business is complex, and unless you fully understand the costs and liabilities that being a landlord entails, it could end up as a very costly exercise.
Prior to making any decisions, you should take into account all of the following.
- Costs – Obviously, you have the cost of the real estate, plus the stamp duty and all of the legal costs that come with a property purchase, then there is the cost of getting the property ready for tenancy. If, for example, you buy a rundown property with a view to renovating, then make sure you accurately estimate the renovation costs, and it pays to add a further 10%, just to be sure. It doesn’t end with the arrival of your tenant, as the property must be maintained on a regular basis, so don’t forget to factor in these costs as well.
- Potential Rent Ceiling – Once you have crunched the numbers and you know your total investment, you then need to assess how much rent you can charge, and this is something that Rise Property Management services in Melbourne can help with, as they offer a free rent appraisal service, which is all part of their comprehensive property management package. It makes perfect sense to outsource the property management, as such a provider would be able to source and screen potential tenants, while also ensuring that you comply with the many laws that come with tenancy. Once you know the rent you can ask, you can then calculate your returns, which will show you your projected earnings over a period of time.
- Building Maintenance – This is an unavoidable cost, and the best way to go about maintaining the property is to enlist the help of an established property management firm, who would liaise with you and provide only the services you need. They also are able to source tenants on your behalf, plus they can handle all maintenance and even accept rent on your behalf, and if you are new to the rental property business, a good property management company will prove to be invaluable.
- Location – This is a key aspect, and buying in the right areas should see you enjoy a healthy increase in the value over a few years. It makes sense to do a little online research into the area you are looking to buy, and by talking to a real estate agent, you can discover areas that are experiencing land price increases. Of course, you could be looking at a long-term investment, and buying a house in a relatively undeveloped area today could prove to be very profitable in the future.
If you have done your homework and are financially able to set the ball rolling, talk to an established property management company, as they can really make all the difference by handling all of the aspects that property management entails.