If you are purchasing or have purchased an investment property for the purposes of rental income, read on, as we outline the necessary steps and considerations to take.
What to fix before the ‘foot traffic’
If your rental property requires a makeover or overhaul, attention to detail in the preparation process is the difference between a reasonable and substantial investment return.
Typical problem areas in established properties often start small and mushroom out of control.
Consider the quality and durability of the fixtures, fittings and appliances in your rental property. Are they designed to stand the test of time? Investing in new or reconditioned appliances could save money in the long term.
Overall cleanliness is also a magnet for renters. Pay attention to bathrooms and kitchens, as these high-use rooms often act as inbuilt marketers for your rental property.
Mouldy grout, broken tiles, leaking taps, chipped paintwork and even outdated fittings are a definite no-go zone.
You should also spring clean or replace carpets, repair wall damage and amend or replace floors, curtains and blinds.
Where to get started
If you are a potential landlord or rental provider, government analysts recommend that you enlist the services of an experienced and highly qualified property manager.
Real estate institutes in your region are an ideal starting point, as trusted members can offer property management skills.
Search the internet and local media to research agents and always interview two to three candidates before making your property management decision.
Management fees to consider
There is a range of expenses for the property owner throughout the initial process of signing with an agent and their promotion of the rental property.
Property management fees to consider include costs for enlisting an agent; letting or leasing fee; management fee; marketing fee; and other costs. These could include statement fees and administrative costs such as postage.
You and the agent need to sign an exclusive leasing and management authority. This gives the agent exclusive rights to find a renter and authorises them to manage your property.
Rental returns
The agent should forward the rent to you within a reasonable timeframe. This can depend on whether the renter pays on time and how often the agent distributes payments from their trust account.
The agent should explain their accounting timelines in writing as part of their service to you.
Repairs post tenancy
As a rental provider/landlord, you can authorise your agent to arrange for urgent repairs up to a specified amount. Your authority should be written into the contract.
You must give the renter a written statement that explains whether or not the agent can arrange urgent repairs. If the agent is authorised to arrange repairs, the written statement to the renter should include the maximum amount the agent is authorised to spend on repairs.