If you are looking for a solid form of investment and are considering property rental, there’s an awful lot to learn, and being a landlord brings with it many responsibilities. As a business model, rental real estate looks very attractive – you could say that your tenants are paying your mortgage – and there will come a day when you own the property outright, yet there will be other expenses. Prior to looking at real estate with a view to renting, it is a good idea to gain a deeper understanding of the rental property sector, which enables you to make an informed decision.
Location is Everything
The ideal situation would be to buy a property in an area that is at the very outset of development, thus securing a low price, and over the following few years, land and house prices rise steadily, thus creating wealth. You might be looking at Brisbane suburbs, where prices are high, but forecast to steadily increase, and when you look at things from the tenant’s perspective, there should be suitable amenities nearby, for shopping, schooling, medical services and other facilities that are in demand.
If you are new to rental property, don’t make the mistake of thinking you can manage everything, indeed, if you did, you would have no time for anything else. The best solution is to enlist the services of a specialist such as Image Property Management in Brisbane, who can handle every aspect from sourcing tenants to building maintenance, and they will keep you informed at all times. When you forge an alliance with a good property management company, you are free to do other things, and in a year or two, you could make a second property purchase and assign this to your management partner.
Crunching the Numbers
Prior to doing anything, you need to calculate the amount of money it will take to cover the following:
- a) acquire the property
- b) make the property ready for occupation
- c) property taxes & legal fees
- d) property management fees
Once you have a ballpark figure, you then look at properties within your price range and then you are able to look at potential rentals. If you know your initial capital outlay, plus running costs, you then balance this against the expected monthly rental, and this allows you to calculate a return on your investment. If you would like to read how good tenants protect your investment, here is an informative article on the subject, which might prove invaluable in the future.
This is one area where your property management provider can really help, as they are fully aware of all landlord liabilities, plus they can help you compile a tenancy contract, an essential document that needs to protect both landlord and tenant. The property management firm will ensure that the property passes all inspections and is fully compliant, while carrying out building maintenance to a pre-agreed schedule. Here is a government website that contains everything you need to know about the landlord’s responsibilities, where you can download a free publication entitled ‘Landlord’s Obligations’, which is recommended reading.
Attracting Suitable Tenants
The goals for a rental property owner are a) to find a tenant who pays on time and b) a tenant that takes care of the property as you would. In order to attract than type of tenant, one has to look at the property from a tenant’s perspective, and the property management provider are experts at presenting rental properties to potential tenants. They can advise you how to make your property more attractive to top tenants, which is a valuable asset to your business, not to mention the many other services that are tailored to the rental property.
Every structure requires maintenance, and when your property is being rented, any minor issues need to be promptly repaired, which the management company can handle. You would agree on a maintenance schedule, with building inspections at pre-agreed intervals, and you will always be kept informed and no work will be carried out without your approval.
Is the Property Rental Sector Profitable?
The simple answer is yes, providing you hook up with a leading property management company, as they will handle everything on your behalf and their skilled teams are ready to assist you with every aspect of the business. A lot depends on the property location; Brisbane would be at the top of our list of best rental property locations, with Melbourne a close second, and your investment will increase in value as time passes.
If you have done your homework and are ready to enter the rental property sector, forge an alliance with a leading property management company and the rest is plain sailing.