As the South Australian property market continues to go strong, renting out properties can create a steady income stream. Subodh Shirodkar, a property investor, built a whopping $7 million portfolio and quit his 9 to 5 job (Financial Review, 2020).
But the job of a landlord is not just limited to handing out keys and cashing in those checks. You can say it’s more ‘hands-on’ than it appears, especially if you’re managing a property while working full-time; it can be taxing. You’re constantly on a hook for those ongoing repairs and maintenance. Moreover, if your property ends up vacant or damaged, your biggest asset can quickly turn into an expensive headache.
As a first-time landlord in the Adelaide real estate market, preparation is the key to a profitable and hassle-free rental investment journey. Here are a few tips on how to not lose your cool or get left behind when renting a property.
1. TREAT IT AS A BUSINESS
You must remember that managing a property is like running a business and good properties attract good tenants. For instance, if you’re looking for a rental property, you would want to invest in a property that can produce a reliable cash flow monthly. We advise you to talk to an area expert to keep an eye for the properties in up-and-coming neighbourhoods that have a strong history of rent appreciation, has a favourable rent-to-price ratio, and offers other perks desirable to a tenant (like access to public transportation).
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If you already have a property that you’re deciding to rent, then it’s time for some touch-ups. A clean and well-maintained property will set your property apart in the market. Painting is a quick way to spruce it, but if you’re looking for renovations, DO NOT go overboard. We know it’s your property, and you would want to add the highest quality Calacatta marble for your countertop, but it’s a business, and your rental doesn’t have to be top of the line. Stick to a happy medium, know where you can skimp and invest where your capital will get you the greatest return.
Setting your rental price wisely
Your property should match the rental price – research your market and learn what is the fair market price in your area. Also, comparing your rental income and rental payments (like property taxes, insurance) can help you decide on a win-win rental amount that attracts tenants and is financially viable for you.
2. HIRE A PROPERTY MANAGER
Once you’ve done your research and your rental property is ready to hit the market. It’s time to hire a property manager as often landlords find them overwhelmed with responsibilities. Thus, if you wish to get the most of your investment and save on the time and hassle involved in managing a rental property then we advise hiring a property manager is the way to go! A property manager handles marketing your property, tenant search, collecting rental payments, legal paperwork, maintenance, dealing with tenants and more.
When choosing a property manager, consider things like vacancy rates, arrears rates and google reviews to hire a reliable manager. A seasoned property manager can give you expert advice on Adelaide property market trends and will make your life much easier and give you that peace of mind that your property is managed by a professional. Find out how our team do it here.
3. KNOW THE BASICS
We’ve established that your property is your business, and a good business follows all the necessary laws to avoid potential legal problems and maintain a positive reputation. Your property manager will know the type of lease (aka residential tenancy agreement) you should sign – a fixed-term lease or periodic.
Your property manager will lodge your rental bond to your state’s Bond Authority, read through the Residential Tenancies Act, protect your property with landlord insurance, know both good and bad Tax implications.
The benefit of working with a property manager is that they’ve got legalities covered. Each Australian state has different laws and regulations, and it’s crucial that you know about your rights and obligations as a landlord.
4. DON’T SKIP THOSE REFERENCE CHECKS
You wouldn’t want to hand over your biggest asset to a bad tenant, right? Then make sure to not budge on your criteria and vet your tenants thoroughly. Our property managers ask vital questions like,
– Personal details,
– Current and previous rental history,
– Employment details,
– Proof of income,
– Credit check,
– References, and many more.
The whole point of doing a thorough tenant screening is finding a quality tenant who pays rent on time and treats your property like their own. Read our blog Top Tips for a stand out rental application for more information on this.
5. CREATE CLEAR COMMUNICATION
Efficient communication is key to a successful tenancy, but you need to set clear boundaries. You’re not a full-time property manager, but we are! Our property managers offer clear tenant communication channels to ensure a positive experience so that you don’t have to run after your tenants if running late in paying the rent. While talking about rent, our experts advise on collecting rent online as it is more convenient, secure, and provides more clarity.
6. DOCUMENT EVERYTHING
It is crucial that condition reports are completed. Our property managers take a bunch of ‘before’ pictures of your property and save yourself from hearing that overheard statement “It was like this when I moved in”. We make regular inspections, making sure you don’t end up as a ‘lease it-leave it’ kind of landlord; we suggest an inspection every 6 months to check the condition of your property and to ask your tenants if anything needs to be spruced up! Our property managers keep a digital record of every receipt and communication. In case a legal issue or dispute emerges, then having evidence to support your claim is always the best way to go.
7. KEEP YOUR FINANCES IN CHECK
You want renting your property to be a profitable affair, and to determine that you need to know your numbers. You can keep a spreadsheet of all your rental income and payments; this will help you make future decisions on whether you should continue renting your property or not.
We highly recommend you keep a cash buffer as your property will eventually require maintenance like a new cooktop, some paint, or new floor coverings. For those “rainy days” keeping some money aside will make sure that unexpected expenses don’t disturb your financial budget when required.
Need some financial advice? Speak to our friends at Fresh Home Loans.
Now, renting your property in the current Adelaide market can pay handsomely, but it also comes with a set of challenges. Please don’t shy away from hiring the experts as they’ve got the resources to manage your property and increase your return on investment two folds.