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Property Management Tips For A Successful Investment Property – Part 1

 

 

 

Whether you have employed the services of a professional property management company or have decided to manage your investment yourself, there are several key items which can either make your experience rewarding or turn it into a nightmare. The majority of people will employ a property manager and will assume that everything to do with their property will be completed by the property manager. Unfortunately this is not always the case, the property management industry is forever evolving and legislation changes mean that the choice of manager can be the most important decision for a successful property. Even if you have a property manager it is important to monitor the progress of your property to ensure they are completing the required tasks. At the end of the day, if the property has an issue, or is not compliant, the owner is held responsible. The following points have been realised from my property management carer spaning over 12 years and are used daily as I run my specialist property management company Pure Property Agents Sydney. At Pure property agents Sydney we manage investment property throughout Sydney with the principles remaining exactly the same. Below are some of the most important indicators to be monitor in order for a problem free and highly profitable rental property.

 

Compliance is Essential

 

The regulations which govern investment property are always changing; some changes are substantial while others have little impact. Knowing the changes and ensuring your property is compliant is the easiest way to avoid an issue snowballing. An example of compliance would be the installation and certification of smoke alarms in rental properties. This is in addition to the annual fire safety checks which strata management organise for your property and refers to the internal smoke alarm for your property. In summary the regulation requires that all rental properties must have smoke alarms installed and maintained by a qualified electrician or tradesman. If a fire was to occur in your property, would you be compliant?

 

 

Look at a Landlord Protection Insurance Policy

 

Landlord protection insurance is something which you may never need to use, but that one time you need it, will be well worth having. As a professional property manager, clients often say to me “why do I need insurance when I have a property manager? Aren’t you responsible for making sure nothing goes wrong?” The fact of the matter is a GOOD property manager will be able to minimise much of the risk involved with the management of a property by processes such as; screening potential tenants properly, conducting regular inspections or handling rental arrears quickly and efficiently; however there may be events arising which are out of anyone’s control.

 

Take for example, a ground floor garden apartment. This type of property may have a higher chance of being flooded by either natural forces like a torrential rain downpour or by a blocked pipe in the complex. Apartments usually have a combined central pipe system which starts at the top floor apartment and heads down the building with each level joining on the way to the mains, with the ground floor property being closest to the mains. If there is a blockage near the mains the water or sewerage will look for the first point to escape and that is usually through the drain of the ground floor unit. The strata may repair the blockage however the owner is responsible for the damage caused which can include replacing carpet or floorboards, repainting walls, replacing damaged furniture and losing rent. To repair these items so the property is habitable again can cost thousands, which the owner may not have available. For an average premium price of a couple of hundred dollars per annum (which is also tax deductable) is it worth the risk not to have insurance?

 

 

Keep Your Property Presenting Well

 

When you were looking to purchase your property no doubt you would have inspected numerous properties. How many times did you walk into a property and immediately know that it was a rental property, the 1970’s carpet had heavy traffic marks with an iron burn in the corner, the paint was sundrenched with dirty hand marks, the walls had random screws from previous paintings, and the chipboard kitchen & bathroom cupboards were swollen and falling apart. The presentation of your property is in direct relation to the type of person you will attract as a tenant. Regular maintenance of the property will not only extend the life of the property, it will also attribute to a higher return through a better class of tenant saying longer, low vacancy rates when the property is available, and a structured expense strategy will avoid numerous expensive works. You don’t always have to spend a large amount of money, replacing a tired waterlogged bathroom vanity and rerouting tiles in depleted areas can add years to a bathroom and make it presentable for a few hundred dollars.

 

 

Have A Good Relationship With Your Tradesmen

 

There are several reasons why having a good relationship with your tradesman will benefit a landlord, one of the main reasons to note is they become your eyes and ears each time they attend the property to conduct a repair. A property manager can do regular inspection however the tenant is given notice before the inspection and in that notice time they can clean the property or have a friend mind their dog which has not been approved to live in the property. When you send a plumber to look at a leaking tap, the tenant isn’t concerned with making the property acceptable and usually will leave it as normal. By having a good relationship with your trades they will report items which could be a problem back to the property manager. This creates an opportunity which the landlord or property manager can investigate the issue or plan a strategy to rectify the problem. 

 

 

Keep On Top Of General Repairs & Maintenance

 

One of the biggest complaints received from tenants is that maintenance is not completed or it takes too long for the work to be done. If you have an investment property you will have to pay for repairs, unfortunately there is no way around it. By completing repairs quickly and efficiently it will have a flow on effect which will minimise future repairs and prolong the life of your tenancy as the tenant is happy. If you take care of the issue when it first arises while it is small it can also reduce to potential risk of the maintenance developing into a major repair. To repair a leaking tap is cheap but to repair a leaking tap and water destroyed kitchen cupboard is not.

 

 

Conduct Regular Rent Reviews

 

There are many factors which contribute to the rental which a property should be receiving; condition of the property, number of other properties available, the time of the year etc. Some investors take the view that if the landlords expenses have increased then so should the rent, this is not the most effective way of ensuring the property is receiving maximum rental. The Christmas period is renowned for having high vacancy rates as tenants are reluctant to move over this period, as such if you were to increase your rent here there is an abundance of properties for the tenant to chose and chances are they will be able to get a similar property at a lower rent.

 

Plan for your rent reviews to be at the most effective time of the year or when the conditions will support the increase. In Sydney we are currently experiencing a rental market where there is minimal property available and there are many tenants competing for these properties, these are the conditions which are favourable for a rental increase. If the tenant decides to vacate the property after receiving the rental increase, the property will be re-leased quickly and with minimal effort.

 

Please refer to Property Management Tips For A Successful Investment Property – Part 2 for completion of the article.

 

Simon Davidson

Director

Pure Property Agents Sydney

www.pureprop.com.au

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