Investment properties are among the most popular and effective ways to build long-term wealth, without the wild swings share market investors experienced.
Always look at taking a long-term view.
1. Tenants: Poor tenant selection is a trap. You need to screen prospective tenants carefully.
A professional property manager will be able to help with this. They have access to default registers that list tenants who have caused past problems. It is important to check and phone all of the referees.
2. Where’s the rent?: Those who don’t pay the rent or continually slip behind in payments can be just as painful.
If a tenant is late in paying rent, you must take action immediately. This serves two purposes. First, it ensures that the outstanding rent is followed up and hopefully collected as soon as possible. It also communicates to the tenant that if they are late in paying, there will be immediate action taken,
3. No insurance: A landlord insurance policy eliminates unnecessary risk and potentially expensive payouts. Landlord insurance provides a safety net and peace of mind. It can provide you with cover against malicious and accidental damage and can also protect you from loss of rental income as a result of a tenant absconding or damaging a property and leaving it unable to be rented while repairs are made.
4. Overcommitting: Many property investors use negative gearing to get a nice tax refund but should remember they don’t get all their expenses back. Investors need to ensure they have the spare cash to cover not only the interest cost differential but also such expenses as council rates, land tax, water rates, maintenance costs and management fees.
5. Can you fix it?: When maintenance or repairs are required, act as quickly as possible. Once you are alerted to maintenance issues, it is your responsibility to act or authorise your property manager to do so. Be proactive with maintenance. Regular routine inspections will highlight areas that need attention.
6. Tenants as friends: Ideally the relationship between landlord and tenant should be at arm’s length. Too close arelationship can lead to difficulties downthe track, especially in situations where the parties have a falling out. It is best to have a professional property manager.
7. No inspections: Conducting regular routine inspections and documenting the information alleviates possible problems. Many landlords who self manage don’t conduct regular inspections. This can have two consequences. If a tenant is causing damage to a property, the damage may go unnoticed and be costly to fix later on.Second, if maintenance issues occur and are not fixed, legal liability issues may arise for the landlord.
8. Self-managing: People who don’t have the time, the knowledge or an interest in property management can get burned if they try to be their own property manager. Many landlords don’t have time to respond to maintenance requests or conduct regular inspections to address potential liabilities. While it can be tempting to save a small percentage of rental income byself-managing your property, the benefitsof a property manager outweigh costs.