Are you thinking about property investment in Perth? With Perth heating up for property investors all over Australia recently, how would you go about ensuring that you have purchased the right property and how do you ensure its continued profitability?
Property investment can be a great investment return provided you do it correctly.
Although property managers are not property investment advisors, through their experience, they provide valuable insights worth considering on this major commitment.
Let us consider what are some benefits of property investment in Western Australia?
- Provides financial security
Based on historic charts, capital growth is a major benefit of property investment provided you have time and patience. Never over-invest and ensure that you have enough savings in order to help you out if your cash flow is tight. If your rental income is more than your expenses including your mortgage, then your investment can be another source of income for you.
- It is regarded as a safe investment option
There are many classes of investment assets including stocks, bonds, investment alternatives, funds or even cash, property is still regarded as a safe investment option due to its lower volatility comparatively. If you invest correctly, it could also be an immediate source of return. That said, it would be wise to ensure that you have your property (being an actual tangible and physical asset) insured correctly.
- You can enjoy tax benefits
All of us have heard of negative gearing and we highly recommend that this is not your sole consideration in investing. The tax benefit is that many of the expenses relating to property can be written off during tax time. This includes property maintenance, council rates, and mots of all your property management fees!
As with any investment, professionals are trained to ensure that your asset produces the best and optimal outcome for your personal financial plan.
With the overwhelming popularity of Do-It-Yourself (DIY) shows on TV, it is tempting to try managing your property yourself. If that is what you are thinking of, here are some important questions to ask yourself and evaluate whether it is worthwhile.
Q1: Do you know the right rental rates?
Setting the right rental rate is one of the trickiest conundrums that a property owner faces. Price too high and you will have elevated rental rates. Price it too low and you will be losing valuable income which impacts your cash flow.
Furthermore, do you have the capacity to conduct regular rental reviews? A small increase of even as low as $10 per week can help you offset the ever-increasing property costs that will confront you (for example strata fees, utility bill increases, overheads, inflation, etc).
Question 2: Do you know how to advertise your property well?
Do you have an extensive ready network that you can advertise to? More than just putting up the property advertisement in search portals as well as social media, the way you position, right and market your property will ensure that you get the exact target audience to apply.
Have you made prepared your property for photography ensuring that the right angles and rooms are presented well? As the photos will be used over and over again, ensure that you get the best possible photography that represents your property in the best light possible.
Question 3: Can you recognise a potentially good tenant from an insidiously damaging one?
Having the skills to not only identify potentially good from the not-so-good tenants is critical. You can do this through interviews, reference checks, driving past their prior property as an indicator of how well the home is maintained, and conducting social media checks are just some of the screening techniques used by professionals.
Like a job interview, the selection process is absolutely important in vetting out the best possible tenant for your property.
Question 4: Are you apt at managing tenants and can afford the time?
On an operational basis, there are various inquiries to respond to as well as repairs required to be conducted efficiently. There are timeframes and procedures in which these matters raised need to be handled within the legal parameters of the lease.
Another aspect is to ensure that rents are always collected on time. Can you enforce a zero-tolerance policy on rent?
Question 5: Is your property and tenancy legally compliant?
Are you able to invest your time in ensuring that your property is legally compliant? How would you handle a tenancy dispute and what are the avenues to avoid legal action? Familiarising yourself with the changes in the regulations will ensure that your tenants and property are all well within the legal parameters of the lease.
Property management companies know the ins and outs of the law, which is something not to be taken lightly. Using the wrong type of tenancy form or not lodging the tenant’s bond correctly can result in the owner receiving a hefty fine, sometimes even up to $20,000. A reputable property manager will have a complete handle on what can and can’t be done, and what needs to be carried out when.
Question 6: Can you handle the maintenance and repair issues promptly?
How much time do you realistically have available to manage repair and maintenance issues? Do you want to be available 24/7 in case there’s an emergency repair required? Consider how a neglected to repair issue could turn into a hefty-priced one if not addressed promptly especially in issues such as plumbing, roofing, or electrical.
Property managers often have a pool of reliable tradespersons whom they can call on for emergencies, that will deliver professional services at reasonable prices. They also have an eye to proactively manage your property, almost pre-empting possible issues during the inspections, which can prove very handy before matters escalate.
Question 7: Are you skilled in carrying out detailed property inspections at a professional level?
Having a trained eye to spot the little cracks that may end up being a big issue comes with experience. Not only is it important to notice those tiny watermarks (and what they could potentially mean) or certain stains, being trained and having the experience to know what those little signs could mean takes time and practice.
A thorough inspection of the property is carried out prior to tenants moving in (and being professionally noted in the Property Condition Report), during the tenancy, and after vacating the premises. Properties need to be maintained well, at a required standard that is clear from the onset. This expectation should be properly conveyed accurately so that disputes can be avoided.
Question 8: What strategies do you have in place to reduce vacancy rates and ensure higher tenant retention?
Vacancies are the bane of property owners. So how can you avoid them so that you don’t end up with a cash flow issue? One of the biggest challenges in property management is having the fine skills of attracting and retaining the right tenant for the property.
Are you able to quickly re-let your property when your tenant vacates?
Another important point to note is the support services that you are giving your tenants are you able to provide them with valuable reports or tips on how to maintain the property and equipping them with the right skill sets so that they can be the best tenant possible? Usually, property managers find that despite good intentions, tenants can end up neglecting certain housekeeping expectations not because they don’t want to do well for the property, but because they don’t really know how to housekeep. These are the little value-adds that a property management firm can bring to the tenancy which helps the tenants enjoy their rental journey as well as avoid potential conflict.
Question 9: How good are you at keeping meticulous reports on your property?
If you enjoy preparing reports and performing administrative functions, then you will benefit from keeping detailed, accurate, and meticulous reports on your property. From preparing thorough Property Condition Report, Quarterly Inspection Reports to Financial Accounting Records for Tax Purposes, the level of detail and meticulous report writing with photographs attached should ensure that nothing is missed out. Having an organized financial reporting system at a professional level will save time, effort and alleviate stress during tax times o if there are any legal disputes.
Alternatively, delegate these little functions to your property manager and focus on what you do best!
Question 10: Do you know how to optimise your renovation budget?
What are some cosmetic refreshes that can be applied to your property so that it fetches a better rental when advertised? How can you make your space look airier, brighter, and more modern?
Not all renovation investments are of equal value you should consider your target market accordingly. A property close-by to universities that attracts university students would attract a different renovation requirement compared to a suburb where families are concentrated in.
Here is where a good property management company can come invaluable advising you where to best spend your money and even suggesting companies where you can find great service at a reasonable rate.
If you feel that you are equipped to manage all of the issues highlighted in the article, in a way that will do your property investment justice, then self-managing your property may be the right solution for you.
However, If you are looking for professionals to manage your property investment, you should consider asking them the right questions before hiring a property manager so that you can find one that will fit your needs.
Hey welcome to my blog . I am a modern women who love to share any tips on lifestyle, health, travel. Hope you join me in this journey!
Speak Your Mind