You’ve conquered the task of property ownership and have decided to take the next step on your property journey. Whether you’re renting out your home because you’re upgrading and want to turn your old place into an investment property or because you’re moving away for a few years and intend to return eventually, there are many factors to consider when renting out your home. Here are just a few:
Just because rent is coming in doesn’t mean that you’ll have an influx of income. Turning your home into an investment property costs time and money, and you will need to account for things such as property management, maintenance and repairs, advertising fees, capital gains tax, insurance. Before you rent out your home, we recommend calculating the weekly income you would receive from the property and balancing that against the cost to see how it will affect your lifestyle.
Most landlords will agree that finding a suitable tenant can be the hardest part of the search. Nice clothes and a good application don’t necessarily make a person a trustworthy tenant, and it takes time and resources to research a person properly. However, it’s worth investing the time and effort upfront, rather than ending up with a tenant who doesn’t pay the rent on time or causes damage to your property – especially as eviction can be stressful.
Many people recommend checking tenancy referencing software (if you have access). Australia currently has two major tenant databases – the Tenancy Information Centre Australia (TICA) and the Trading Reference Australia (TRA). They let property managers look at things like pictures of damaged houses and tenancy history.
Upgrades and Repairs
No matter where you are in Australia, the nicer your property is, the nicer your tenants will be. A new coat of paint and shining fixtures can do wonders in adding to the perceived value of a property – and a landlord who cares about their property will attract tenants who do the same.
Tax and Legals
Before renting your property, we recommend speaking with your financial advisor. As a property investor, you’ll have access to tax benefits that owner-occupiers do not have, such as property depreciation. That said, you’ll also be affected by Capital Gains Tax if you decide to sell it in the future.
We also suggest that you hire a property manager or lawyer to attend to your legal obligations. This can cover everything from tenancy agreements, inspections and repairs to rent collection and contract termination.
The Benefits of a Property Manager
While it may be tempting to manage your own property, the amount of time, experience, money and skills required to do it properly can be daunting. It’s one of the many reasons people decide to invest in a good property manager instead. A property manager is an excellent solution if you live far from your property or don’t want to be as hands-on with managing your rental.
Not only do property managers have experience within tenant selection, reference checks, rent appraisal, and obligations, they also have the tools and professional connections to get more in-depth information and streamline the entire process.