You Have Bought An Investment Property, Now What?
Finally, you have done it. You have found the property, done your figures, negotiated with the mortgage companies, achieved your preapproval and now you own an investment property. Now what?
Firstly you need a Property Manager and not just any old Property Manager. You need a professional Property Manager, one who understands how you prefer to communicate, who knows the relevant legislation and who has enough experience to take care of your property and ensure that the tenancy is smooth and painless.
Start talking to various Property Managers prior to purchasing an investment property. You will find that they will be invaluable in relation to targeting properties that will be in demand by Tenants.
If you know of another investor, ask them who they use. You can use local Property Managers however you can also use that are not local who have been recommended to you.
You should also organise Insurance and make sure that your largest asset is protected. Landlord insurance provides cover if the property is damaged by fire, floods, a hail storm or high winds. It covers things like window breakages, a burst water pipe, or a leak caused by a faulty washing machine or toilet.
In my experience your insurance should cover tenant-related risks, including loss of rental income and damage to your property by tenants or their pets.I once had a tenant who tried to refill a Zippo lighter on a sofa and then proceeded to light the lighter - he has unknowingly spilt lighter fluid on the sofa and the entire apartment was damaged. We also had to evacuate the 100+ other apartments in the block. It was a very serious incident and I am pleased to advise that my client was covered. The tenant paid the excess and all was right again.
Most insurance policies will also cover rent default should your tenant stop paying rent or loss of rent if your property becomes untenantable after a natural disaster.
I will not take on an investment property unless it has Landlord Insurance. A good Property Manager will have the same check in place.
Keep a cash buffer available for maintenance or emergency repairs. Have you ever heard of a sinking fund in a body corporate? This sinking fund is a cash buffer kept for emergency repairs but also for planned maintenance.
A good Property Manager will let their client know that the property needs a paint or is starting to look tired and needs some renovation work. I always let my clients know when a property is looking tired. I ask them to begin to save for some maintenance. I will organise a quote so that the client understands what the monetary expectation is.
There is nothing worse than working with a client who has not planned a buffer.
Of course you want to save and make a good return however it should not be at the expense of the property or the tenancy.
Not being able to attend to maintenance reflects badly on a professional Property Manager. So it is vital that you give your Property Manager the tools to do their work and to maintain their reputation within the industry.
- Tracie Harrington