How to manage your investment property
In the last article I walked you through the steps to secure an investment property. Now comes the next part: keep it in good shape.
Have your property professionally cleaned
Yes, not just cleaned, but professionally cleaned. Find a company who specialises in moving-in and moving-out cleaning, you can also ask your agent to recommend one in their network.
Find a property manager
Some investors prefer to manage the property themselves to save costs, but if you are serious about investing, hire a property manager, it will save you time, make management more efficient and of course, the cost is totally tax-deductible.
There’s a few ways to find a good manager:
- Search on google for highly rated property managers in the area
- Check with the selling agent of the property and see how experienced they are with properties on the same street. They can recommend a property manager for you.
- If you used an advocate to secure your property, they can help you talk to some of the candidates to decide who’s best to manage it.
Accounts that you manage
In Australia, when you are a property owner there’s several accounts that you need to have:
- Council rates: this is a type of property tax. Get in touch with your city council to set up your account. Usually you pay the rates once a year but you can also set up payment plan for 12 months.
- Water rates: your tenant will pay for their own water usage, but you have to pay for waterways and drainage. Usually this is automatically rolled over when you settle the property, but check with your agent or city council.
- Land tax: usually there’s a threshold for the tax depending on the value of the land under your property. Check government website and talk to them to understand how much you have to pay.
- Body corporate: if you buy a townhouse in a block that has more than 2 houses, you’re subject to body corporate fees which is paid manually to the company that manages everything outside of your house but within the property block.
You may consider assigning these accounts to your property manager, meaning they will receive the invoice and make payment on your behalf, this will save you time for organising the documents.
At the end of financial year your property manager will consolidate all the costs against your rental income in a statement that you can use for tax return.
Time to find your tenant
Once everything is set for your property, you can start searching for people to live in it. Discuss with your property manager to prepare photos and content for leasing out the house online.
Regarding rental price, you should spend time researching the area to determine the most suitable rent for your house.
Be reasonable, use all the strengths of your property, like location, space, interior, local amenities, to justify your price.
When you start receiving applications, a few things to consider to pick the best tenant:
- Rental history: your property manager will contact the applicant’s previous landlord/property managers to find out if they had any issue like causing damage or not paying rent on time.
- Income: I would prefer someone with a fulltime job and their monthly income is substantial enough to save some money after deducting rent and average living expenses.
- No criminal record: this is too obvious right :)
All set and good to go
Now that your tenant is moving in, what you should do every month is keep an eye on rental income and any notification for rates. If your tenant has any enquiry or reports any issue with the property then you will hear from your property manager. Make sure to store all the documents and invoices throughout the year for your tax return. Good luck!
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