Managing Your Investment Property
Its possible to manage a rental property yourself, and in so doing save a management fee thats usually around 5 per cent of the rent. But it can be time-consuming and it's hard to remain emotionally detached when you have tenants ringing up complaining about every little thing, or you personally have to deal with damage to your property.
The other option is to use the services of a professional property manager. Theyll have up-to-date information on whats happening in the market and what tenants are prepared to pay. Theyll have prospective tenants on their books, and experience vetting tenants. Because they manage many properties, theyll have access to reputable trades people at cheaper service fees.
And their fees are tax deductible.
Insurance
Managing your financial risk as a property investor also involves insuring yourself against a myriad of potential hazards.
Its up to your tenants to take out home contents insurance to cover their possessions, but youll need building insurance. Then theres landlord insurance, covering risks such as malicious or accidental damage to your property by a tenant, any legal liability should a tenant injure themselves, and lost rental income should tenants move out without paying.
Renovating
Be prudent about renovations. The colour palette of the kitchen in your investment unit may offend your sensibilities, but it only makes financial sense to replace it if a better kitchen will stop the unit sitting vacant or lift the rent you can charge.
Make a cost-benefit analysis of your renovations. If the kitchen is going to cost $10,000, and youll have to borrow the money and pay interest, but it will only add $10 a week to the rent, its probably better left alone.
Don't overcapitalise by spending too much on design, finishes and fittings.
