Many landlords in Australia are continuous looking for new properties to invest in order to increase their rental income. Low-interest rates along with high-income levels have made buying homes pretty easy for the average Australians which makes it a pretty good investment for long term income.
However, sometimes owning a rental home can be a risky business too. You also need to keep in mind that the monthly rent along with the tax deductions could significantly lower your rental income compared to the cost of purchasing the house. So here are 5 things which you should cross off from your checklist when you are buying an investment property.
Before buying a property, do some research about the area. At first, check out the price of houses in that neighbourhood. If it’s within your budget then you can go forward but if it’s out of your range then move to another area. Make sure the location has a safe environment and easy access to every place in the city. If you are renting out to students or families check if there’s school nearby which will make travelling much easier. Similarly, if your house is in an area where there are few people, chances are you will have difficulties finding tenants.
2. Background Of The Tenant
You should always check the tenant’s profile before renting your house to them. Check their rental history, if possible is always a good idea because you do not want a tenant who will default your rent. You will also need to keep in mind the target group of your tenants. For example, a house with a beautiful garden will be suitable for a family but if you are giving it to students then they might not look after it. So take some time and try to find out what type of existing tenants are living in that area.
3. Tenant Safety
Owning an investment property is like running a business so you will have to comply with the local rules and regulations which ensure tenants safety. You must check for gas, electricity or plumbing problems regularly which can cause injuries to the tenant. Failure to maintain such standards could mean a hefty fine or even prison for landlords.
4. Dealing With Problematic Tenants
Sometimes tenants can cause huge problems for landlords. They can default rent which can make your mortgage payments difficult or can cause damage to the property which you need to repair. They can also cause some nuisance in the house which may upset the neighbours. In some cases, you may have to hire a lawyer to get them out of your property. So landlords should be mentally prepared to deal with such problems if they want to run a successful rental business.
5. Landlord Insurance
Since we know becoming a landlord has a lot of risks associated with it, so to minimise and overcome such risks, investment property owners must adopt a landlord insurance policy. You need to acquire the best landlord insurance quote which is reasonable for you. Your landlord property insurance should cover the building as well as its contents along with rent default from tenants. Getting a landlord insurance will not only protect your property but will also save you from a lot of troubles.