Essential Tips for New Investors After Purchasing a Property

September 11, 2024 Anshu Vaidya

Reading time: 4 minutes

Congratulations on your new investment property! You make 1 out of 2.2 million Australians who own an investment property.

While the journey to buying a property is well-documented, there’s less information on the crucial steps to take once you’ve made the purchase. Here’s a comprehensive guide to help you navigate property management, maintain your investment, and optimise your rental income.

Selecting the Right Property Manager

Why It Matters: Your property manager plays a crucial role in maintaining your property and managing tenant relations. Choosing the right one can significantly impact your investment’s success.

Evaluate Based on More Than Just Fees: While a lower fee might seem attractive, it could also reflect the overall quality of service. Look beyond the cost and consider the property manager’s reputation and service standards.
Research and Compare: Use resources like Real Estate's agent search to check vacancy rates, median days on market, and reviews for various agencies.
Direct Interaction: Speak directly with property managers to understand how they handle landlord and tenant relationships, tenant screening processes, fee structures, and lease renewals.
Additional Resource: Consider checking Rate My Agent for further reviews and ratings.

Maximizing Property Manager Utilisation

Why It Matters: Properly utilising your property manager can streamline operations and save you time and money.

Routine Inspections: Ensure that your property manager conducts regular inspections to proactively address issues like worn flexi-hoses, signs of water damage, property upkeep etc.
Bill Management: Have your property manager handle all utility bills. This keeps your financial records neat and simplifies tax time. If you receive any invoices directly (e.g. insurance, council rates), forward them to your property manager to ensure all expenses are documented in your End of Financial Year Statement. You are welcome!

Investing in Quality Advertising

Why It Matters: High-quality advertisements can make a big difference in attracting potential tenants.

Professional Photos: Don’t skimp on professional photography. Quality images enhance the appeal of your property and drive more traffic to your listing. A small savings on ad costs could result in fewer inquiries and a longer vacancy period.

Tenant Selection Process

Why It Matters: Choosing reliable tenants is key to maintaining steady rental income and minimising risks.

Affordability Check: Ensure tenants can afford the rent both now and preferably the future increases. This reduces the risk of late payments or defaults.
Rental and Bond History: Review potential tenants’ past rental histories and bond claims to gauge their reliability. Be cautious and thorough to avoid issues later on.
Consider Future Circumstances: Keep in mind that tenants’ personal situations can change, such as job loss, which might impact their ability to pay rent.

Adequate Insurance Coverage

Why It Matters: Proper insurance protects your investment from unforeseen issues and damages.

Comprehensive Coverage: Ensure you have insurance that covers the building, contents, loss of rent, and malicious damage by tenants. This safeguard helps mitigate financial risks.

Consult an Expert: While this is not financial advice, consult with an insurance expert to tailor a policy that fits your specific needs and circumstances.

Avoiding Greed

Why It Matters: Overcharging can lead to longer vacancy periods and potentially miss out on good tenants.

Balance Rent and Vacancy: An additional $10 in weekly rent equates to $520 annually. However, if this results in an extra week of vacancy, you may lose more than you gain.
Attracting Quality Tenants: Competitive and fair rent can help you attract and retain high-quality tenants, which is often more beneficial than a small increase in rent.

Staying on Top of Maintenance

Why It Matters: Regular maintenance helps prevent small issues from becoming major problems and ensures your property remains in good condition.

Routine Tasks: Regularly clean gutters, monitor and prune overhanging trees, and address plumbing issues promptly.
Long-term Care: Remember that all properties need ongoing maintenance. For example, roofs might need repointing every 25-30 years, and cladding may require a fresh coat of paint every 10-12 years.

Strategic Tenancy Agreement End Dates

Why It Matters: The timing of lease end dates can impact vacancy rates and rental income.

Flexible Lease Terms: You don’t have to stick strictly to 6 or 12-month leases. Adjust lease terms to suit market demand and minimize vacancy. For example, avoid ending leases before Christmas and aim for January or February if your area is popular for school relocations.
Insurance Considerations: Some insurers offer limited coverage for periodic leases. Ensure your lease agreements align with your insurance policy to avoid coverage issues.

Changing Property Managers

Why It Matters: If your property management isn’t meeting expectations, it’s crucial to make a change.

Giving Notice: To switch property managers, you typically need to provide 30 days' notice. Be aware that some agencies may charge an exit fee.
Finding a Better Fit: Use your research and experiences to select a property manager who better meets your needs and expectations.

By following these tips, you’ll be well-equipped to manage your property effectively, maximise your returns, and maintain a successful investment. Happy managing!

Buyers Agents for property investment