Golden Rules of Successful Property Investment

The financial security that flows from owning residential investments is well documented.

Not so well known are the reasons why some experienced investors ( landlords) have been more successful at managing their investments to produce optimum yield & maximum capital appreciation.

1. Keep vacancies, arrears and repairs to a minimum & tenant harmony to a maximum by setting the rent at or just below market value. Novice residential property investors & agents often fall into the trap of trying to obtain rent 5% to 10% above the market.

Rental properties which are placed on the market just below market value:

• Attract the best referenced tenants, and
• Maintain minimum levels of vacancy, arrears & repair/maintenance

2. Tenant references are essential

Give the most weight to the response to the question.

Do you believe the applicants would be able to pay $ X per week for Y weeks & keep the property clean & in good repair ?

• Always obtain reference checks from prospective tenant’s previous real estate agent or owner (landlord) as well ask for a ledger history of payments
• Current employment references
• Identification Details i.e. copy of passport including visas if applicable & drivers licence
• Proof of Income – payslips, bank statements, tax returns
• Don’t be influenced by personal references
• Successful investors readily confirm it is rare indeed to be provided with poor personal references
• As well where possible make sure you or the agent has met the potential tenant in person

3. Always utilise the services of an experienced, well referenced, professional managing agent

• Unless you have the time to gain a detailed up to date knowledge of the residential tenancy legislation, an understanding of local vacancy & rental movements, a background in repairs & maintenance, a bank of reliable tradespeople, an awareness of housing price movements & other governing factors such as insurance & property taxation.

4. Require your managing agent to provide:

• Monthly statement of all income & expenses with your monies banked directly into your nominated account
• At least 2 inspections per annum including a written report plus photos on the state of repair & cleanliness
• An annual report on the current rental value & local area vacancy rate & option to renew the tenancy agreement
• An updated reasonable selling price of your property annually

5. Carry out an Internal inspection of the property with the agent at least every 2 years

• Always good to keep an eye on the property as well as setting a maintenance plan for repairs to keep the property maintained to a high standard, well maintained properties will always attract the best tenants.

6. Until you get to know the agent (usually 3-6 months) require all expense items to be referred to you (other than emergencies)

• After an introductory period set a limit that the agent can spend, in saying that most agents will refer to the owner (landlord) prior to arranging most repairs. 
• Be responsive to tenant requests for maintenance, and make sure the agent is as well.
• There is nothing more frustrating from a tenant’s prospective than having to chase the agent/owner for outstanding maintenance.

Following the steps above will set you on the path to not only to stress free tenancies & good relationships with your tenants but also successful property investment.