Some property investors get into the market by specifically searching for and buying an investment property. Other investors, however, convert their family home into an investment property. Unlike a home bought specifically for investment purposes, your family home likely has a lot of memories attached to it, so making changes to get the best return possible can feel challenging. Keep reading to understand the key things you need to consider when converting your family home into an investment property.
Holiday rental or fixed-term agreement?
There are pros and cons to making your property a holiday rental instead of offering fixed-term agreements. On the upside, if your home is in a popular getaway destination, you may be able to use your property for a short time each year while making income from it for the rest of the year. However, downsides, such as a higher likelihood of damage and additional administration, such as regular cleaning, mean that the logistics of a holiday rental may not stack up. Beyond considering the upsides and downsides of what kind of rental you will offer, you should also think about your needs and priorities. If you’d like a stable long-term tenant, getting the help of a property manager to list your property as a fixed-term rental and attract some great tenants is likely the best option.
Get your finances sorted
You may need to refinance if you have a mortgage on your property and it’s your primary residence. You’ll need to look for clauses such as the occupancy clause, which states how long you need to live in your home before making it available to rent. Getting advice from your legal and financial advisers is essential to ensure you have everything set up correctly.
Make sure your property is compliant
Each state has its own legislation detailing the compliance requirements for rental properties. Generally, this will cover items such as smoke alarms (the number of these and where they are located) and liveability factors (structural safety, ventilation and lighting, working appliances, and working plumbing and drainage systems). If you’re unsure whether you need to make changes to your property, speak with a property manager who can help you understand the current legislation and compliance requirements.
Consider renovations for a competitive edge
The navy feature wall in your master bedroom may have been your home décor dream, but it’s not going to appeal to every tenant. Small changes like fresh paint in neutral tones and updating fixtures can help your property stand out. An experienced property manager can tell you what changes are worth spending money on to get the best return possible on renovations.
Calculate your expenses
There are a few key expenses associated with owning an investment property, so make sure you factor these into your numbers. These expenses include land tax, landlord insurance, council rates, maintenance and repairs, and property management fees (if applicable).
Turning your family home into an investment property is an excellent way to add another income stream to your family’s wealth. However, there are factors you need to consider too. Speaking with an experienced property manager and getting advice from your financial and legal professionals will help you decide if adding the family home to your investment portfolio is the right move for you.
Remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.
Property condition reports are an important part of keeping accurate records about your investment properties. These reports are important as, while allowing for fair wear and tear, it provides all parties with a record of the property’s condition to make property maintenance and dispute resolution more straightforward. This article outlines what should be included in your property condition report to ensure it covers everything.
Start with the entry condition report
An entry condition report should include the working condition of all appliances, water and electricity connections, lighting, doors, windows, and other parts of the property. Any existing damage should be noted so it’s clear that the new tenants did not cause it. This may include things such as marks and dents on walls, carpet, kitchen benches and other surfaces. Once the landlord or property manager has completed the entry condition report, the tenant will then need to complete the document by comparing the condition of the property when they move in to the landlord’s or property manager’s notes on the entry condition report.
When new tenants move into a property, they have three days to complete and return the entry condition report. If the property manager agrees with the tenant’s comments, they need to share the completed report within 14 days. And if there are discrepancies between the property manager’s report and the comments made by the tenants, the property manager will meet with the tenant to resolve any issues.
Complete an exit condition report at the end of each tenancy agreement
As the name implies, the exit condition report is completed when the tenant vacates the rental property. The exit condition report compares the property’s condition at the end of the tenancy agreement to when the tenant moved in. Any new damage that hasn’t been documented on the entry condition report is deemed damage that happened in the most recent tenancy.
Items to include in property condition reports
It’s important to be thorough in property condition reports by following a list of all items to check room by room. Your property condition report should include a space to check and comment on the condition of all surfaces, fixtures and fittings. This is done most efficiently by splitting the report into rooms, including the property entry, loungeroom and living areas, kitchen, bedrooms, ensuite bathrooms, toilet, laundry, and outdoor areas. Other general items that should be included are smoke alarms, security systems, electrical safety switches, hot water systems, locks, remotes, and storage rooms or cages.
Establishing a thorough property condition reporting process provides documentation to determine who is liable for damage if it occurs. An experienced property manager knows how to ensure your property condition reports are thorough, your property remains in good condition throughout the tenancy, and any potential disputes are resolved efficiently.
Remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.
Don’t Make a Mistake: How to Choose the Right Property Manager
When it comes to choosing a property manager, it’s essential to make a decision that’s right for you and your investment property. Unfortunately, many landlords make the mistake of selecting a property manager based on the wrong factors, such as fees, location & more. In this blog post, we’ll take a closer look at how to avoid making the wrong decisions when choosing a property manager.
Look past the low fees!
One of the most common mistakes landlords make is choosing a property manager based solely on their fees. While fees are an important factor to consider, they shouldn’t be the only factor. A low fee may seem like a good deal, but it could be an indicator of poor service or lack of experience. It’s crucial to look beyond the fees and consider the level of service and expertise that the property manager can provide.
Low fees often mean low paid staff. When property management companies pay their staff low wages, they may struggle to attract and retain experienced and knowledgeable professionals. These staff members may feel undervalued and overworked, which can lead to high levels of stress and burnout. As a result, they may leave the company for better-paying positions, causing a turnover that can disrupt the continuity and quality of service for landlords and their properties.
Low-paid staff may also lack motivation to provide excellent service to their clients, which can lead to poor communication, slow response times, and other service-related issues. In contrast, property management companies that invest in their staff by paying them fair wages and providing opportunities for professional development tend to have lower turnover rates, resulting in more stable and consistent service for their clients.
Technology
Fees not only contribute to wages, but also for investing in technology in the property management industry. PropTech, which refers to the use of technology in property management, is advancing rapidly, and as our current software upgrades or new software is released, there are costs involved. It’s important for property management companies to stay up-to-date with the latest technological advancements in order to improve their procedures and provide better service to their clients.
By investing in technology, property managers can save time and streamline their operations, allowing them to focus on improving their service to landlords and tenants. For example, property management software can automate routine tasks such as rent collection and maintenance requests, allowing property managers to spend more time on communication and building relationships with their clients.
In addition, technology can also improve the overall tenant experience. Online portals for rent payments and maintenance requests can provide tenants with convenient and efficient ways to interact with their property managers, resulting in higher tenant satisfaction and retention rates.
Location
Another mistake that landlords make is selecting a property manager based on their location. While it may seem convenient to choose an agent that’s close to your property, proximity doesn’t necessarily equate to quality service. A property manager’s experience, expertise, and level of communication are far more important than their location.
Relationships don’t mean a thing!
Lastly, many landlords make the mistake of choosing a property manager based on their previous business relationships with a real estate agency. Just because an agency sold you the property doesn’t mean they’ll provide the best property management service If a franchise, those agents are usually contractually bound to refer in house. Given this, opt for recommendations outside of the sales agents company, based off personal referral.
It’s essential to evaluate each property manager individually based on their experience, expertise, and level of service.
At Hunter Property Management, we believe that the best way to choose a property manager is to do your research, ask for referrals, and evaluate each candidate based on their experience, expertise, and level of service.
Don’t make the mistake of choosing a property manager based on the wrong factors. Contact us today to learn more about our property management services and how we can help you maximize your investment.