Blogger: Jarrad Mahon, Investors Edge Real Estate
So, you are thinking of buying an investment property. You have done your due diligence and decided that you want to be a landlord. Welcome, but remember that nobody is guaranteed success. Here are seven tips to help you hit the ground running and avoid first-time mistakes.
Property investing is a business
If you only come away from this article with one helpful idea, let it be this one. You have to treat your property investing as a business. Property investing is competitive and I will guarantee that most of your competition is treating it like a business. You should have a solid business plan before you buy your first investment property.
Whatever the case, treat it like a business: because that’s exactly what it is.
Numbers, not emotions or personal taste
A lot of people buy properties they would want to live in and subsequently decorate them like they would want them decorated. This is a great way to remain an amateur property investor. Instead, make all buying decisions on solid numbers and demographics. When decorating, be conservativ - paint with neutral colours that will suit everyone.
Repairs and maintenance
Always keep your property in a state of good repair. Nothing deteriorates in value faster than a property that is not maintained. Keep everything repaired and use touches like fresh paint and updated appliances to keep your investment property competitive on both the rental and sales markets.
Keep your distance from tenants
We know that it is tough for a nice person not to be friendly with anyone. But we also know that the last thing you want to do is become personal friends with your tenants.
Tenants will inevitably find a way to take advantage of your friendship, whether intentionally or unintentionally. One of the most common problems that landlords who are friends with their tenants have is that the tenants think it is “OK” to be late on rent payments. Because you are their friend, they think you will be “understanding”.
Don’t put yourself in this position; keep your distance from your tenants.
In many cases, a tax professional can find a lot of depreciation in a rental property that you didn’t know was there. Always hire a tax professional to create a depreciation schedule for any rental property. This provides more operating income for you to help grow your portfolio. The cost will be well worth it.
Charge enough rent
Don’t be afraid to raise rents as the market goes up. Keep an eye on the market and charge as much as you can. If you don’t, you are throwing revenue away. When a tenant is prepared to pay market rent from day one, it is just a matter of process when the time comes to review it.
Hire professional property management
If you try to “go it alone”, it will cost you far more than the money you will save on fees. In addition, you will be spending time that is better spent doing whatever you do best to make money. Hire a professional - they are well worth what you will pay them.