How to manage an investment property
There are two basic options when it comes to managing an investment property – the DIY option or employing a management agent to do it for you. Either way, there are costs involved that you may not have considered. Here’s our straightforward guide to managing your investment property.
Employing a management agent vs. Going it alone
Management agents deal with tenants and repairs etc. on your behalf and their fees are tax deductible. It’s a great option if you can afford it and don’t want the hassle of dealing with everything yourself.
If you choose to self-manage remember that you’ll be responsible for everything including tenant management, rent collection and repairs.
Building insurance will cover you for full building replacement in the event of a catastrophic event like a fire. You should also consider tax deductible landlord insurance for protection against tenants damaging the property or absconding without paying the rent.
We also recommend income protection insurance, particularly if you’re relying on part of your income to cover repayments and other expenses.
Renovations & Repairs
An investment property is just like your own home and will require on-going maintenance. It’s important to have money set aside to deal with regular maintenance like replacing the washers in the taps as well as unexpected things like ovens and stove tops needing repair or replacement.
Renovations should only be carried out if you think it will increase the amount of rent you can charge or make the property easier to rent.
A home loan calculator is a great way to factor in all of the expenses involved in owning an investment property. Consider the costs outlined above as well as the other costs of a home loan – things like loan fees and charges, stamp duty, the impact of changing interest rates etc. – before you make any investment decisions.