Investing in real estate looks like a great idea on paper. You just buy a place in a nice area, find tenants and let the cash roll in. However, there are some matters you have to consider first.
Here we provide a rundown of some pros and cons of owning rental property and give you a few tips on how to turn a profit!
The advantages of rental real estate are quite substantial. When you own real estate, you own a tangible asset. You can do many things with property. You can paint it, renovate it, add value to it, and use it as leverage to buy other properties or keep it for your retirement fund. In most cases property will increase in value. Repairs and maintenance expenses and property management fees can also be tax deductible, meaning before long you could be running your very own small business.
For every upside, there is a downside, and rental property is no different. You may be exposed to unexpected expenses like faulty wiring, bad foundations or a leaking roof etc. It pays to undertake thorough due diligence and building inspections before purchasing any property to help mitigate your risk. There is always a slight chance that tenants can go bad. Unfortunately, almost every landlord has a story about a situation where a tenant has either missed rent payments, damaged the property or caused other issues.
If you are managing your own investment property, always conduct thorough back grounds and credit checks on all prospective tenants. We advise the use of approved legal tenancy agreements and recommend you have a comprehensive landlord insurance policy specifically for a rental home. You should inspect your properties regularly (we recommend every 3 months) and take photos for your records. Finally, have some emergency funds set aside in the event of the unexpected happening.
Our advice is to know the rules!! The Residential Tenancy Act, as is any Act, is not always easy to interpret. The tenants are becoming a lot more aware of their rights and even taking advantage of private landlords - another good reason to use a property manager!
This is another good reason why you should use the professional services of Click Property Management!
Our sole job is to manage residential properties and we deal with tenants all day every day. We have fully trained staff who can identify any issues before they come a problem, mitigating your risk and making investing in property an enjoyable experience. We take the hassle out of owning rental property – so you can enjoy doing the things you really want to do.