Recently a friend of mine told me about a seminar he attended. Run by a finance company hoping to supply my friend with a loan, it was called “Everything you need to know about becoming a rental property owner.”
For those new to the world of rental property ownership or those thinking about buying, here’s a summary of the wisdom shared—and don’t forget to read the entire list, number eight might surprise you!
1. Learn to listen
New Zealanders like to think we are experts at everything (and a lot of the time we are!). However, we can also learn a lot by listening to others and seeking out advice.
If you’re thinking of buying a rental, ask around. Ask friends who already own rentals to share their experiences, and ask the advice of a reputable property management company, after all, they are the experts!
2. Be strategic
Not every property makes a good rental. Remember, the property you purchase is not for you to live in; you are hoping to make a profit from it. That means thinking carefully about a number of factors including:
- the size of the property you invest in
- the property’s building materials
- the kind of tenants you will be targeting, e.g. students, families, young professionals, etc.
Think about the answers to these sorts of questions and spend your time searching for properties that match your target.
3. Location, location, location
Like we just said, it pays to remember, you are not going to live in this property. It’s for you to profit from. That means you want a location that is attractive to potential renters.
A property that you find attractive may not suit potential tenants. In the same way, a property you’d not want to live in, may be ideal for some tenants. For instance, not many people would want to live with a bus stop outside their front gate—unless you’re a student looking for a flat to rent that is close to public transport so they can travel to university each morning.
4. Be clear about your goal
Before you buy a property you need to ask, “How long am I expecting to own this?” In other words, are you hoping for a small but quick profit? Or are you thinking long-term and making this a part of your retirement fund?
Your goal will affect the type of property you purchase, the location of that property, and how much money you’re prepared to put into getting it to a state where it is attractive to tenants.
5. What’s the worst that could happen?
When we think of owning a rental, we tend to think of a steady flow of rental income for 52 weeks of the year. That doesn’t always happen. There will be times when you’re without a tenant. And there may be times when your property is unable to be tenanted, e.g. if the property catches fire and needs renovating. Insurance will cover the renovation, but not always the loss of rent.
These possibilities need to be taken into account when thinking about becoming a landlord.
6. Decorate accordingly
Remember, just because you like a colour, doesn’t mean potential tenants will. It’s best to forgo your love for outlandish interior design and keep your colours neutral and serviceable.
7. Resist being greedy
You want to get a fair rent—that means a rent that is fair to you and fair to your tenants. Remember, if you have good, reliable tenants, it’s worth doing all you can to keep them! That may mean a slight rent discount, and will always mean keeping up maintenance on the property.
8. Employ a property manager
This last one was interesting. No one at the seminar (run by a finance company, not a property management company) really expected this.
The seminar presenter said, “The goal of a rental property is like any other investment; it’s to maximise your profit. And, the way to maximise your profit on a rental is to let a professional manage it.”
It makes sense. A good property management company will ensure:
- you receive the best possible rent
- your property is well maintained
- your tenants are treating the property well
- new tenants are found quickly when required
- rents are paid consistently and on time.
“It makes sense,” said the seminar presenter, “to let a professional handle what is a specialised task.”
If you want to maximise the benefits of owning a residential rental property, contact Sam and Stacy at Chase Property Management. We’re rental property management experts, servicing the North Shore, Hibiscus Coast and Central Auckland.
Phone Stacey on: 09 213 7445 or email: email@example.com
Phone Sam on: 09 213 7444 or email: firstname.lastname@example.org