The thought of owning and letting out property is an appealing financial venture to many. However, there is more to being a landlord than collecting the rent each month.
Depending on the circumstances, owning a rental property can be fairly time consuming and involving, especially if you decide to manage the property yourself.
It is possible for the endeavor to be financially rewarding, but it is vital to be fully aware of what it entails before taking the leap. Understanding what is involved and doing some research on the matter will put you in the best position to handle whatever may come your way and increase the chance of making it a success.
Here are five aspects that all potential landlords should think about when considering getting into the property rental business:
You are in it for the long haul
Property should be considered a long-term investment – it takes time for property to appreciate in value and build equity. A rental property will likely get to the stage that it is paying for itself, or ideally making a profit – but this will take time. While possible, it is rare that the rental will cover all the costs from the outset.
The bond won’t be the only expense
Landlords need to be privy to the additional costs other than the bond; aspects to take into account include general maintenance, insurance, rates and taxes and possibly the services of an attorney or a professional rental agent.
An attorney is a valuable asset when it comes to drawing up lease agreements, as well as providing sound legal advice regarding your rights and responsibilities, while the latter will take care of screening and vetting tenants, collecting the monthly rental and general management of the property.
Have a checklist
This list should include all items you need to go over when a tenant moves in and again when they move out, to ensure that nothing is overlooked. It will help you to assess the property and ensure that it is in good condition when handing over the keys. The same checklist can be used to compare the condition of the home to its state before the tenant took occupancy.
Make sure contracts include all details
All stipulations should be stated upfront in a detailed contract to avoid any future complications or misunderstandings. The more detailed the contract, the better, as there is less chance of any ambiguity.
If aspects of the tenancy are dealt with in the contract, there will be no areas left open for interpretation. Factors such as acceptable tenant behaviour, breakage costs, preferred method of payment and date that the rental is payable by should be all included in the document.