When it comes to renting out your property for the first time, new Property Investors can make some big mistakes that can cost them dearly later on.
So to help you make the right decisions upfront, here are FIVE MASSIVE mistakes to avoid:
Don’t Choose Your Agent Based on Cheap Fees.
As the saying goes, cheap fees are cheap for a reason, and if you’ve selected an Agent because they are cheaper than others, just remember that they priced themselves cheaper knowing full well, what their competition charges. They have done so because they believe their services are likely inferior to that of the other Agent and they cut corners to meet their bottom line. Therefore, fee-charging levels give a good indication of Agency quality and their belief in what they deliver.
Don’t try and save a few dollars at the start of the relationship only to lose thousands later through agent negligence and cheap service.
Not Having Quality Landlord Protection Insurance
One of the great things about investing in property is that you can insure your investment, unlike the stock market or bitcoin. Insurance covers unforeseen and unexpected losses, and you can stand to lose a small fortune without the right insurance cover.
Whether you need to protect your rental income against financial hardship of the tenant (their circumstances can change at any time), damage and re-renovation due to narcotic production, loss of rent from the death of a tenant, to malicious and intentional damage… the list can go on.
Your standard building insurance will not cover you for tenant-related matters, and you also need to avoid taking out inferior landlord insurance coverage through a financial institution or even at the supermarket.
Only consider using reputable Landlord-specific insurance companies.
Renting to Family and Friends (without an Agent!!!)
Property investment should be ‘strictly business’, and renting to family and friends can spell trouble!
Getting emotionally involved or being taken advantage of by a family member or friend can quickly turn into a financial loss, leaving you with regret and wishing you never rented to family or friends in the first place.
We have successfully managed property for people who have rented to family and friends, including a set of parents who rented their townhouse to their son and his 2 best mates.
Renting Property Privately
Did you know that bad tenants avoid renting through an Agent and instead target Private Owners because they prey on their lack of experience? These Landlords don’t have stringent checking on a tenancy application form (if they actually even completed an application form).
If they have something to hide, in most cases, this will get overlooked or missed by a property owner trying to save a few dollars, NOT hiring a professional Agent.
Property Management is not for the inexperienced or unwary, and can quickly turn into a nightmare should wrong decisions be made.
Not Putting Money Back Into the Property
An investment property needs to be kept in good condition to attract and keep a quality tenant.
Every five to seven years, it will need new paint, carpets will likely need replacing every ten years, and now and again, it may need woodwork being painted and the general look and upkeep of the property kept in good condition.
When it comes to selling time, you want your property to be in the best condition possible to make it easier to sell it quickly at the best market price you can get.
Do you have any other recommendations? We would love to hear your comments below.
Do you have a property that you would like managed professionally?