3 of the biggest mistakes that new landlords make
Thu March 16, 2017
There are countless ways that keen investors can get into the Sydney property market. Options include everything from the booming apartment developments to less expensive 'rentvesting' opportunities further from the city centre. Regardless of the type of property that buyers choose to pursue, there are a lot of similarities when it comes to renting it out, and securing a stable flow of cash to make the investment worthwhile.
However, this is easier said than done, and plenty of first-time investors find being a landlord quite challenging - especially if they don't have the assistance of an experienced property manager. To help you avoid these trials and tribulations, we've compiled a list of three of the most frequent problems that first-time landlords encounter.
It's far better to have stable income than intermittent payments from renters who can't afford to pay a higher price.
1. Setting rent too high
It makes sense to try and get the very best rental income from your property, but many landlords set their prices far too high, especially if they have completed renovations they feel will increase the property's value.
The truth is, it's far better to have a stable income from tenants who always pay on time than it is to have intermittent payments from renters who can't afford to pay a higher price. In many cases, setting the rent higher than similar houses will lead to longer periods of vacancy, and less demand from potential tenants. These periods of vacancy are death to a property investment, and should be avoided at all costs.
2. Consider maintenance costs
Another common issue that many landlords come across is maintenance, and this comes from a lack of understanding of just what they are responsible for as the property owners. According to the Residential Tenancies Authority, landlords are responsible for the overall condition of their property, and for ensuring that it is fit for their tenants. This includes everything from looking after appliances such as the oven and dishwasher through to smaller jobs such as blocked drains. Over time, the costs of these repairs can stack up, especially if the property was in poor condition when the tenants moved in.
As a general rule of thumb, the tenants are only responsible for damage that they cause, as well as the general cleanliness of the property. There are exceptions to this rule, with one of the most common being mowing lawns and looking after gardens. In most cases, this is actually the job of the tenant, but this should always be stipulated in the tenancy agreement.
Landlords need to be very aware of the rules surrounding entry to the property, and should always make sure to provide the correct notice.
3. Being too hands on
If you're not working with a property manager, it can be tempting to get a little too involved in the day-to-day aspects of being a landlord. This is easy to understand, after all, it's an expensive investment, and every buyer will want the peace of mind that their property is being well cared for.
However, this can occasionally cross over into behaviour that disrupts a tenant's right to peaceful enjoyment of the property, which is their home while they are renting it. Landlords need to be very aware of the rules surrounding entry to the property, and should always make sure to provide the correct notice. For a standard inspection, this notice period is seven days, but you'll also need to keep in mind that inspections can only happen once every three months.
Of course, these are only a few facets to managing a property. In many cases, the easiest way to make sure your investment runs smoothly is to work with a seasoned property manager. In our next article, we'll look at the other side of the coin and examine a few of the common mistakes made by tenants.
To find out more, contact Laing+Simmons today.