Buying an investment property with the idea of renting it out to make money is a popular trend these days, but the ongoing costs of owning a home in Australia can be more than you might expect.
If you’re a new property investor in The Hills District, hiring a property manager might seem like an extra expense at first, but when you get the right team to help you with your investment property you can find that they save you not only money, but a lot of time and hassle as well.
Costs involved in property investment
The Commonwealth Bank lists 11 ongoing costs for owning an investment property, including the big payments like mortgage fees, taxes and renovations, as well as ongoing costs like council rates, strata fees, utilities, insurance, advertising and income tax.
While this list is a good indicator of what to expect, it doesn’t cover every eventuality like travel costs (if you need to drive to visit your investment property or stay overnight), the gap between tenants or things like pest maintenance.
The case for property management
One other fee you may have to consider is for a property manager. Although it is possible to look after a property yourself, this may not always be the best option.
Consider is the cost of your own time. Every hour you spend looking after your investment could be spent on other work or simply living your life – spending time with your family, on your hobbies or just relaxing.
While a property manager may seem like an extra expense, they can make your life a lot simpler and can often help you save money. A task like advertising for tenants isn’t something everyone can do well, for example.
A good property manager will hold a database of pre-qualified tenants they can draw on before they need to advertise your investment property.
If you’re self-managing your property, for a start, you’ll to:
- Advertise your investment property
- Show people around the property
- Vet the applicants
- Get contracts drawn up
As well, you might need to dip into your savings to cover costs for advertising and marketing your investment property, and any weeks your property is empty.
Something like this will be easily be covered by a property manager, someone who has vast experience in bringing people in when your current tenants give notice. Some managers also offer a guarantee to keep your home tenanted or they’ll cover the rent themselves.
Handling hidden problems
Unless you have experience in managing property in Castle Hill, Baulkham Hills or Kellyville, there are certainly going to be new issues that crop up from time to time.
As well as the application process, there are plenty of (often overlooked) specialities involved in managing a property.
Your experienced property management team, with local knowledge, will have encountered these challenges many times. Use their expertise and you’re well on the way to a smoother operation.
“Your investment could be worth over $1 million. Looking after that yourself might not be cost effective.”
One of the biggest considerations is the size of your investment, which could easily be $1 million or more. Trying to look after that yourself might not be the best use of your time.
What happens when your tenant goes rogue?
When you have the perfect tenant and a well-maintained property, property management seems easy. But when you get someone in who struggles to pay bills on time, who wants to break the lease early or who damages your property, it can be hard to get money off them promptly.
When you have your own bills and mortgage to pay, it can be a very stressful period, especially if you have to hire a lawyer and go through the courts.
Again, property managers are experienced in dealing with these situations when they arise, which is rare if they have a strong tenant vetting process in place. Some property managers will even go to court for you, should the need arise.
Your investment property and negative gearing
If this is your first investment property, you might be unaware of how negative gearing works. Put simply, if your expenses on a property are more than the money you receive from it, you may be able to reduce your taxes through negative gearing and even make long-term profit through capital gains.
As with any investment strategy, there are pros and cons with negative gearing. Your property manager will be able to talk you through this and how to make sure it’s all by the book. Unless you’re experienced in the matter you may find it a stressful adventure.
Lower-cost maintenance of your investment property
Unless you know someone who can help with the upkeep of your property (whether that’s regular work like gardening or one-off jobs like fly-screen repair), you may find getting a suitable quote that’s affordable and that offers high-quality work is hard to come by.
Property managers generally get a better rate from the top maintenance firms simply because they can offer them more work. Rather than quoting for a one-off job, these companies can secure more work by aligning themselves with a management firm with multiple properties in their care.
Catherine Madders from our Stone Hills District team notes that the Stone property management team has vetted all the licensed tradespeople we use. After comparing prices and quality of the work, the team is confident that the tradespeople on call offer the best value for money.
“A good property manager gets a better rate from a trusted team of tradespeople.”
The other often-quoted issue with tradespeople is that it can take an age to get the work done, with quotes slow to arrive, and work going over budget and missing deadlines. Supervising them and chasing them up to complete jobs can be time consuming and an irritation you could do without.
This is yet another task you can entrust to your property manager.
It’s the job of your property manager to chase up quotes, make sure the work is done in a timely manner, and to communicate with all parties to ensure that both you and your tenant are satisfied with the work once it’s completed.
Ongoing support for investment properties
Property management throws up surprises on a regular basis, and going it alone can be a struggle.
Staying abreast of changes in the law (including the new strata laws), knowing what’s happening in the market and making sure you keep up with all your compliance obligations can be time consuming in itself.
A qualified property manager will be able to help you with this, saving you time, stress and a potential lawsuit. Not only will you get notified when you need to make changes or take action, you’ll also get regular updates so you know when you should be thinking about increasing your rent or whether selling might be in your best interest.
As with any walk of life, there’s a lot more to property management than first meets the eye. From unexpected costs to ongoing correspondence, there are plenty of benefits to getting professional help.
If you’re trying to manage your investment property in The Hills District, why not give our team a call and let them take the burden from you?
Gain expert support and advice
Whether you’re selling or buying a property, as a home or investment, contact us for professional help!