Simple mistakes landlords should avoid
Knowing how property investment works is essential, but knowing what to avoid is also key to success.
Whether you’re new to property, or a seasoned investor, here are some common mistakes to avoid.
Not doing research or due diligence
Property does offer some great investment and wealth creation opportunities – but only if you’ve done your research and due diligence and are comfortable you have all the information to enable you to make sound decisions.
Know what makes a good investment property and what doesn’t, speak to experts and consider all the risks, particularly if you’re having to stretch yourself financially.
Under estimating essential maintenance
A property will always experience some wear and tear from time to time – it will need painting, and carpets and appliances will need to be replaced.
Landlords do need to account for this when they are doing their budget, and also ensure they have some extra funds should an unexpected event, such as a broken window or storm damage occur. While insurance may cover many unexpected events, there may be some up-front costs, out of pocket expenses and/or excess to pay.
Not getting the right insurance
Many landlords would be familiar with (and probably already have a form of) building and contents insurance, but landlords do need a policy that is specific and covers a wide range of tenant-related incidents.
For instance, recent legislative changes give renters more rights, including the right to have pets, so it may be worth considering cover for pet damage.
Sometimes you get what you pay for; we have seen landlords taking out an insurance policy because it was cheaper, but in the event of them putting in a claim, it turns out they aren’t covered.
Always check the fine print and if you’re in any doubt, ask if you will be covered for a situation before you purchase the cover.
Failing to maximise on tax-deductions
Failing to keep a record of all property-related expenses could lead to missing out on thousands of dollars in the form of tax deductions.
Having a property manager can help you stay on track with expenses such as body corporate fees, council and water rates, cleaning and maintenance, and property management fees are also a tax-deductible expense.
Even if you have purchased an older property, it’s worth getting a professional thorough site inspection to identify all eligible assets and accurately determine depreciable values.
Selling out of fear
While vacancy rates are low, the interest rate rises may have got some landlords a bit jittery, and some think they should sell.
But before they do, we suggest take a big step back, review finances and consider all options and look at every potential outcome before committing to selling your asset.
Selling does incur costs – not just in terms of the selling costs, but there will be tax implications too.
Cutting corners
Some property investors try to cut corners by self-managing their investment and while it is possible to self-manage your property, the positives for using a property manager far outweigh being a self-managed landlord; they save you time, and money, it’s a tax-deductible expense, and they keep you legal!
But with so many property managers out there, how do you know what makes not just a good property manager, but an excellent one? Take a look at our blog on what makes an excellent property manager!
If you are thinking about getting into property investment and want to know more, or you already have a property, and want to know how our property management services can save you both time and money, give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or call into our Cardiff office.
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