4 Things You MUST Know as a Property Investor
Whether your investment properties are positively geared, and you’re enjoying consistent cash flow, or you’re looking to use the long-term capital growth in your property to propel your wealth-building, there are some key things you need to know as a property investor. If you’re not aware of these things, you could find yourself with unexpected problems and expenses, which can impact your investments. Keep reading to learn the key things you should know as a property investor so you don’t get any nasty surprises throughout your investment journey.
1. Landlord’s insurance is a smart investment
Your investment property is likely one of your most valuable assets, so it makes sense to protect it. While landlord’s insurance isn’t compulsory, it is a good idea to take out a policy that covers you for things such as damage caused by water leaks, plumbing issues, and if a tenant deliberately damages your property. Some policies will also cover you for lost rental income if your tenant vacates unexpectedly or stops paying rent. Some policies also will cover you against pet damage if you have pets at the property – it always pays to check the fine print carefully for coverage options.
2. Budget for ongoing costs when you buy
Sure, you’ve probably worked out your mortgage repayments and secured pre-approval for a loan, but have you factored in the ongoing costs of having an investment property? Make sure you budget for expenses such as land tax, council rates, water bills (where applicable), and strata or owner’s corporation fees for townhouses and apartments. In Tasmania, a lot of investors are unaware of landtax and what this means until they get an unexpected bill.
3. Keep up to date with regulation changes
Tenant legislation is constantly changing across jurisdictions. And with the proportion of renters in the community increasing, there’s a general trend for legislation changes to be more accommodative of tenants. For example, in Victoria and the ACT, landlords may not be able to refuse a tenant’s right to have pets at their property however here in Tasmania, the owners still have choice over this aspect when selecting a new tenant. With changes like this becoming commonplace, it becomes even more important to secure great tenants who will not only look after your investment but make sure any four-legged family members don’t damage your property.
4. Make sure your property is safe
Fire alarm legislation is another area constantly changing. Your property manager will keep you updated on these and similar changes. However, you should make sure you always have funds set aside for compliance activities, such as upgrading your fire alarms if required and always ensuring the switchboard is compliant is another handy tip.
Having an investment property is rewarding in many ways, but you need to make sure you’re aware of your upfront and ongoing costs and potential risks. Factor in the items above for your current properties and future purchases to proactively manage your expenses, address problems and stay on track with your wealth-building goals.
If we can help talk you through any of these pointers, please feel welcome to reach out.
Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.