Buying your first investment property is a milestone to be proud of – you own a valuable, income-generating asset! What matters now, is that you get the most from your property.
As a first-time investor, it can be easy to overlook the importance of effective management to the long-term success of your portfolio, resulting in many buyers falling short of their potential ROI.
Below, Momentum’s experienced team of property managers share their top five first-time investor tips, to help you harness your property’s full potential.
1 – Don’t underestimate the importance of your lease contract
Your lease contract with tenants is an important document. It sets the ground rules for the tenancy and plays a critical role in protecting you and your property from unexpected costs.
While you may be given the option to sign an industry-standard lease, take a moment to think beyond this, and consider whether you would benefit from adding lease clauses that provide additional protection.
This may include a clause protecting outdoor areas from damage due to parking on lawns, or preventative measures to protect floorboards from factors such as moving furniture or scratches from pets.
Get the lease right at the start of the tenancy, and you can avoid unexpected – and unwanted – expenses further down the line.
2 – Think long term when onboarding tenants
As a first-time home investor, bringing your first tenant on board can be satisfying and rewarding – you’re about to start earning rental income!
But don’t just jump in straight away with the typical 12-month lease term.
The time of year you sign a lease can impact how readily you’ll be able to secure a new tenant when the lease expires.
Certain times such as winter and the festive season tend to have weaker rental demand, so if you’re onboarding a tenant over these months, you might want to consider a longer lease term.
This will prevent the lease expiring in a low demand period in the future, setting you up for success when you next onboard a tenant. And you could be surprised by how many tenants, especially families, will welcome a longer lease.
Similarly, give some thought to the market conditions in which you’re leasing.
In periods of high tenant demand, rents can rise quickly. This could be extra income that you are missing out on. The solution can be to add a lease clause that allows for a small periodic rent increase. This ensures the property’s rent continues to move in line with the market.
One advantage of the Perth property market is that rent can be increased every six months if you follow the correct processes. In other states such as NSW and Victoria, rent increases can only occur once every 12 months, giving less opportunity to recoup increases in market value.
3 – Small changes can have a big impact
Your property manager is a source of expert advice. So, before leasing out your property, be sure to talk to your property manager about steps you can take to command a higher rent.
This can be especially important if the property is a little worse for wear.
For rental properties in popular locations, even minor cosmetic enhancements can make a big difference to the tenant appeal of a property. This can feed through to a higher rent return, as well as help the property attract a higher number of quality tenants.
Speak to a property manager who understands the local area, and can help you make objective decisions about where money is best spent on your property. A well-informed property manager will be able to guide you on the features that are most in demand from tenants in your location.
4 – Take a proactive approach to maintenance
All properties are subject to wear and tear over time. This makes regular inspections a must.
But a quality inspection goes beyond checking there are no scuff marks on floorboards.
As an investor, it is worth opting into regular safety and maintenance checks. This can include gutter cleaning, pest inspections and RCD checks (testing of electrical appliances).
This not only ensures your property remains in good condition so that you can continue commanding strong rent; it also prevents a minor issue becoming a major – and potentially costly – problem.
A proactive approach to property maintenance also provides peace of mind that you are staying on top of your legal responsibilities as a landlord to provide a safe dwelling for your tenant.
5 – Maximising returns isn’t just about managing tenants
Successful property investing is the sum of many parts.
Yes, effective tenant management plays a key role. But there are other aspects to address that can help you maximise rent returns – and the long-term value of your investment property.
These types of strategies often extend beyond property management in the traditional sense, and involve factors like regular reviews of your investment loan. Simple steps that can cut costs and deliver enhanced cashflow.
Effective management also involves assessing your property for potential strategies, such as dual-income tactics, to boost its value and rent returns. It’s an area where the collaboration between our teams at Momentum Wealth offers real advantages.
It’s this holistic approach that can see you get more from your investment property than you thought possible.
Download our property management brochure for investors
And there you have our top five first-time investor tips from our property managers! If you would like to find out more about our property management service at Momentum Wealth, download our free property management brochure for investors via the form below.