Owning a Rental Property - Two Things You Need To Know
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Articles by John Heaslip
All property investors will want the same thing: a vessel to create greater wealth for their futures and to provide passive income. Obviously rental yield, capital growth, tenant quality and demand will be your main concerns but here are just two tips to help you make the right decisions to capitalise your returns and keep your property safe.
Maximising RentThe time to maximise your rent is when you first make your property available to tenants, or when re-renting. At this stage try advertising for the top of the range – the market will soon let you know if this is attainable. If not, a reduction may be advisable so you don’t have it vacant for long.
- Often increasing the rent to the maximum possible, or
- Not increasing the rent at all.
On the other hand, if you fail to increase the rent, it is lost revenue and it makes it difficult to raise it to market rates at a later date. If you use a property manager, they should already know the market rent rates and be assessing these every three to six months. If you manage the property yourself, the same applies but you will need to complete your own research by asking real estate agents, completing due diligence etc.
Finally, tenants who look after the property and pay their rent on time are worth looking after. If you look after a tenant they will also respect you and the property in return.
Insuring your Property
In a recent New Zealand Herald article by Diane Clement, she overviewed the issue of landlord insurance.
In essence, the article highlighted the need for landlords to check and understand the fine print of their insurance policies. She says just because a policy has “Landlord” attached to it, does not mean it actually covers the risks faced by a landlord, some of which are as follows:
- Malicious damage or theft by a tenant
- Loss of rent for accidental or malicious damage, abandonment, or eviction
- Landlord’s contents, i.e. floor coverings, blinds and drapes, dishwashers etc
- P-lab found on property with no tenant references or regular inspections.
Remember, owning a property is not a ‘buy, get a tenant and never look at it for the next 10 years’ arrangement. You are now a business owner and it’s important to run your investment as a business, keep the rents at market rates or just under, and check your insurance policies every year to identify any risks you are not aware of.
John Heaslip
Business Advisory Director
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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