So, you think you can be a landlord?

If you’ve kept up with the C&G Facebook page lately, you’ll have noted our focus on the process of becoming a landlord. For those of you who have responded with a resounding head nod to the proposition- those who’ve jumped straight on the web and started searching for your first investment property – this blog is for you. Today C&G discuss the pros and cons of landlord-hood, and ways to succeed in property investment. 

In Australia, we absolutely love real estate. In fact, one in four Aussies is a landlord. Real estate is a fantastic investment (especially considering the upward market trajectory of recent years), and when executed properly there’s often serious money to be made. Because real estate is considered such a great way to build wealth, would-be landlords often see it as an ‘easy investment’. You buy a property, rent it out, and cash in on the rental income. Simple, right? Not necessarily.

Sure, buying a property to lease is a good way to invest your money. Generally, properties in built up areas close to the city, convenient to employment, public transport and schools appreciate - meaning that should you sell your investment in future, you’ll make a profit. Landlords are additionally attracted to investment property for the tax benefits they reap - as many costs from maintaining a rental property are tax deductible. Such costs include repainting and upgrading, maintenance of wear-and-tear and accounting and property management fees. 

Yes – being a landlord offers plenty of benefits. Bear in mind, however, that there are a number of notable pitfalls that newbie landlords can succumb to. Primarily – that self-managing a property to save funds on professional property management is a good financial move.  How hard can it be?

It’s incredibly complex actually – which is why seasoned investors would never consider building a portfolio without a trusted property manager on-call.  Managing a property is a demanding role which takes time, emotional intelligence and a thorough understanding of legislation. Your liability as a landlord is significant, should you neglect any element of property maintenance that leads to an accident. You also stand to lose income if you are not in a position to firmly manage any rental arrears your tenant might fall into. Additionally, you’ll need to ensure you have appropriate landlord insurance to cover your investment and any losses you might incur.

All landlords should also work towards having an ‘emergency fund’ available – something to draw upon quickly for when things go wrong with your property.  Hot water systems, appliances, leaks, broken heating or cooling systems - ensuring these items are in good repair is your financial responsibility. Think carefully: if you are unable to afford the maintenance of a property or to hold up your ‘side of the bargain’ as a landlord – it might not be the investment category for you.

Overall, investing in a rental property can be a sound investment, providing you do your research beforehand and use professional property management support services. A property manager will help ensure your investment is kept in good condition, your tenants are reference-checked, and that bond lodgement (and return) is properly handled. Chisholm & Gamon’s property management team are experienced, friendly and happy to discuss management options with you if you are thinking about becoming a landlord.