Property investing is not easy, it isn't a matter of buying the property, finding a property manager and a tenant who pays their rent. Property investment should be considered as a long term "BUSINESS" plan. You would be surprised how many landlords hunt down the cheapest property, the cheapest agent and not doing their due diligence with maintenance.
Here I am going to identify the 3 biggest mistakes landlords make:
1. Too focused on finding a cheap property to buy and expecting good return.
Yes it is possible to find a property for a cheap price and get good return on value, but is it a property that requires more maintenance or renovations down the track to maintain it's value. Where is it located? What is the demographic like? Will the "cheap" property attract the quality tenants you want and need in order to keep the value an income flowing in?
HOW TO AVOID: Gain the help of a local agent, provide them with your ideas, your 'BUSINESS' plan, your budget, features you want etc and they can assist you in finding the ideal investment that will provide you everything you want and need, now and in years to come. Do additional research, speak to your mortgage broker, call local councils, call some local schools, call conveyancers. If you do the hard work... the reward will come.
2. Too focused on finding the agent that will offer the cheapest management fees.
I see this happening far too often and it is NOT the way to become a successful property investor. Like I mentioned above, think about your property as a 'BUSINESS' and treat it like one. Is the cheapest management fee going to offer you a cheap service? If the agent is willing to reduce the fee just to get your business, does this mean they have no negotiating skills or power when it comes to negotiating issues with tenants? Will they keep dropping their knees to the tenant and therefore the agent not working in your best interest?
There is so much involved into property management, it isn't a matter of just collecting the rent and doing inspections (as many think it is). It is about; getting the right tenant for you, inspections, leases, insurance, tax, improvements, rent increases, discussing ways to improve return, communicator, mediator, counsellor, maintenance manager and the list goes on.
HOW TO AVOID:
Research! Look at their social platforms, online reviews, website, the content and information they provide. Ask questions and lots of them. Who will be managing my property? Do you own an investment property? How experienced are you? What difficult situations with tenants have you had and how did you resolve them? What is your maintenance routine? How will you determine my rent increase and when? What staff turn over do they have? What are their communication methods? You need to start thinking smart...remember this is your financial future and leaving it in the hands of the cheapest agent isn't necessary the best decision.
3. Landlords not doing maintenance or upkeep on their property.
It is a very common pattern and I would say not ideal from a business perspective. Owning an investment property isn't just a set and forget investment. It is no different to a car, you must service your car in order for it to run well and retain it's value. Well guess WHAT! Your investment property is exactly the SAME! Doing regular and ongoing maintenance to your property will help with the longevity of your appliances and the value of the home. Leaving maintenance requests will not only decrease the value but also make your tenant very unhappy and then their relationship between the tenant and looking after your home is severed.
HOW TO ADVOID:
Here are some simple steps and ideas to maintain your investment property and retain the value through ongoing care and maintenance:
- Organise every two years service on a/c, heater, oven, dishwasher
- Have the gutters cleaned out every year prior to the winter months
- Organise a pest inspection and spray every year
- Smoke alarm serviced every year
- Complete any additional maintenance request the tenant has noted throughout the tenancy within two weeks
- Organise a professional to come and trim all trees and shrubs each spring
Property investing is not easy, take the time, do the research and PLAN! Good luck!