Managing An Investment Property

A beginner's guide to investment property management...

So you found the perfect investment property, it’s located in a rising market with new developments springing up all over town and you’ve finally sorted out the financing and mortgage issues. Great, but how are you going to manage your investment, keep all parties involved happy and maximise your returns? Buying the house is only half of the journey when it comes to investment property, you need to manage your asset effectively and efficiently else it may prove more hassle than it’s worth.

Remember, unless you hand over full control to somebody else (which probably means you don’t need to be reading articles about investment property) you are the landlord and you need to interact with your tenant. That doesn’t mean take them out to dinner every day, but if you fulfil your obligations and legal requirements coupled with some common courtesy, you shouldn’t have any problems with the average tenant. This means not randomly putting up rent prices when you need extra cash, letting the place fall to bits or being rude or dismissive of your tenant’s requests.

That being said you actually need a tenant in the first place. To understand the best rent rates to advertise you need to research the market; check what other landlords in the area are charging and set your rent level accordingly. You may have to be price sensitive because leaving the property empty for two months is a loss of income and is far worse than having it occupied all the time for a slightly below market rate.

Consider taking out landlord insurance that will provide you with some comfort should your tenant cause any accidental damage during their tenancy.

Investment property should be treated like a business and all businesses need up to date paperwork and accounts. If you leave everything until tax day and have to search around like a madman for all your stray documents you’ll regret not updating your records. Do it on a monthly basis and you’ll thank yourself in the long run. Remember if you stay on top of the boring stuff it makes it easier to claim tax deducts for depreciation.

As alluded to earlier if you have plenty of other streams of income and your time is best served elsewhere you can in fact delegate a lot of the management work to other people. For a fee you can have a property manager do all the hard work, property inspections and even arrange maintenance procedures. Just make sure they are a reputable company - ask for references and interview them well, after all, they are managing a very valuable asset.

Like doing anything successfully in life, taking your time, doing the research and staying on top of the work can make managing an investment property a lot easier than you may think.