A beginner’s guide to property investment

For first-time property investors, it can be difficult to know where to start. According to landlord insurance specialist Terri Scheer Insurance, investors who take a long-term view which extends further than the first open inspection can create a positive experience throughout the life of their investment. Terri Scheer Insurance general manager Carolyn Majda said property investors should have a clear investment plan before they start searching the real estate section of the paper.

Think about the type of tenant you want to attract. Ms Majda said a tenant could make or break a landlord’s experience of owning a rental property. ‘‘When choosing a property to invest in, think about the tenant demographic you want to attract, for example a family, sole tenant or couple, and choose a home that is likely to appeal to them,’’ she said. ‘‘Properties that are close to good schools, shops and public transport are likely to be well sought after and may give you a larger pool of prospective tenants from which to choose.’’

Look for a lowmaintenance property. ‘‘A property that requires as little maintenance as possible will make life much easier for both tenants and landlords as it will minimise the effort and cost involved in the upkeep of the home,’’ Ms Majda said. ‘‘Look for properties that are free from safety hazards, such as large trees in the backyard, as they can give rise to legal liability claims if someone is injured by debris at the property. ‘‘Homes with hard flooring rather than carpet make good rental properties because they are easier to clean. ‘‘Outdoor areas that are paved also require minimal gardening by the tenant.’’

Would you want to live there? Ms Majda said a home which was poorly presented by the landlord may be poorly cared for by the tenant. ‘‘No one wants to live in a property that has stained carpets and marked walls,’’ she said. ‘‘If you are planning to renovate a property before renting it out, consider painting the property using washable paints and installing hard flooring. ‘‘Presenting a clean, tidy and well cared for property will encourage tenants to treat the property as if it were their own. ‘‘Tenants may also be more likely to pay their rent on time and stay in your property longer.’’

Do not leave risk management until it is too late. ‘‘Too many property investors overlook risk management until after the tenants have moved in and something goes wrong,’’ Ms Majda said. ‘‘Every landlord should have a tailored landlord insurance policy that covers them for risks like malicious and accidental damage, loss or rental income, and potential legal liability. ‘‘Even the best tenant can accidentally damage a property or lose their job and be unable to pay rent. ‘‘Adequate landlord insurance can protect your investment, ease concerns about receiving regular rental payments and provide peace of mind if the unforeseen should occur.’’

Consider appointing a property manager. ‘‘A property manager can help you to secure good tenants, take responsibility for conducting regular inspections, alert you to maintenance requests, address potential liabilities and help to ensure your property is well cared for,’’ Ms Majda said. ‘‘This is particularly relevant if you are thinking about investing in an area that is far from where you live or if you cannot commit significant amounts of time to manage the property yourself. ‘‘While the total costs associated with appointing a property manager vary, landlords are generally required to pay an upfront letting fee that might be around two weeks’ rent, as well as an ongoing weekly fee which can be around 8 to 11 per cent of the rental income. ‘‘While these costs may be tax deductable, it is a good idea to subtract these costs from expected rental income while looking for a property to ensure you can still comfortably cover your mortgage repayments.’’