If you own an investment property, you need assurance that you will receive both short-term regular income and long-term capital gain. While both objectives are, to a large extent, driven by the market, there is one sure fire way to dramatically improve the likelihood of achieving both – good property management.
Firstly, let’s take a look at the two main causes for a breakdown in a rental agreement:
The number one cause of a breakdown in a rental agreement is financial hardship. It only takes the loss of a job or a relationship change to leave a tenant in a dire financial situation.
Landlords can also face their own financial pressures, resulting from a number of things including tighter lending criteria, a shift from interest only loans to principle and interest, a reduction in rents over the last few years and loss of equity.
The result can be insecurity on both sides.
The second most common cause of a rental agreement breakdown is damage to the landlord’s property caused by the tenant.
How do you mitigate these risks?
The best way to mitigate these risks is to have your investment property managed by a good property manager. A good property manager will keep the lines of communication open, acting as the conduit between tenant and landlord. As soon as there are signs that trouble is brewing, the property manager can take steps to resolve the issue or, if it can’t be satisfactorily resolved, terminate the tenancy and find someone more suitable in as short a timeframe as possible.
REIWA receives thousands of calls a year to the REIWA Information Service from both property owners and tenants seeking advice and it is evident from those calls that there is a great lack of knowledge and understanding about the rights and responsibilities of each party.
The Residential Tenancy Act is complex. Hiring an experienced property manager with the skills and knowledge to deal with any situation that arises is the best way to safeguard against the early termination of a lease. When it comes to property managers, the benefits far outweigh the costs.
What should a good property manager do?
A good property manager works hard to maximise the return on your investment. To do this they focus on the big picture. There is a lot more to it than just collecting the rent.
He/she should:
• Find and keep the best tenants,
• Coordinate repairs and maintenance,
• Conduct regular inspections,
• Avoid lease expiry dates in periods of low demand,
• Maintain awareness of local development that may affect your rent, and
• Assess the rent annually so your rent remains in line with the market.
While we don’t handle property management in our agency, we can recommend some excellent property managers in our area. We have received excellent testimonials from the property investors we have worked with who use their services and would be more than happy to pass on their details to you. Contact us if this is of interest to you.