5 Tips to Maximising Your Rental Property’s Potential
- 1 - Power of positioning
- 2 - Consider the costs
- 3 - Managing the property
- 4 - Legislation to keep in mind
- 5 - Insurance & contingency
If you are in the market for a rental investment property then it is vital that you do the necessary research.
This might be something that you have heard many times, and you might even grow tired of reading it, but it cannot be emphasized enough.
A reputable real estate agent will be able to assist you in the process so that the time you put into it won’t go to waste. They have access to reliable resources that will allow you to get the most out of your property.
Keep these tips in mind when working alongside your trusted professional agent:
1 – Power of positioning
The golden rule of real estate applies to rental properties as well: location, location, location. The position of the property is where the most value will be.
When choosing your property, have a look at the area it is situated in and the type of property it is. Generally, a property that is located close to amenities such as schools and malls will fetch a higher rental income.
Buyers should also consider the demand for the type of property in the area: it would be unwise to purchase a freestanding house if most tenants are looking for apartments.
2 – Consider the costs
Before determining the rental price for the property, it is important to research the average rent paid by tenants in the area.
Initial decisions like these will lay the foundation and determine the success of the rental unit.
Investors should also remember that there are other costs to cover besides the bond repayment. Regular maintenance and repairs will have to be done as well as levies that need to be paid.
Sellers should list the defects of the house so that the investor can calculate the cost of those repairs into the price as well.
3 – Managing the property
When investing in a property, it is important to determine who will be managing the rental unit.
The investor or owner can choose to run the property, but this is often a laborious task to undertake. In this case, it is important for the investor to remember to manage the property as a business and keep track of all expenses and income.
A choice that many investors opt for is to hire a rental management agency to manage the property for them. A percentage of the rent (i.e. 10%) will go to them every month and they take care of all paperwork and managerial services.
4 – Legislation to keep in mind
Another important aspect to take note of when purchasing a rental property is legislation.
Investors need to be aware of and understand any laws pertaining to real estate and in particular, rental properties. Landlords need to ensure that the rental agreements are drawn up according to legislation and that all legislative terms are present in the document.
Lease agreements must be in line with the Consumer Protection Act and the terms and expectations should be stated clearly.
There must be no room for assumption or doubt.
5 – Insurance & contingency
Once an investor has purchased property, it is imperative that they take out an insurance policy. This can be done by speaking to a broker who will advise them on the correct insurance needed for that specific type of property.
This will prevent the landlord from having to find additional funds in the event of weather damage or liabilities such as a burst geyser.
Landlords should also be aware of the fact that insurance policies might not cover everything so it is always a good idea for them to have a savings account in case of an emergency.