How to manage your investment property
Finding tenants, organising lease agreements and managing renters’ requests can be time consuming and stressful. This is why many property investors engage the services of a real estate agent.
The upside of managing the rental property yourself is that you will maintain direct control over your investment and save on management fees.
To work out if self-managing the rental property is for you, consider the responsibilities involved:
- Advertising for tenants and showing the property at inspection
- Understanding tenant’s legal rights, organising the lease agreement and processing the bond payment
- Collecting rent or following up rental arrears (non-payment)
- Responding to tenant requests and organising repairs
- Direct mediation in the event of a disagreement.
Real estate agents generally charge a commission on the rent to manage the property and a one-off letting commission that covers the costs of finding the tenants.
Paying an ongoing commission rate of between five and seven percent of rental income is fairly standard. These management charges will be deducted automatically from the rent and are tax deductible. It is worthwhile shopping around and obtaining a number of property management quotes.
Future financial considerations
Costs associated with maintaining an investment property are inevitable. Along with mortgage repayments, insurance, repair and maintenance expenses, you need to consider the tax implications of earning a net rental income or making a loss on the property.
Refer to our investment property finance special to learn about cash-flow analysis, personal budgeting and the type of mortgage loans you should consider.
To learn more about investment property tax deductions, negative gearing and capital gains tax see our tips on investment property taxation.
Selling investment property
The process of selling investment property is not dissimilar to selling a home except you will be charged capital gains tax on any capital gain made. Selling an investment property should be less complicated than a place of residence as you don’t have to negotiate your personal living arrangements. That said, if tenants are in residence, you will either need to end the lease or work around their residency. Refer to our home seller’s guide for detailed advice on getting the most for your property with minimum fuss.
An alternative to selling is using the equity in your investment property to expand your real estate investment portfolio or to buy a home.
Source: https://www.domain.com.auPosted by