So, you’ve bought an investment property and decided to rent it out? Before you decide to start advertising your property for rent, it’s important to prepare your investment property to ensure it’s presented in the best possible light. This will not only help to secure good quality tenants on a longer lease, but also generate higher rental returns.
Whether this is your first investment property or you are a landlord with a large property portfolio, here are 11 things you need to carefully think about and action first when preparing your investment property for rent.
11 Ways to prepare your investment property for rent
1. Will you manage the property or use a Property Manager?
One of the first things you need to decide upon when renting out your investment property is whether you want to manage the property yourself or use a Property Manager to take care of all of this for you. Managing an investment property yourself can be a time consuming and stressful experience and may not be for everyone. However, using a Property Manager can save you time, reduce stress and is also tax deductible, a great reason why investors like to use a Property Manager.
It also might not always be possible to manage the property yourself, particularly if you live interstate, so hiring a Property Manager will be much more beneficial and helpful. They can help you with selecting and interviewing tenants, arranging inspections, assisting with maintenance issues and much more.
2. What rent to charge
Setting a competitive rent for your investment property is essential to your property’s success and your return on investment. It’s therefore best to research the local property market and find out what other similar properties are being rented for to give you a rough idea of current rental prices. There are factors that can affect rental prices such as supply and demand, location, property facilities, age and what amenities are close by. A Property Manager can help you with all this and also determine the length of the lease too.
3. Tenant screening for best tenants
As well as setting a competitive rental price for your investment property, you also need to think about the tenants. If you use a Property Manager, then they can screen the tenants for you and do background checks, helping you to find the best tenants possible. You want to find tenants that will respect your property, pay rent on time and don’t cause unnecessary hassle or damage.
As well as thinking about the type of tenants you want to rent your investment property, you should also think about whether you want to allow pets or not. If you don’t want pets, you need to make this clear in your lease.
5. Furnished or unfurnished
You also need to decide whether you want to rent out your investment property as furnished or unfurnished. Some landlords will have the property part furnished, where tenants will have a washing machine and dryer and the tenant will then need to provide their own appliances and furniture such as a fridge and freezer, bed and sofas. If you choose to furnish your investment property, then this allows you to charge a higher rent. For many tenants looking for their first rental property, this can make renting much more easier and approachable due to not having to buy new furniture.
6. Property presentation
When advertising your property for rent, it’s essential that you present your investment property in the best possible light to make it much more attractive for potential rental tenants. This means cleaning and tidying it up and providing high res photos to be used in marketing material. You should also ensure that the investment property remains clean and tidy when inspections are held to create the right first impression.
7. Landlord and building insurance
It is important that when you rent out your investment property that you take out landlord insurance and building insurance to cover you from things like loss of rental income as well as damage from fire, theft, storms and floods. To get the best deal, it’s worthwhile shopping around first to compare different policies and purchase the policy that best suits you.
8. Tax deductions
One of the advantages of renting out your investment property is the number of tax deductions you might be eligible for. Having a good accountant will ensure you will be claiming all of your deductions, helping to reduce your taxable income. Some of the most common tax deductions include:
- Borrowing expenses
- Advertising for tenants
- Council rates and water charges
- Land tax
- Gardening and lawn mowing
- Pest control
- Interest expenses
- Property agent's fees and commission
It is important to note that the 2017-18 State Budget has also made some changes to what tax deductions you can claim. Property investors are no longer allowed to claim travel expenses to visit their property and there are also restrictions on depreciation. It’s best to check the ATO website to learn what you may be eligible for.
9. Consider the costs
When you rent out your investment property then there are a number of costs you also need to consider. Some of the main ones include the following:
- Body corporate fees
- Water repairs
- Council rates
- Repairs and maintenance
- Land tax
- Interest and other bank fees
Setting the right rent will help to cover these costs, whilst you should also set aside some savings in case of unforeseen circumstances such as major repair work required.
10. Make repairs first
Before you go renting your investment property out, it’s beneficial to make any repair work first before you get tenants in, as this could save you from bigger and costlier problems in the future, especially on an older property. You want to make sure your property is in the best possible condition so any tiny repairs that can be made such as fixing a shelf or adding new blinds will make your property much easier to rent and could also fetch a higher rental price.
11. Does your property meet current regulations?
It’s also worth noting whether your investment property meets current regulations or safety guidelines. This could include having working smoke detectors as well as meeting the electrical and water efficiency standards under the local Residential Tenancies Act. It’s therefore best to check the latest laws, and if you are using a Property Manager then they are able to assist with this.
Get in touch
To learn more about preparing your investment property for rent or to learn where you should be buying an investment property in the first place, it’s best to get in touch with the iBuyNew team. Our expert Property Consultants will be able to assist you with any queries you might have.
Call us today on 1300 123 463
Published on 16th of May 2017 by Marty Stanowich