Congratulations! You’ve made the big step of purchasing an investment property and can officially call yourself a property investor.
So now what?
Buying an investment property often takes a lot of work and preparation, and it’s easy to see the purchase as the big end goal.
But in reality, this is where it all starts.
Here are some of the things you might need to do next or consider after you have bought an investment property.
Find a good property manager
When renting your property out, it’s crucial that you find a good property manager.
While you can DIY your property management, there are some risks to this approach.
A good property manager will help you find and secure suitable tenants, conduct inspections, set an appropriate weekly rent, chase any arrears and organise repairs.
They should manage the tenancy smoothly and take the stress and hard work out of the process for you.
A great property manager will also help you find ways you can improve upon your investment and will make suitable recommendations where appropriate.
When searching for a property manager, make sure you compare agent fees and look further into the services they provide.
Does the company specialise in property management or does the agency have a dedicated property management department? Or is property management just a small (and often overlooked) arm of a big sales agency, where sales are given precedence?
Do your research, shop around and organise several appraisals if you can.
Revise your strategy and plan forward
If you haven’t already devised an investment strategy, you’ll need to do so now. You should focus on what you want to achieve from your investment and what mini goals and steps you need to take to get you there.
Also think about the future. If you wish to build a property portfolio, what steps will you need to take now and in the coming months and years so you can eventually buy a second property?
If you’re a bit unsure where to start, your strategy can be developed with the help of your financial advisor, based on your circumstances and investing goals.
While you may have a team of experts advising you, you need to start learning about property investing and the property market yourself or add to your existing knowledge. This will help you stay on top of what is happening, to be aware of any opportunities and understand your property’s performance.
Read newspapers, books, industry magazines, chat with other investors, attend investing seminars or keep up to date online.
Tax implications and property depreciation
When you become an investor, your tax situation is going to change. One of the most notable taxes you’ll now be faced with is the capital gains tax.
As an investor, you will also be able to claim depreciation deductions for wear and tear to the property over time. To do this, you should have a quantity surveyor prepare a tax depreciation schedule that outlines all available deductions, which you can claim come tax time.
As a landlord you will need special landlord insurance. General home and building insurance just won’t cut it.
You’ll need to be covered for tenant damage, arrears and a number of other scenarios that come with being an investor.
Once again, shop around to get a good deal and to compare covers.
Even if you don’t need to make major upgrades, it’s amazing the difference some new carpet, fresh paint or new appliances can do to attract tenants and even bring in a higher rent.
Update your budget
You’ll need to update your budget so you know exactly what is coming in and going out each week or month, as this will help you manage your investment better and keep track of your goals.
Keep in mind that in the first few years of owning an investment, the income often does not cover all the expenses, and you’ll need to account for this shortfall.
You should also build a cash reserve into your budget, should anything go wrong at the property that you need to pay for.