It is crucial that you provide your tenant with a safe property. Find out your…
By Kristen Amiet
As seen on SMH.com.au
You’ve beat out the competition, signed on the dotted line, and collected the keys to your new investment property. Congratulations!
But now it’s time to make a call on one of the most consequential decisions you’ll face as an investor: hire a property manager or manage the property yourself?
There are pros and cons to both, but if you’re leaning towards the latter path, there are a few things to consider. The Sydney Morning Herald sought some sage advice from Carolyn Parrella, Terri Scheer Insurance’s Head of Niche Distribution, in a bid to help DIY landlords learn on the job and make the most of their investment.
Protect yourself – and others
The to-do list of DIY landlords is a long one. But while it can be tempting to jump straight to tenant selection or maintenance and upgrades in order to start making a return, insurance should be the very first box you tick.
“Insurance is a really important to consider straight away,” Parrella says.
There are a couple of reasons for this: first, to ensure your new house is covered in the wake of any unexpected weather events like storms or floods. Second, to remove or offset liability risks that arise if and when your property is open for inspection or tenanted. And third, to ensure any malicious or accidental damage caused by tenants is dealt with quickly and relatively painlessly.
“Not all home and contents policies will cover rented properties, so carefully check yours to make sure you’ve got the right insurance [to protect your assets and cover any unforeseen rental losses or damage caused by your tenants],” Parrella advises.
What’s more, the type and level of insurance required for an apartment differs from what you’ll need for a stand-alone house, which isn’t covered by a body corporate’s building insurance.
Terri Scheer offers a range of insurance policies designed to make the lives of landlords easier, whether you’re offering a home to long-term tenants or covering a holiday rental. Do yourself a favour and cross this vital step off your list first.
Get your paperwork in order
Managing your own investment property means you’ll have to do the heavy lifting when it comes to legislation compliance and documentation. But fortunately, you don’t need to be a lawyer to ensure everyone gets a fair go.
Parrella recommends doing your research on the rental market to ensure you’re asking a price that’s fair for everyone. She also suggests familiarising yourself with your state’s legislative requirements and obtaining the forms – like a lease agreement – you’ll need to complete to ensure you meet them via your state’s real estate institute.
“You don’t want to end up in a tribunal because you haven’t got the processes right,” she says, adding that you’ll be able to get help on everything from inspection schedules to bond requirements.
Find your people
Finding tenants you can trust to enjoy and care for your investment property as you would can be a time-consuming process because they come with varied histories. You could select an applicant with a stellar rental ledger who unexpectedly loses their job or becomes unwell or go with somebody who overcomes a heap of hurdles and turns out to be the best tenant you ever have.
The fact is, you don’t really know how it’s going to work out until they’re settled in.
“Check the references and verify that people are who they say they are, but…that’s the thing about insurance – it’s there for the unexpected,” she says.
Keep things ship-shape
Landlord’s insurance policies don’t cover general wear-and-tear and poor living conditions. That means it’s up to you to ensure your property is well-maintained and any problems are addressed before they become big headaches for you and your tenant.
“That’s where it’s really important to…regularly inspect the property and make sure that it’s being maintained to a reasonable standard,” Parrella advises, adding that the most important thing is to address issues like leaky pipes or dysfunctional stoves as soon as they arise rather than wait until they put your investment property in jeopardy.
And while you might also come to an arrangement to mow the lawns or replace the odd light bulb yourself to keep costs down, Parrella says it’s best to call in the professionals for specialised repairs to keep yourself and your tenants out of harm’s way.
Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Vero Insurance. In arranging your insurance, Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 AFSL 218585 acts under authority given to it by Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy.
The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.
For further information, call 1800 804 016.