You might be looking for a good business with long-term investment opportunities, in which case, it is worth considering the rental property sector. Many Australian entrepreneurs/investors have moved into the rental property market and if you would like to learn more, please read on.
Buying a rundown property
The best way to move into the rental property market is to acquire a rundown house that is in need of renovation and commission a local builder to carry out the work. A large house could be divided into 2 or 3 apartments, which would give you a higher return and choosing the right location ensures the best rental prices. This means forging an alliance with a local builder is an important step to take. Probably the cheapest properties are those that are repossessed by lenders and they are normally sold by auction.
See also: Why Attend a Real Estate Investment Convention?
Landlord responsibilities
Most take out landlord insurance that covers a range of scenarios including accidental damage, fire and flooding and it should be understood that as a landlord, you take on many responsibilities. The property must meet very high standards and tenants have many rights, which you should know about. One important connection for landlords is legal advice, which is typically provided by property management companies that offer many essential services for rental property owners.
Property management companies
As a rental property owner, you should forge a working alliance with an established property management company, an organisation that provides the following;
- Building maintenance – All maintenance would be carried out on behalf of the owner and when required, they carry out repairs as they are required.
- Screening & sourcing tenants – Most property management companies offer a tenant screening service, when they advertise for and check potential tenants, while some even collect the rent and deposit it into the landlord’s bank account.
- Legal advice – In the event you have a conflict with a tenant, you can talk to a legal expert and they can represent you should the issue reach a court.
- Security – When a property is unoccupied, the management company can provide regular security according to your needs.
- End of tenancy renovations – When a tenant vacates a property, the landlord would call in their property management partner to carry out renovations to prepare the property for the next tenant.
Business registration
If you are planning to move into the rental property market, you need to register your business with the Australian government, which can be done online. Once your business is official, you need to hire a bookkeeper and accountant to record all transactions; you can outsource to local 3rd party providers.
Create a business plan
This will enable you to calculate the numbers and creating a business plan is the first step to setting up a rental property company. The business plan should be comprehensive, covering every aspect of the operation and with adequate funding you can start looking at potential properties.
