Your House is Now Your Tenant’s Home
Property investment has come a long way. Being a landlord is now seen as a secure and respectable investment into your financial future.
It is important therefore that landlords know to treat it as a business. Every business has guidelines and legal requirements but the first thing that a landlord needs to be aware of is the need to emotionally separate themselves from the property. Secondly is to remain emotionally detached from the tenants.
If you used to live in the property you must realise that a tenant is never going to look after the property as well as you did – but what is now an investment to you is their home. Most of the time, a tenant will respect their home as long as you respect them and their right to private enjoyment of that home.
To avoid becoming emotionally attached to the plight of your tenants, avoid forming a chatting relationship with them and leave this up to your property manager. You never want a tenant using this against your property manager: ‘But the landlord said’, or if legal steps need to be taken over rent arrears, if you are at ‘arms length’ you won’t be burdened emotionally with the tenant’s circumstances.
The professional property investor treats it like a business and leaves the hard work to their property manager. At the end of the day, you’re purchasing ‘peace of mind’ by hiring your property manager, so enjoy it!
Furnished or Unfurnished
At some stage during your investment lifetime you may face the dilemma of whether to rent your investment property furnished or unfurnished. Here are some factors to consider:
Location – Furnished apartments normally attract people who are either relocating for a short period of time, are commuting weekly for work and live elsewhere or have relocated and need a place to base for 3-6 months while they establish themselves. You would normally expect a slightly shorter term lease on furnished properties.
When furnishing your property, consider that the furniture needs to be high enough quality that it won’t break under heavy use. It needs to be fashionable with clean lines and relevant to today. It also has to be cheap enough that you can depreciate it in five years or less and replace it. A key component with furnished properties is, keep the decor current. You also need to be aware that when any furnished item breaks, legislation requires it be repaired or replaced. Your furnished investment property is not a dumping ground for your old furniture from home.
Furnished properties will attract a premium from the market. Tenants usually understand the concept and expect to pay extra for the convenience. If your property doesn’t attract a premium, then maybe consider whether this type of concept is suited to your area. Ensure the premium covers the cost of your furniture depreciated over five years, repairs and maintenance for breakages, and extra cleaning for all the furniture now in your property.
Renting a fully furnished property can be very rewarding if you ensure you have ticked all the right boxes.
The Top 4 Bang for Your Buck Improvements
Aiming to attract quality tenants to your investment property is a smart strategy, so which improvements will give you the biggest return on your investment. As with any financial transaction there are 3 key considerations – time, money and risk.
If your investment property is vacant for say… 3 weeks whilst you make your improvements then that is costing you 3 weeks rental return, so it’s important to manage your tradespeople efficiently.
On the upside improving the property will reduce your exposure to a high risk tenant. A better quality property is more likely to attract a better quality and house proud tenant as well as a higher weekly return.
Clean: Just because a property is older doesn’t mean it can’t be spotless, this will go a long way towards attracting a tenant who values a clean environment. To really present a clean property check light fittings, window tracks & sills, curtain rails and exhaust fans.
Paint: Nothing brightens up a property like a fresh coat of paint. Paint quotes can see huge price variations, ask your property manager for a recommendation. Also keep the colour light and bright with a fresh neutral colour throughout.
Window Furnishings: A light colour, opaque tab curtain is usually the most satisfactory and economic solution. They wear well for their cost and are readily available. They’re washable and any handyman can install and hang them. Just make sure you get the height right! Sometimes tradespeople don’t take as much care if they think “it’s just a rental property”. I’m not sure how that becomes a good reason for shoddy workmanship?
Floor coverings: Once again, remember who you want to attract to the property and consider the lifespan of the flooring in relation to its depreciation value. Most people, tenants included seem to prefer hard floor finishes which is great as there are lots of options available. If you’re in a strata building you may need strata approval prior to installing.