Managing Your Investment Property
Queensland property investment can be a lucrative way of building equity and wealth for the future, but it comes with significant responsibilities. As it will act as a source of income and (ideally) profit in the long term, you need to consider a lot more than whether it is the right home for you. Here is our set of resources to get you started on the path to property investment in Queensland.
Different types of property investment in Queensland
Because Queensland investment property is about getting the right financial returns, you need to be certain that you're selecting real estate to suit your strategy. Whether it's ongoing positive cashflow or negative gearing with a view to long term capital gains, the home you buy must fit this direction.
Positive cashflow property
This refers to when the rental income you're making from the investment property is higher than the costs of running it, which includes your home loan and maintenance costs. The property will be running at a profit, with a strong rental yield (simply put, the income converted to a percentage of the property's full value).
Once values rise, however, rental yields contract. This makes it a little more difficult to establish positive cashflow via investment property in Queensland.
Negatively geared property
This term has precisely the opposite meaning of positive cashflow. Your property will be running at a loss, because interest on the home loan is higher than that of the rental income. Such a situation, though, carries benefits in the form of tax deductions. This makes it a popular choice among investors hoping to make the most of capital gains. That's because it allows them to manage an investment property that may well run at a short-term loss, but this negative is mitigated by the tax breaks. Eventually, it will produce long-term gains.
Such a method of investment is popular in Queensland because values have risen so quickly, especially in Brisbane. Even so, your particular investment strategy largely depends on your personal income.
The team at LJ Hooker Home Loans can help you gain a greater understanding of these concepts and lend advice on how to proceed with your Queensland investment.
Managing a Queensland investment property
Do it yourself, or use an agent?
Of course, once you've bought your investment property, you'll now want to see some returns through renting it out. You can do this yourself, or use a property management service such as the one provided by LJ Hooker.
As a landlord, you'll get hands-on management of your Queensland investment property which can save you agent fees, but you'll also have to learn a great deal of the legal side of things. For example, you'll need to know all about tenancy law, bond lodgment, tenant screening, ongoing repairs and a whole host of other matters. Additionally, you'll also have to live close by to your Queensland investment property, to attend to any urgent matters.
Why not choose to use a property management? Sure, it will incur service costs, but every single aspect of the investment will be managed by real estate professionals who do this for a living. LJ Hooker's property management team has unrivalled experience managing all manner of investment properties the length and breadth of Queensland.
What to ask a property manager
There are several essential questions you must ask a property agent before they take over the running of your rental, as this is your investment and income source Here are a few to think about.
- How many properties do they manage, and how long have they been doing it?
- Do they do repairs themselves, or is a contractor called in? Do they have the necessary qualifications for significant repairs, such as electricity or plumbing issues?
- How do they select tenants for a rental property?
- How are rental arrears resolved?
- How much is charged, and what will this cover?
- Will you be able to remain in contact with the agent, within reason?
Typically, there is a starter fee of between one and four weeks rent set by the property manager, with an ongoing percentage of monthly rent paid thereafter, falling between 5 to 10 per cent. This should be clarified when you first enter talks with a potential agent.
Benefits of a Property Manager
LJ Hooker Robina has a team of experienced property managers who can help make sure you receive a reliable income stream, excellent capital growth and the best returns possible - as well as a guarantee of exceptional customer service.
You will receive regular and thorough property inspection reports, copies of all important documents and a regular review of rent rates within the local market to help you achieve the best return on your investment.
The key roles of an LJ Hooker Property Manager:
- Advertising your property for rent
- Open your rental property for viewings
- Screening tenants including reference checks, rental history review
- Manage the condition report process
- Manage the tenancy agreement signing process and handling questions
- Manage your financial accounts for the investment property and provide regular reports
- Inspect the property on a regular basis
- Organise tradespeople for repairs and maintenance
Landlord protection insurance will provide you with peace of mind and ensure that you are protected in that unexpected situation for loss of rental income or property damage. Landlord insurance is a tax deduction. When choosing a landlord insurance policy, it is important to carefully read the terms and conditions.
Safety Switches and Smoke Detectors
Help save lives! Does your property have an electrical safety switch and smoke detectors? For a minimal fee you can have peace of mind that you are providing a safe environment for your tenants. When installing a safety switch ensure that you engage a licensed electrical contractor.
They are small - but can cause big problems. It is recommended that you have an annual pest inspection carried out on your property by a professional. For a minimal annual fee, you will have peace of mind that your property is protected and safe.
It is recommended that you engage a professional building inspector once a year to conduct a thorough inspection of the property to detect any potential building defects.
Engage Qualified Tradespeople
When carrying out maintenance at a property it is important to utilise a qualified tradesperson who is licensed to carry out the work and who has adequate insurance to protect you against poor workmanship in the event of a tenant injury from the work carried out.
Professional Pool Report
If you have a pool at your property it is recommended that you have at least one professional pool report carried out once a year from a reputable pool maintenance company to ensure that the equipment is in good condition and not corroding and to ensure that the pool surroundings, including the fencing complies with local council laws.
Promptly attend to maintenance By promptly attending to maintenance you are reducing the risk of possible tenant injury and avoiding a small repair becoming a large costly one.
Budgeting to upgrade & improve a rental property
Over a period of time rental properties need to be upgraded. Taking the time to prepare a budget on your investment property will help you estimate the annual income against expenditure. You will also be able to put aside a set amount to save for maintenance and property improvements.
The advice provided on this website is general advice only. It has been prepared without taking into account your personal objectives, financial situation or needs. While every care has been taken to ensure the accuracy of the information it contains, neither the publishers, authors nor their employees, can be held liable for inaccuracies, errors or omission. Readers are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice. This information is to be used as a guide only and is subject to change at any time. All information is current as at publication release and the publishers take no responsibility for any factors that may change thereafter.