I’ve talked before about how you can use your home to make money, whether it’s to boost your income or as a fantastic investment opportunity. But, what we haven’t really touched on yet is what this means. Sure, we know that there’s definitely the potential to make money renting it out. Or even splitting your home, converting it into two apartments and renting out part of the home. You see this all the time on property websites, and they do rent for some quite high prices. More importantly, people like them, they buy them, so the investment opportunity is there.
But if you’re going to do that it’s important to realize that you’ll be becoming a landlord and you might not have a full understanding of what that means. There are a lot of people who simplify the idea of renting out property way too much. It’s not just a case of sticking it on Gumtree and seeing if you get a bite from a person living there.
First of all, you do need to register as a landlord, and everything has to be above board. It’s also advisable to rent out the property through an actual agency because if you don’t, you’re going to look a little shady. It might affect whether people are willing to live there. But really, that’s just the tip of the iceberg for what it means to rent out a property. So, let’s start with the age old myth. People think you can be completely hands off as a landlord. Spoiler alert, you can’t.
The Power Of The Landlord
It’s not just the name, it actually fits the job role pretty well. You’re the lord of the land and what this means is that you can control who lives on the property. You can state what type of terms you would like renters to agree to. This is a smart choice because you want to be very careful with who you let live in your property. If you’re renting out your own house, you might want to avoid certain groups like students. They could leave a lot of property damage behind when they move out. Now, the deposit you should get them to pay might cover some of the damage but not all of it. If it doesn’t, you may have a hard time getting them to pay for any other issues that they might have caused.
That’s why you should always vet anyone who lives in your property extremely carefully. Read more about this on http://www.yourinvestmentpropertymag.com.au. You don’t want them to end up being a nightmare, taking up a lot of your spare time. This is the greatest power you have as a landlord.You get to decide how the property is used and who uses it. If you don’t like how they are treating the property, you might be able to evict them. However, do bear in mind it’s not a simple as saying ‘it’s not working out.’ You’ll have to give a valid reason, and if they don’t accept it, you could face a legal battle.
The Power Of The Tenant
You might think that tenants can’t demand anything or expect anything from you as a landlord, but they can. First, they can demand that the property is safe and free of any dangerous hazards. If there are any dangers that mean the property is unsafe, it’s going to be your responsibility to fix them. But it’s not just about safety.
You will also be responsible for maintenance of the property. You might find that there is an issue that the tenant hasn’t caused. Any issue needs to be fixed immediately, particularly if it affects their standard of living. For instance, you can not leave a drain clogged for days if it is creating a nasty smell in the property. If the tenant didn’t cause the issue, you’d also need to pay for the fix and anything that needs replacing.
As such, it is worth having a little extra cash if you want to be a landlord. You need to have at least a few thousand in the accounts for emergencies and rainy days. If you can’t afford to pay for repairs, don’t rent out your property. You will quickly run into issues.
If you want to be hands off running the property, there is only one option available. You will need to hire companies who willing and able to provide the services that you need. For instance, you should have a look at a site such as http://www.plumberleichhardtnsw.com.au. That way you can make sure you have a plumber on call to deal with any issues with the pipes in the property. You might also want an electrician.
As for management of the property and the letting process, you can use an agency. They’ll handle almost everything for you, and this can allow you to get the income from renting without the full responsibilities. However, you must be aware of the costs that this will involve. If you’re not careful, paying for all these services could leave you with a loss, even if the rent is included. So, it’s all about budgeting and whether you can make the numbers make sense financially. But is this the end of the problems that you could face as a landlord? Not Quite…
This strictly applies to when you’re renting out property that you won’t be using yourself. It’s possible that on occasion the property could be left empty. This might be because there’s no interest on the market. Usually, it’s an issue for landlords renting out to students during the holiday season. At this point, there will be no one in the property for two or three months. Again, it’s something that you’ll have to factor into your budgeting. You can have a look at https://www.budgetdirect.com.au for more information on the challenges of being a landlord. You must make sure that you are prepared for times through the year when you might not be making any money from the investment.
The main lessons here then are to watch out for overspending and make sure you are ready for the responsibilities of the landlord. If you are, renting out your property could still be a great opportunity.