5 things you should do before renting out your investment property

Are you thinking of buying a house to rent out? Or perhaps you’re planning on turning your current home into a rental. Before you jump on the property investment bandwagon, it’s important to understand what goes on behind the scenes so you can set your property up for success.

We’re here to help you navigate how to rent out a property starting with preparing for renting out your property.

1. Get your property ready to rent

First things first, you’ll need to get your property rental ready. It can be helpful to put yourself in the shoes of a potential tenant. Would you like to rent out a tired, damaged, dirty property? Probably not, so it’s worth spending a bit of time getting your property ready to rent. Not to mention, properties that present well and appeal to potential tenants can often command a higher rental asking price.

Repairs and maintenance

As a landlord, you’re obligated to maintain a safe and habitable rental property. With this in mind, it’s important to address any necessary repairs and ensure all fixtures and fittings are safe and the property is clean and in good condition.

If your property is looking a little tired, you might want to consider making a few improvements to help freshen it up. There’s no need to completely transform your space with a renovated bathroom or kitchen. Instead, a few simple improvements can breathe fresh air into your new rental. You could try tidying up the garden, giving your home a fresh coat of paint or replacing the lighting to transform the space.

Plus, you can often claim rental expenses as a tax deduction. Just be sure to familiarise yourself with expenses you can claim immediately and those that need to be claimed over several years.

Safety compliance

While you’re in the process of tidying up your new investment property, it’s important to make sure your home is up to code when it comes to smoke alarms and electrical wiring.

Different smoke alarm legislation applies across the states and territories, so you’ll need to make sure your property complies with local regulations. In some states, this includes regular testing and maintenance.

Engage licensed trades to complete safety checks on gas and electrical wiring to make sure everything’s up to scratch.

2. Insure your investment

As a landlord, you’ll want to protect your property against loss or damage. That’s where insurance comes in. For rentals, you’ll generally need two different policies, landlord insurance and building insurance.

Landlord insurance typically covers damage to the building, loss of rental income due to tenant default or property damage, and liability for injuries or damage to third parties caused by your property.

On the other hand, building insurance covers the structure of the property against events like fire, storm damage, natural disasters, theft and vandalism.

Before you settle on insurance, be sure to compare policies to find one that suits your needs. Consider the excess and premiums, balancing cost with coverage benefits. It’s also worth reviewing policy details, including what’s covered, exclusions, limits and any additional benefits or optional extras.

3. Decide between engaging a property manager or self-management

Ultimately, the decision between self-managing and hiring a property manager depends on your individual circumstances and preferences. A good property manager can offer experience and expertise on all things rentals while also saving you time to focus your attention on other things. However, the cost of a property manager will eat into your rental income.

Alternatively, if you choose to manage your rental yourself, you’ll have to take on all the responsibilities. This includes everything from advertising and inspections, screening potential tenants and collecting rent to organising property maintenance and ensuring legal compliance.

If you choose a property manager, just make sure they’re licensed and experienced in your state or territory.

4. Understand your legal and financial obligations

Regardless of whether you decide to engage a property manager or self-manage your rental, it’s well worth familiarising yourself with the Residential Tenancies Act relevant to your state or territory. Legislation changes from time to time, so be sure to stay updated on changes to tenancy laws and regulations in your local area.

It’s not just the legals that you have to be mindful of as a landlord, you’ll also need to stay across the tax implications of rental income and allowable deductions. As a landlord, it’s essential to keep detailed records and consider consulting with a qualified tax accountant.

5. Set the rent

When it comes to setting the rent on your investment property, it’s important to do a bit of research rather than just pulling a number out of thin air.

Setting the rent too high will deter potential tenants, which could leave your property sitting empty for a period of time. Alternatively, rent that’s too low could leave you in the red if you’re not able to cover the difference between your rental income and investment expenses.

Check out similar properties in your area to set a competitive rent. Websites like Domain are great places to start if you’re looking to compare rent. If you’ve decided to go with a property manager to take care of your rental, they should be able to help you settle on a fair rental price.

While we’re on the topic of rent, it’s essential to be aware of state and territory regulations regarding rent increases, including the frequency and notice period required.

Keen to get into the property investment game? Check out our ultimate guide to buying an investment property for everything you need to know about how to invest in property.

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