By Lauren Ferrone
Published: Wednesday, August 21, 2019
Buying a property is a milestone, but trusting someone else to live there is just as much of a big deal. To help you decide whether to rent out your humble castle, we’ve put together a few questions to ask yourself before becoming a landlord.
Have I bought the right property?
Before you consider renting out your property, make sure it’s profitable. How do you do that?
You can tell a lot about a property by researching. The question isn’t so much about finding the right property as it is about finding the right area. Is the area a hotspot for crime? Are there shops, schools or beaches nearby? On average, do homes in the area sell and rent for an attractive price? If you can gauge where the suburb’s headed in the next 5 years, you’ll have your answer.
Do I have time?
If you’re considering being a DIY landlord, you need to make sure you’ve got time to deal with situations when they arise. In fact, landlord duties are often 24/7. Think middle of the night calls or problems while you’re basking beachside on holiday. Blocked toilet? Leaky tap? By law, landlords are expected to arrange most of these repairs themselves.
If you’re not up for late-night wake up calls, you can relinquish most landlord duties to a real estate agency who’ll manage the property for you. Just remember, it’s an expense that’ll cut into your rental profit.
How much money will I make?
Making a living off rental income may sound like a dream, but if you’re after quick cash, being a landlord might not be the way to do it. It often takes time to earn a profit from investing in property. You need to charge a high enough rent to cover expenses, such as mortgage repayments and unforeseen costs like repairs. In some cases, you may only profit a couple of hundreds of dollars per month.
Some costs that come with operating an investment property in SA can be offset through tax deductions. You may be eligible for tax breaks in management fees, repair costs, legal issues and mortgage expenses. Go to the Australian Taxation Office website for a list of tax deductions.
How do I protect my property from damage?
No doubt you’ve heard stories about nightmare tenants. That’s why it pays to protect your property – and yourself – by taking out landlord insurance.
This type of insurance covers malicious or intentional damage to the property by the tenant or their guests; theft by the tenant or their guests; if the tenant defaults on payments; and expenses incurred from taking legal action against the tenant.
As you’d expect, not all landlord insurance policies are the same, so make sure you shop around and carefully read any Product Disclosure Statement before committing.