frequently asked questions
Owning an investment property can be very rewarding but there are bound to be questions you’ll have regarding the management of your investment. To answer your questions and help you with making the most important decisions, we’ve put together a list of common questions that we hear from investors.
How can we prepare our property for rent?
When preparing your property for rent, you should present your property in a way that you would expect your property to be kept during a tenancy. Things like cleanliness and functionality are important.
It’s also necessary to consider features that may add value to your property and make your property more appealing to prospective tenants.
We’ve listed below some common things that tenants look for; however insignificant you may think these features are, for a tenant they can sometimes be the deciding factor on whether they apply for your property or not:
- TV points
- TV aerial reliability
- Phone line to the property
- Air conditioning
- Ceiling fans
- Permission for pets
- Security screens
- Location of electrical outlets around the property
- Fenced yard
The top three features should always be included from the start; while it isn’t essential that you provide all the features listed above, you should be prepared for any of these features to be requested for someone to apply for or stay in your property.
Many tenants are spoilt for choice so it’s important to provide as much value to the tenant experience as possible, while remaining in your budget. Providing these features can be the deciding factor in how much rent you are likely to achieve, who you attract and how long they stay.
How long will it take to find a tenant?
The time it takes to find a tenant can depend on a number of factors:
• The condition of the property itself
• The season (demand has been known to increase in the warmer months)
• The local real estate market
The rental market can fluctuate on a steady basis. By properly preparing your property, presenting it well and keeping the asking rent amount in line with the current market value, you’re likely to receive higher demand which can result in a greater return and shorter vacancy periods.
When is the best time of year to advertise my property for rent?
It’s not impossible to find a suitable tenant at any time of the year, however, the following periods are noticeably busier than others:
• January – February – this time of year is significantly busier than others in the rental market and reasons for people being on the move can be settling the kids into a new school, transferring for work, students starting university or people who just want a change of location and lifestyle. It’s also common for lease agreements to expire in the months straight after the Christmas period which can also be another reason a lot of people look to move during this time.
• June – August – this time of year is the second busiest in the rental market; the common reasons for this include six-month tenancy agreements expiring and new university intakes occurring around this time.
These two periods provide investors with more demand, a wider selection of suitable applications and more potential for the optimal rent to be achieved. Remember – a lease term doesn’t have to be 6 or 12 months. It can be any number of months if it’s agreed upon by all parties. With this in mind, it’s wise to consider having your tenancy end in any of the peak seasons.
How much will my property rent for?
This is a common question amongst every investor and it’s only natural to want to know how much return you’ll be getting on your investment. Searching for comparable properties on popular websites like realestate.com.au are a good place to start to see what similar properties are being advertised for but it’s not all that should be ultimately used when deciding how your property is priced.
The agency managing your property should have access to software that allows them to produce a Comparative Rental Analysis (CRA). A CRA will show exactly what similar properties rented for and how long they took to rent. It will also show a difference, if any, to the original advertised price and the price it eventually rented for.
It’s important to remember that properties don’t always rent for the same amount they were originally advertised for and it’s always worth considering how long similar properties are taking to rent, especially if your property is vacant. The best way to price your property effectively is by combining the CRA that your property manager has provided along with the current rental market listings.
Should I leave furniture in my property for tenants to use?
Yes and no – this can depend on the location, type of property you have etc. For example, houses in suburban areas are usually best rented unfurnished as most tenants are moving into houses with their own furniture and leaving it furnished can be a turn-off. With that being said, it’s not uncommon for appliances such as dishwashers or dryers to be left at the property for the tenants use.
Otherwise, if you have a small apartment in the city, you might consider leaving furniture there as it’s more likely that a tenant won’t have or won’t want to bring their own furniture with them.
When and how do I get my rental payments?
Your rental payments are disbursed to you twice a month; at mid-month and at the end of the month into your nominated bank account. Statements showing income and expenditure are also sent to you at the end of every month and at the end of every financial year.
We can also take care of paying bills for your property, such as your rates and body corporate fees. This makes it easier for you to keep on top of your expenses without having to worry about paying them yourself and all bill payments appear on your statements, meaning that your expenditure is all on one financial statement. Chat to us to find out more about this service.
Can I charge the tenants for water?
Yes, you can pass on full water consumption charges to the tenants if the following criteria is met:
• the rental premises are individually metered (or water is delivered by vehicle), and
• the rental premises are water efficient, and
• the tenancy agreement states the tenant must pay for water consumption.
If your property is not already water efficient or you’re not sure, we can organise one of our preferred plumbers to go out and inspect it for you.
What happens if we decide we’d like to sell?
The selling process with a tenant in place can be a delicate situation; while it can be done, there are legal obligations that must be met, and notice periods differ depending on whether your tenant is on a fixed term tenancy or periodic tenancy. Remember – a tenant cannot be forced to vacate the property as soon as you have a buyer.
Unfortunately, selling the home they’re in is rarely an enjoyable experience for the tenant and it can affect the tenant’s ‘quiet enjoyment’, a term referred to in legislation as a right of the tenant during their tenancy. In some cases, it can result in an unhappy tenant who may become uncooperative during the sale process.
The tenant’s cooperation with things like marketing strategies and inspection times during a sale is very important so you might consider these options to encourage the tenant’s cooperation:
• Offer compensation to the tenants by reducing the rent amount for the selling period. The recommended method of compensation is via a rent rebate.
• Consider offering a cleaner to come once a week before the open home. It’s a good way to ensure your property is always looking spotless for potential buyers and a good way to keep your tenants happy and on-side.
Important: If you know that you intend to sell the property prior to a tenant moving into your property, you must advise your property manager. There are legal requirements relating to notices that must be issued prior to the tenant signing their agreement so it’s best to discuss the best method of action with your property manager.
What is tax depreciation and what’s in it for me?
Tax depreciation (also known as property depreciation) is a deduction against assessable taxable income, generated by a residential or commercial investment property. It’s been estimated that between 70%-80% of investors aren’t claiming tax depreciation and may be missing out on money that should be back in their pockets.
Generally, the value of depreciation that can be claimed for a residential property may range between $1500 and $15,000 a year. For someone in the top marginal tax bracket, the outcome of tax depreciation is to put between $650 and $6500 a year back in their pocket in the first full year of claim alone.
Most parts of a building that are related to the creation of assessable income can be claimed, however, there are some exclusions such as the cost of retaining walls and landscaping that do not play a fundamental part of the buildings function.
We can point you in the direction of quantity surveyors who are experts in this area; contact our office for further information.
Who is responsible for repairs and maintenance?
As an investor, it’s inevitable that your property will need repairs or maintenance at some stage so it’s important to budget accordingly. There are two types of repairs that are a landlord’s responsibility: emergency repairs and routine repairs. Of course, any repairs that are deemed to be the fault of the tenant are at the tenant’s expense.
Emergency repairs require urgent action and they are defined by legislation as:
• a burst water service or a serious water service leak
• a blocked or broken toilet
• a serious roof leak
• a gas leak
• a dangerous electrical fault
• flooding or serious flood damage
• serious storm, fire or impact damage
• a failure or breakdown of the gas, electricity or water supply
• a failure or breakdown of an essential service or appliance on the property for hot water, cooking or heating
• a fault or damage that makes the property unsafe or insecure
• a fault or damage likely to injure a person, damage property or unduly inconvenience a tenant
• a serious fault in a staircase, lift or other common area of the property that unduly inconveniences a tenant in gaining access to, or using, the property.
Tenants are instructed to contact their property manager urgently if there is an emergency repair needed and the repair should be attended to as soon as possible as required by legislation. This is especially important as the tenant can be rewarded significant compensation that may exceed the cost of the repairs if an emergency repair is not attended to promptly. It is always recommended to budget for unexpected problems and act quickly if they happen, so it doesn’t end up costing you more than what the repair would have cost alone.
Routine repairs are anything that is not listed as an emergency repair such as things like faulty air conditioners or loose fixtures. Even though these issues are not considered urgent, it’s still important to attend to these in a timely manner to avoid an unhappy tenant or having the problem get worse.
Delaying or ignoring repairs and maintenance can only cause you headaches in the long run so it’s best to tackle these problems as soon as they come up to get them out of the way.