A growing number of Australians are expected to invest in the property market as low interest rates and rising rental values promise to deliver some attractive returns.
Location, price and the type of property can all play a major factor in determining how your investment will perform, however there is another important factor that some investors neglect to consider: the tenant.
While capital growth is a major goal for most investors, strong cash flow is also an essential consideration for a sound investment – and this will be generated by the rental income.
Good tenants are therefore an essential ingredient in an overall sound property investment, so how should landlords go about attracting them?
Landlords essentially have two options when it comes to finding tenants. The first is to engage a professional to manage the property on your behalf – and that service includes finding suitable tenants.
Hiring a professional can be a smart move but their services do come at a cost – usually around 7.5 per cent of the rental value.
If you engage a professional real estate or property management agent they will not only find and screen suitable tenants, they will also manage your property on your behalf, which includes rental collection, maintenance and tenant liaisons.
If you decide that you have the time to manage your own investment you’ll need to find your own tenants.
When finding your own tenants it’s important that you advertise in the most effective media channels and use the right messages to attract the type of tenant you seek.
For example, for a suburban property renting families are a more likely to be your target market, so local papers are usually a good vehicle for communicating with them. If in the inner city, your target market may be students or singles – which you can connect with online.
When selecting a tenant you’ll need to be rigorous with your reference and rental history checks as well as determining their employment status and current family situation.
Also ensure that your tenants sign a rental agreement, which can be purchased on the internet for as little as $40.
Remember, good tenants are essential to a successful investment. Should they not look after your property you may incur excessive maintenance and damage costs – so be selective.
If you’re unsure about how to find an agency to manage your property, or to discuss how tenants may impact your mortgage, please feel free to get in touch.