Mortgage brokers need to warn their clients that property investment isn’t always as simple as they may think.
New investors can end up with an underperforming portfolio inside 12 months if they don’t keep a close eye on their assets and on emerging opportunities in the market.
People think property investment is simple stuff, but you’d be surprised what’s involved in doing it well.
One of the key things that can turn a great investment into a drain on your clients’ time and bank account is when they take a ‘set and forget’ approach to property management.
Once your client has their first tenant in and the lease signed, they will be tempted to sit back and let the rent appear in their account. But local property markets are dynamic, and in time they could be earning less rent than comparable properties in the area.
Properties obviously experience wear and tear, so it’s important not to be lazy or stingy about making repairs. This can signal to tenants that it’s OK to be lazy with their maintenance and paying rent on time.
All of this takes time, attention and expertise, and that’s why a property manager would be a good investment for your clients. But they shouldn’t assume that their property is being managed well just because they have a property manager.
Properties should be inspected every three to six months and your clients should always ask for evidence they’ve been carried out – that means inspection reports and photos.
Your clients should also be offered a sales and rental appraisal after every inspection. This will tell them if they should increase the rent or sell the property or keep things as they are.
Owen Davis, owner, DFG Property Services
Owen has over 15 years experience in property financing, real estate and property management. More than one third of his clients are among the top 10 per cent of property investors in Australia. He is also the author of the free eBook, 10 Ways to Rate Your Property Manager.
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