Property Report – Tim Johnson

Property on the North Coast has proven to be one of the best investments that you can make.

Aside from investing in your own residential apartment or home, there is always the option of investing in an additional property or portfolio of properties to rent out and earn rental returns or yields while your investment value grows year on year.

Our chairman, Samuel Seeff, reckons that you cannot really go wrong with local property unless you hopelessly overpay, buy a structurally unsound property or buy in the wrong area.

That said, he cautions buyers to know that there are many hidden nuances that you need to be aware of, especially if you are looking to invest in a rental property and you are new to the market.

Here are five things to consider before committing to taking on an additional rental property:

1. Investigate the market

Make sure you get to know the area that you want to invest in, inside and out. Speak to a credible local rental agency with a history and successful track record in the area and find out what type of property is in demand and at what rental rates.

2. Furnished or unfurnished?

When it comes to the long-term rental market, unfurnished is usually preferred. For holiday and short-term rentals, basic and durable furniture and furnishings and extras such as satellite television and wi-fi have become essential.

3. Maintenance

You will be responsible not just for the basic maintenance of the structure and fixtures that come with ordinary wear and tear, but be prepared for additional damage repairs and maintenance.

4. Tenant sourcing and management

Employ the services of a credible rental agent to assist with managing your property and its occupancy. This includes navigating what has become a bit of a minefield of legislative issues, vetting of the tenants, collecting monthly rentals, managing the property including any maintenance issues and more. This would certainly assist in ensuring that you do not sit with unnecessary vacant periods, something that can quickly eat into the returns that you may have hoped to achieve.

5. Property costs and rental returns/yields

Over and above the costs of actually acquiring the property such as the purchase price and transaction and transfer costs, it is important to be fully aware of the hidden costs that come with a rental property. These would include the basic holding or ownership costs such as home owners insurances, basic utilities and levies, any complex levies and costs and security costs.