What is your property investment plan?
May 9th 2017
Often we get a management request from a new landlord who has purchased or inherited a property, or perhaps has their own earthquake damaged home still after being paid out and moving to a new build. Being new to the investment game, and hearing conflicting advice about what to do can leave a lot of uncertainty about what the best long term plans should be for the property.
The reason this is important is it can affect the way the property is marketed as a rental, what maintenance or improvements are carried out, including how to much to spend, and what tenants are best suited to the property.
So here are some things to consider, bear in mind it’s worth reviewing your portfolio from time to time anyway.
- Do you intend to keep the property long term (5 years or more), or sell in the next 12-24 months?
- Is the property held in a family trust, by an individual, or in a company? How will holding or sellig the property affect the financial and tax implications for all involved?
- Who are your ideal tenants; young families, singles, professional couple, retirees, students, new migrants (to Christchurch or New Zealand)? Any other parameters?
- Are you happy to have pets in the home? Pet owners as tenants tend to stay longer and be keen to keep on the right side of the Landlord or Property Manager, because they understand it can difficult to rent elsewhere with animals.
- What about smokers? Inside or outside only? Some owners of earthquake damaged but liveable homes have made an exception to the outside smoking rule, as the house will eventually be demolished.
- Do you have a maintenance schedule for the property?And have you set funds aside for regular work to be carried out? If you’re not practically inclined, get advice on recommended and necessary servicing and preventative maintenance, as well as repairs as needed. The minimum we would recommend while a property is tenanted is annual heatpump and/or log fire servicing, gas fitting servicing if applicable, six monthly garden maintenance (pruning trees and shrubs), waterblasting paths and driveways, and clearing gutters six monthly.
- Have you had a rental property before? Did you manage it yourself or have a property manager? What worked well or not so well with that process?
- What is most important to you in having a rental property? Regular income, providing a home for people, being hands-off (no more late night calls!), an investment for your children or grandchildren, having someone else look after maintenance, knowing the property is being looked after while you live elsewhere, future wealth due to capital gain, letting someone else look after the detail of open homes, reference and checks, inspections, and all the day to day of a rental home? Anything else which is really important to you?
There isn’t one right or wrong answer; instead it depends on your own stage of life, risk profile, and appetite for stability or change. Get plenty of advice from people you trust who are also experienced in property investment, accountant, lawyer, financial adviser, CPIA, and of course your trusted property manager!