Even in the current market, where uncertainty prevails, buying a property and renting it out, over a period of 10 or more years, is most likely to guarantee you a good rate of return. While the rental income each year will likely more than cover your mortgage and some, new landlords often neglect a couple of critical aspects of property maintenance which mean that they will not recoup the profit they initially desired upon selling the house.
With this in mind, landlords should remember these three principles if they wish to effectively maintain and maximise the long term value of their property.
- Invest in maintenance, little and often. When landlords buy a new house in great condition, there seems little reason to invest in its maintenance. After all, the landlord is not living in the house and as long as the tenants are happy then that’s all that matters. If your investment plan is to sell after 10 years, and you invest in little maintenance during this period, this is when problems can arise. Small investments along the way are insignificant when compared against the long term cost of a full renovation, which may be required in order to achieve full market value upon sale.
- Perform background checks on any prospective tenants. When purchasing a new investment property, it may be tempting to move tenants in as quickly as possible. It is important, however, to perform the relevant credit and background checks before allowing prospective tenants to move in. This avoids not only the issue of unpaid rent, but also avoids a situation of renting to tenants who have a track record of not treating properties with care.
- Communicate. Whether it’s with your property manager or tenant, we can’t stress enough the value of effective communication. Setting your standards early is important. If there is an issue, become a landlord with a reputation for quickly resolving any problems. By establishing this kind of relationship with you property manager and tenants, there is more chance that they will treat you, and your property, with the respect that is deserved, ultimately protecting the long term value of your property.