Top tips for landlords
Creating an investment property portfolio for future generation of wealth and some financial security is quickly becoming a popular avenue Australians are considering. People across the nation are taking out home loans and making decisive moves into their local real estate markets with the goal of generating some value in these assets, paying off their mortgage as soon as possible, and reaping the rewards of a strong investment portfolio.
Of course, like most things in life, it's important to take steps towards protecting your interests. The wildly unpredictable nature of life can sometimes have a major effect on your investment outcomes, whether this be for better or worse. Therefore, taking some initiative and making moves to ensure you're well covered for any inexplicable complications in the near future is a great way to safeguard against potentially huge financial losses.
As a property landlord, here are some of the measures you can take to kerb these problems and protect your future interests.
When it comes to renting out your properties, more often than not there will be no complications with the tenants. Most people are perfectly happy to respect your real estate and treat it like their own, without any complications or major damage being done to the property.
However, to protect yourself from the potential "bad apple", it's always a good idea to take photos of your properties and get some inspections reports done before new tenants move in. This is simply so you have evidence of the property's state before they moved in, giving you a leg to stand on in the event that tenants cause major damage, but deny them ever happening.
To remain even more transparent and open, encourage your tenants to take photos as soon as they move in. Creating this honest dialogue with your tenants is a great way to build a rapport while also avoiding the potential for complicated legal battles in the future.
Another thing to consider as a landlord is the possible insurance options available for your portfolio. Known as landlord's insurance, these products can be a lifesaver if you're befallen by an unforeseeable accident or particularly malicious tenants.
Like all insurance, there are different things you can include in your policies, depending on what the insurance company provides, as well as your own thoughts towards possible problems. These range from natural disasters like flooding, earthquakes, storms, fire damage and other Acts of God that cannot be adequately prepared for, as well as more tenant-related complications.
For example, if a tenant decides to leave the property without giving the required notice, this can result in substantial amounts of lost income for the investor. However, having landlord's insurance can help alleviate the blow from this financial loss by providing some form of compensation of the lost funds.
Airtight rental agreement
Making sure you and your tenants are on the same page when it comes to the terms and conditions of their residence in your property is essential. Therefore, having a solid rental contract that outlines things like the agreed rental rate, a measure of how long the lease is for, the circumstances surrounding renewing their tenancy and any other specific complexities involved with rental agreements should be clearly outlined.
Furthermore, ensure both parties agree with the terms and sign off on the document. Should any legal complications arise, these documents can be used in court to help the proceedings and highlight any intentional wrongdoing by either party.
These are just some of the steps a landlord can take to help protect themselves from any future financial risks involved with owning and leasing out rental property in Australia.
Image credit: GlennPeb