Investment Property Management
An investment property is purchased with the intention of generating a financial return. Returns are generated through rental income or sale of the property. An investment property may be owned by an individual, group, or corporation. Owning an investment property is an excellent way to create passive income, but managing a property is time-consuming and complicated. Many homeowners turn to property managers to handle rental-related business such as advertising the property, attracting tenants, and organising repairs.
What is investment property management?
Investment property management is the process of supervising a rental property. This includes finding tenants, preparing rental paperwork, organising maintenance and repairs, conducting property inspections, and handling tenant enquiries. To ensure a good return on your investment, you must be aware of your rights and responsibilities as a homeowner. Without effective management, your property won’t attract tenants and may experience long vacancy periods.
The two main types of investment property management are residential and commercial. Residential properties typically house tenants who live in rentals. Commercial properties are public spaces like hotels, restaurants, offices, or coworking spaces. Management strategies differ depending on property type. To effectively manage an investment property, you’ll need a strong understanding of rental market advertising.
Is it worth investing in property?
It’s worth investing in property if you want security, tax benefits, and improved cash flow. Although the rental market fluctuates, the demand for housing is constant (everyone needs a place to live). This makes property a pretty secure pathway compared to other popular investments like cars or stocks.
Investing in property also gives you access to certain tax benefits. You can claim deductions on rental-related expenses, like repairs and strata fees. If you bought the property with the intention of renting it out for income, you may even be able to claim mortgage interest payments on tax. Claiming these benefits helps offset the cost of your property.
Turning your investment property into a rental is also a great way to earn passive income. By understanding unique rental market trends and fluctuations, your rental income can exceed the expenses of the property. This creates positive cash flow and fills up your bank account. Whether your investment property starts generating good passive income depends on factors like location, demand, and management.
RMA offers a range of useful information for clients about property markets. Visit our news section and learn about the nuances of property investment.
Should I self-manage or use an investment property manager?
The easiest way to manage an investment property is through a property management agency. Maintaining rental properties requires a deep understanding of tenancy laws, rental markets, and property maintenance. Managing a property yourself means arranging repairs, property inspections, and paperwork. You’ll also be responsible for navigating rent increases, lease agreements, and tenant disputes. This is especially difficult if you work full time, or manage multiple investment properties.
A property management agency will handle all property upkeep on your behalf. Property managers find and screen tenants, arrange inspections, organise repairs, and act as a bridge between homeowners and tenants. RMA’s skilled property managers know the rental market inside and out, and ensure you get the best return on your investment. Quality property management saves homeowners time and money.
How much are property management fees?
Property management fees are calculated based on the services being provided. Homeowners may utilise all or part of the services offered by a property management agency. With RMA, the cost is typically between 7% and 10% of the property’s rental income. The good news is, property management fees are usually tax deductible, so long as you’re using the property for rental purposes.