A cooling market can mean hot opportunities for landlords

Tips in a cooling market

A cooling market can mean hot deals for investment properties so now is the time to see what is out there. When doing so, here's a few practical considerations to keep in mind. 

For years, the Auckland housing market has been hampered by too few homes being chased by too many buyers. This left those wanting to be landlords disappointed with their options.  The current cooling market can mean hot deals for investment properties so now is the time to see what is out there. Of special interest might be properties that need significant repair or upgrades but are in desirable locations.

Our tenant survey found that 85% of respondents considered location to be an important consideration in choosing a rental property. Commute time is also a factor with 59% saying that how close they are to school and work can be a deciding factor when thinking about staying for over a year in a property.

Get your tool box or your team sorted
While dated properties can make financial sense over time as they increase in value know that maintenance and upkeep may mean more headaches than newer places.  If you don’t enjoy chances to be handy make sure you have a short list of reasonably priced experts in plumbing, electricity and general property troubleshooting.  Have enough savings on hand to tackle big and small projects because unexpected repairs can affect revenue even if you have rent rolling in.  

Only engage reputable tradespeople as you are a Person Conducting a Business or Undertaking (PCBU) and must ensure, ‘so far as is reasonably practicable’ the health and safety of workers and that other persons are not put at risk by its work.

If you are a busy professional don’t overlook the option of bringing on a property manager.  

Have a solid understanding of tax ramifications
Before you sign on the dotted line to purchase ensure you have a solid understanding of property and income taxes. As a general rule, you can anticipate that any income received from renting must be included in your annual tax return.  According to Inland Revenue, the following may be deducted from your rental income:
-  Mortgage repayment insurance
-  Accounting fees for the preparation of accounts
-  Commission paid to agents who collect rent, find tenants or manage the property
-  Motor vehicle and travel expense specifically related to the rental property

Get it in writing
If you cannot afford a property on your own choose partners and investors wisely. Hire professional legal counsel to draw up contracts and agreements, even if you are working with trusted family members. This can prevent arguments, misunderstandings and legal woes down the line if everything is agreed upon in writing from the outset. This includes profit sharing, maintenance liabilities and other topics that require clarification.

Rentals can monopolise free time
Give serious thought as to the amount of time you want to dedicate to this investment. If you are planning on self-managing your rental property, consider it a sure bet that you will be spending hours dealing with tenants, sorting repairs and reviewing financials.  If your free time is a precious commodity then you may want to consider engaging a property manager or looking to other investment opportunities in lieu of becoming a landlord. This is especially true if you intend to acquire more properties as time passes.  More properties can mean more demands on your free time.

There are so many benefits to owning an investment property. Don’t let the handful of potential pitfalls scare you off!  As long as you do your homework and are a responsive landlord it can mean a solid revenue stream for years to come.

We are here to help!  For more information on available investment properties and our property management contact one of our property managers.