How To Become A Successful Landlord

2007-12-21 Word Count: 659 Category: Real Estate

Building yourself a property portfolio can be one of the best financial decisions you ever make, many newbie property investors though seem to forget that there is more in it than just numbers on your bank account. Becoming a good landlord is one of the vital parts of running your own property portfolio, there will be things you probably never thought of. I will show you some of the things you need to know and do when becoming a landlord.

Property Insurance:
Residential property insurance is absolutely important, the insurance policy should at least incorporate:
Liability
Building and contents cover
Rent default
Loss of rent due to damage or loss of your property

Taking care of responsibilities and obligations to your tenants:
You the landlord are obliged by law to keep the property in a hygienic and livable state, this doesn't mean that you have to turn the place into a palace, keep a reasonable state of maintenance considering the age of the property and the rent paid for it.
Conduct urgent repairs as soon as they arise
Maintain a good level of security, measures you need to take differ depending on the area your property is situated in, measures you may need to take are: safety locks, window bars for ground floors, but also installing smoke and fire detectors.

Maintenance of your property:
Extremely important, as good maintenance will increase the value of the property but even more important, ignoring maintenance will be a guarantee to increase your tenant turnover, meaning more vacancy time and no return on your investment. Keeping your property in a good state will make it more attractive for future tenants and on the other site increase it's resale value.

Keep regular inspections:
Schedule a maintenance inspection at least once a year, of course you have to give written notice to the tenant. During these inspections you can do small repairs and change batteries of smoke detectors, these inspections are ideal to view the state of your property. You can also see this inspection as an opportunity to get feedback from your tenants.

Make a minute tenant responsibilities list
Rule out the main reason of rental conflicts by leaving no room for open interpretations of the law or your rental contract. Combat this by minutely spelling out what you expect of your tenants, attach it to the rental contract and let your tenants sign the contract agreeing to abide by these conditions.
Things you can include in this contract are: keeping the place clean and tidy, garden maintenance, damage reports, yes or no pets, keeping walls free of nails, cleaning the property prior to departure, bond conditions etc.
Keep in mind that your contract may not be legally upheld if your tenant challenges your contract for a tenancy tribunal.

Be a good bookkeeper:
Keep all invoices for repair and maintenance work you have done as they are tax deductible on income providing properties. There is a difference between maintenance and improvements though, improvements are not deductible immediately, and have to be deducted over a couple of years.
The difference between the two is: Maintenance or repairs are expenses that maintain or restore an income producing asset in the state that it was. Improvements are taking it beyond the condition it was when it was first rented out. There is a sort of twilight zone between the two of them, and it's up to you to be creative and convince your local friends at the tax office that you are entitled to that huge tax return.

My final advice to you is to keep well informed about all new regulations, as each year there are many changes to the system. Read property investment magazines, financial papers and try to attend a property seminar, some banks give free ones for the prospective property investor. Anyway try to keep up to date in this business where the rules of the game change rapidly.