Homeowners with tens of thousands of dollars of ‘new’ equity in their own property may be keen to spend it! Some may look at big toys like a flash car or a boat. If they consider using it for a second property ideally that will be an investment property rather than a holiday home.
An investment property produces an income and when rented well it can also produce a profit (income minus expenses). Borrowing to invest in an income producing asset is surely a better spend than borrowing to spend on a liability like a car or boat… and investments can be just as much fun – umm well probably not but an investment property will keep you busy!
The starting point for a new landlord is getting to know your rights and responsibilities. The legislation governing the relationship between landlord and tenant is called the Residential Tenancies Act (the Act). There are a lot of clauses in the Act and they all need to be adhered to. Failure to comply with the Act may result in a financial penalty and being listed on the public record – clearly this is not a good look – but don’t let learning the Act put you off.
When you engage a property manager they manage the relationship and instruct you on how to keep on the right side of the law.
On Pedersens Property Management website you can get a list of the ‘must do’ and ‘must not do’ actions that are in the Act. Examples of ‘must do’ actions are:
- maintain the property and do any necessary repairs
- write and tell the tenant at least 60 days before putting up the rent
There are also rules for the condition of the rental property and what it must have and also a rule for when you can inspect it.
Some of the ‘must not do’ actions are:
- Ask for more than 4 weeks bond
- Inspect the property more than once every 4 weeks
- evict a tenant (this needs a possession order enforced by the District Court).
New landlords should also get a rental valuation before securing tenants so they know how much the rental rate should be for their property.
Tips on rental rate increases and maintenance challenges like pest infestations or how to market your rental to attract tenants can be found on Pedersens Property Management website.
This blog article was written for PropertyBlogs by Mobilize Mail.