By Phil McCarroll of Your Investment Property Magazine | 23 Feb 2016 11:30 PM
While investing in a rental property may be a sound way for people to secure their financial futures, one insurance company has warned that landlords won’t always get a great night’s sleep.
According to landlord insurance provider Terri Scheer Insurance, there are five common issues that often cause landlords to lay awake at night.
“With preparation and dedication, property investment can be an attractive wealth creation strategy for Australians,” Terri Scheer Insurance executive manager Carolyn Parrella said.
“[But] like any investment, it’s not without its risks,” Parrella said.
According to Parrella, the main reason that rental properties cause their owners to stress is a relatively obvious one.
“Concerns over rent being paid on time can become a major stress point for property owners relying on the income. It’s an issue that needs to be addressed as soon as possible,” Parrella said.
“Landlords should refer to their local laws, and their lease agreement, as these requirements may differ in each state/territory. Landlords should complete thorough checks of potential tenants’ references during the screening process, specifically looking for issues with missed or late payments,” she said.
Cash flow issues are common concerns for landlords, with Parrella saying landlords may now have to ensure their properties are tenanted and avoid the stress that comes with a vacant property.
“Presenting a well-managed property may help to broaden your pool of prospective tenants, reduce time and money spent on advertising and decrease the number of days your property remains unoccupied between tenancies.
“Items once considered luxuries are now standard requirements. Not offering these comforts can make a real difference to the property’s appeal and may impact the amount of rental income the landlord earns.”
But just finding a tenant can sometimes lead to even more reasons to worry.
“While most tenants do the right thing, there is a minority that violate their lease agreement by behaving poorly or undertaking illegal activity at the property,” Parrella said.
“Some tenants may breach their pet policy, fail to adhere to noise requirements or smoke at the property. Although it’s a rare issue, other tenants may use the property to distribute or manufacture illegal drugs,” she said.
While ensuring the rental money is coming in may go a long way to alleviating the stress landlords are under, Parrella said more mundane concerns can also place a heavy strain on landlords.
“There is a sizeable amount of paperwork that goes with being a landlord and left unchecked it can build up and become a burden.
“A good property manager can save landlords from potential paperwork headaches by managing the administrative side of the investment property for them.”
Similarly, Parrella recommends landlords deal with maintenance issues in a timely and adequate manner to avoid further headaches down the road.
“Landlords who skimp on maintenance with quick fix solutions often find that it actually costs them more in the long run. With the popularity of home renovation shows like The Block, landlords are given the false impression that improvements to their properties are achievable within tight time frames and with limited practical experience or knowledge.
“Do-it-yourself fixes can result in substandard workmanship and legal liability claims if there is an injury or loss resulting from a safety hazard that has not been addressed. Unqualified handymen should leave maintenance to the professionals as the expense is also tax deductible.”