A residential rental property investment is one of the most common avenues through which investors enter the Australian property investment market – there is of course commercial property options however a far greater level of finance is required to secure commercial properties – making the residential market much more accessible to the everyday investor.
Whilst holding a residential rental investment property, you will make an extra income and can use the investment as a tax offset if the property is negatively geared. There are essentially two types of residential rental investment property options available:
A short term rental investment property
Short term rental investment properties are those that are rented for shorter periods of time and are generally holiday rental properties, with many in coastal areas. The benefit of this rental investment property type is that the owner can also use the property throughout the year – often making these properties an enviable lifestyle option.
A long term rental investment property
A long term rental investment property is one in which the tenants reside for an extended period, with tenancy contracts in Australia generally ranging from 3 to 12 months.
The rental investment property type is usually dictated by demand for that type of property in the area – such as short term rentals in coastal locations and long term rentals in inner-ring CBD suburbs.
Managing Your Rental Investment Property
One important consideration you will need to make when buying your rental property investment is how to manage the property. The options include:
Self managing your rental investment property is effectively a DIY approach to leasing, renting, inspecting, screening, legislations and maintenance. While this would be an effective way to save money as there are no management fees, you do need to make sure you have a good grasp of your obligations including the legalities and trends, as well as a dedicated amount of time for the management.
External Property Manager
An external property manager is an offsite agent authorised by the owner to manage the rental property on their behalf. They typically manage the tenancy requirements including collecting rent, pricing, property maintenance, and so forth. The benefit of this is that not only is the hard work done for you, but their industry knowledge, tools and contacts will work well in your favour.
An onsite manager is a person that resides within the development and undertakes all of the tasks as outlined by an external property manager. The benefits of this are that they are well equipped to handle all leasing enquiries and tenancy applications, and have a personal interest in the development itself.
We generally recommend using the onsite property manager as they have a vested interest in the success of the development. An onsite manager has purchased one of the largest apartments in the development, as well as the management rights. While an onsite manager generally requires a higher fee, this shouldn’t be considered a major deterrent as they are definitely worth their weight in gold. A handy onsite manager will attend to general maintenance themselves saving you time and money in the long term, whereas an external agent will usually call a trade upon an issue with the property being raised.
To find out more about rental property investments contact LV Prestige today.