Education key to avoiding pitfalls
Understanding the common financial pitfalls affecting landlords is the key to investing with confidence, according to Carolyn Parrella, of Terri Scheer Insurance.
Ms Parrella said the first pitfall was setting the rent too low or high.
“Setting the rent too high may result in limited interest from prospective tenants, leaving you out of pocket if the property remains empty for an extended period of time, ” she said. “However, setting the rent too low may place you under financial pressure, limit your rental income and has the potential to attract unsuitable tenants.”
The second mistake stemmed from landlords failing to monitor arrears, which can become a lengthy process to resolve if a tenant falls behind in their rent.
“Diarise the dates that your tenant’s rental payments are due and check your bank account on those days, ” she said. “If your tenant doesn’t pay on the due date, monitor your bank account on a daily basis. If they fall into arrears a breach notice should be sent for non-payment of rent.”
However, she said the number of days in rental arrears before a termination notice could be sent and the time between presenting the notice and requesting vacation varied, so it was important to check local tenancy laws.
Ms Parrella said self-managing a rental property could also create headaches for landlords.
“While it can be tempting to save a small percentage of rental income by self-managing your rental property, the benefits of appointing a property manager can far outweigh the costs, ” she said.
Neglecting maintenance was another pitfall, with landlords liable to act on any issues as soon as possible, while having inadequate insurance rounded out the most common five landlord hazards.
© The West Australian
For more Real Estate information, visit westrealestate.com.au