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Investing in rental property
Owning a rental property used to be something highly affluent people did. These days, owning property to rent is more commonplace, and as the demographics of our country shift, the demand for rental property remains strong.
As a result, investing in rental property is an increasingly popular way to save for retirement in New Zealand. Property investment can provide a steady income stream and financial security for years to come.
Rental properties are relatively low-risk investments, and a well-managed rental property can provide a steady stream of income and a potential capital gain.
This income can supplement retirement savings, saving you more money for retirement. A rental property can also help hedge against inflation, as rents tend to increase over time. By using the rental income to cover the cost of the mortgage payment, you ensure that your retirement savings are maintained.
Additionally, rental properties can be leveraged to purchase additional properties, allowing you to build a more extensive portfolio of rental properties over time. This can be a great way to diversify your investment portfolio and ensure that you have a steady income in retirement.
As a landlord, you can claim expenses against your income, such as mortgage interest payments, insurance, repairs and maintenance, and other costs associated with being a landlord.
Using a property manager
Why would I use a property manager for my rental investment?
As a rental property investor, having a reliable property manager to take care of your property is one of the best investments you can make. The benefits are more than just financial; many other parts of property management can be arduous for landlords.
Running a rental relationship involves much more than selecting a tenant and collecting rent. It is a business, and having a buffer between you and your customers prevents you from feeling compromised by having a personal relationship with tenants. Keeping the tenancy professional will reap financial rewards and reduce any need requirements for dealing with conflict. Being confident that your Property Manager has it all under control is priceless.
Property maintenance can take up much time, and when something isn’t working or needs repairing, tenants want it fixed asap. Sourcing quotes from tradespeople and managing access and performance can be quite arduous, especially if your property isn’t close to home. Property Managers will have a roster of great suppliers for your property’s needs and will likely have preferential relationships with their network of providers. This means they will be getting an excellent price for any work and are more likely to be prioritised in expedience. And you can sleep well knowing your phone won’t be ringing at midnight because the tenant’s toilet is blocked.
As well as a great network of suppliers, your Property Manager will have a wealth of knowledge about your legal requirements and obligations as a landlord. This can save you time and money!
This is a crucial element when you are looking for new tenants. Property Managers deal with people all day, every day and will provide significant insights when it comes to choosing the right tenant for your investment. They will have tools that allow comprehensive background checking and credit checking and will have a strong understanding of the Residential Tenancy Act (RTA). Investors not up to date with the changing law can end up in complex (and expensive) situations. They can advise you about Healthy Homes Certificates and know what to look for when doing regular inspections, quickly identifying any potential red flags!
Property Managers come at a cost, but the benefits they provide, mean that they often pay for themselves quickly. From understanding market rates for rent, managing rent increases effectively and preventing you from being lumbered with damage and unpaid rent. If your property is out of town, they can save you the time and cost of travel, and you can benefit from savings from their suppliers whom they use regularly.
Experience counts for everything. Your rental property may be an old family home with emotional ties, or you may find that particular tenants don’t live the way you do. Property Managers understand that your investment is crucial to you, but the tenant has the right to live without a landlord constantly looking over their shoulders. A Property Manager will know what is legal and fair in terms of access and assessment of the house’s condition and will build a relationship based on trust and respect, allowing you to enjoy the financial gains with your feet up.
Find out more about Classic Property Management now available in Auckland, Bay of Plenty and Waikato HERE.