1. The spark: You have been inspired to invest in property. Either your parents have encouraged you, your friends are successfully investing in property or some other inspiration has sparked the fire.
2. Research: Researching takes time but is important. You need to research areas that you may want to invest in, what sort of property you may want to buy, potential team members (Property Manager, Accountant, Buyer’s Agent etc).
3. Financing: How are you going to finance it? Who have you got on your team that can help you make decisions in this area? Financing may fall under the research section, but for others it is a separate category.
4. Paperwork: You will need to determine how you are going to purchase your property. Are you going to buy property as a business or as a personal concern? What are the tax implications of each? What insurance will you need? What contracts will you need? Don’t skip this step! Paperwork may not be exciting, but it’s important that you know all legal issues and you have everything you can in place BEFORE you find a property.
5. Find and Buy: Now you have the money you’ve done the research and you have all the legal issues ironed out, it’s now time to find the right property at the right price. Ideally you will have people on your team who are very experienced at getting a good deal!
6. Renovate and Decorate: Put your stamp on the property – add value if you can. Hopefully you already have great contractors on call who will give you great advice. If you haven’t, find them! The property needs to appeal to your ideal tenant and it needs to last a good long time. A great contractor will save you money in the long-run on these points. Are you using a Property Manager for your property? If so, I would advise that you get them involved in the this step – BEFORE you start to renovate. A Property Manager will be able to give you great advice on what you should and shouldn’t do to maximise your rental yield.
7. Promote: If you are not using a Property Manager to handle the marketing of your property then you will need to organise the advertising of the property – with fantastic photos! Photos can make or break a property. Your potential tenant’s first impression is likely to be the photos they see online – make them appealing. Then you need to advertise your property in all the places your ideal tenant will be looking. When it’s time to show your property – get their early, have all the paperwork you need, be friendly and welcoming. You and your property have to make a good impression.
8. Screen: This is a vital step! The screening process is the key to long-term, responsible tenants. Do everything you should do – and then some. You will not regret it if you do the work. But if you decide to NOT spend the time and effort at this point, and the tenant turns into a nightmare, you will kick yourself for years. You can hand this over to a Property Manager to take care of if you don’t want to deal with this.
9. Sign and Collect: Sign the lease, collect the bond. Make sure you use a rock-solid contract, that spells everything out and that you go through it ALL with your tenants. This way your new tenants cannot claim they ‘didn’t know’ they weren’t allowed to sub-lease the property. Make sure that all adults in the property are named and they sign the lease.
10. Move In: Deliver the keys to the tenant, and give them a hand. Go the extra mile, give them a ‘welcome’ gift, a little gift basket of essentials (toilet paper, dishwashing liquid, tea towel, coffee, milk, shower curtain etc). You will make a very good impression and you tenant will be grateful. At the very least provide a contact sheet with your details, the day rubbish is collected, local takeaway places, and other local knowledge.
11. Collect the Rent: Once an automatic payment is set up most of the hassle will be taken out of collecting rent, but sometimes there are teething issues, so make sure everything is set up and monitored closely.
12. Repair, Maintain and Inspect: When your tenant calls with an issue – address it FAST! The sooner you get on top of a leaking tap the easier it is in the long-run. The tenant also understands that you are responsive and the property is important to them, and you expect the same in return. Make sure you inspect the property as outlined in your lease, this way you can see if there are any potential issues that need to be addressed.
13. Renew or Re-list: Hopefully you’ve made a great impression on your tenants and they want to stay, so renew that lease. If not, then start the process again at step 6 if you need to. Are there any touch ups that need to be done before you re-list the property? Do you want to hand the management of the property over to a Property Manager?
Have I missed a step, or is there something that you’d add? Share below.