Converting your home into an investment property - what you need to know

For many people, the prospect of buying a new property is a chance to find a home that better suits their needs. Maybe there’s more bedrooms, a bigger backyard, multiple living areas, or it’s just more kid-friendly? Moving into a new home is an exciting time – but it doesn’t have to spell the end of your relationship with your original property. Why not keep your previous home as an investment property and take advantage of all the benefits that come with it?

Thinking of converting your home into a rental? It’s not as simple as just moving out and putting a “for lease” sign out the front. Preparation is key – a properly prepared home will not only fetch a better weekly rent and quality of tenant, but it will also ensure the leasing process is simple from start to finish. Give yourself plenty of time to properly prepare your home for lease. It might mean a few extra weeks without rental income, but it’s important to get all those jobs around the house finished, any cosmetic improvements completed, and give your property manager time to conduct all the relevant checks and inspections. Your property manager will then need at least three days before tenants move in to allow them to perform a thorough inspection and prepare a condition report. This document records the condition of the property prior to the tenants moving in so it’s important that it is accurately completed. Your property manager will take photos of the property and prepare a copy of the report for you before your tenants move in.

Contemplating turning your home into an investment property?

Here are some things to consider:

• Invest in a property manager: getting someone to manage your house for you makes the whole process of owning an investment property much easier. Your property manager will have direct contact with the tenants, organising any maintenance and repairs, managing rental payments, and conducting routine inspections – so you don’t have to.
• Update your insurance: you’ll need to switch your insurance from owner/occupier home insurance to landlord insurance. Basic landlord insurance covers building insurance for damage to structures on the property, maintenance, and protection for pools, sheds, and other outbuildings. Basic insurance should also provide some coverage for minor accidents or injuries that happen on the property too.
• Think about rent: talk to your property manager to get an idea about how much rent to charge. Do some market research – look at the rates for properties in your area that are similar in size, location, and amenities. Factor in your costs (i.e. mortgage) but be reasonable in your expectations.
• Set the rules: talk to your property manager and decide what you’re willing to allow at your property – and what is a no-go. Do you mind pets? Will the lease include water usage? Will it be furnished? These are all things to think about before you rent out your home.
• Get your property ready: you don’t have to complete a full renovation to get your house on the market but it’s definitely worth making a few cosmetic changes if you want to secure a higher rent. Now is the time to put in a new kitchen or bathroom if it’s something that will add value to the home. Consider a fresh coat of paint and some landscaping or installing reverse-cycle air-conditioning.
• If it’s broken, fix it: everything in the house should be in good working order, including appliances, plumbing and electrics. There are some things a home owner would be happy to live with that a tenant wouldn’t (and shouldn’t!) have to deal with. Do an internal and external inspection and fix anything that you’ve been meaning to tend to, particularly torn fly screens, holes in walls and general wear and tear.
• Bring in the professionals: get your property professionally cleaned (including the carpets) and have it sprayed for pests inside and out before your new tenants move in.
• Change the locks: have new keys created and collect keys/remotes for items like the mailbox, garage and shed.
• Read the fine print: think about any aspect of your property that might not meet regulations/safety guidelines – for example, fences, stairs, railings, blinds, balconies, and curtains. Does the property meet electrical and water efficiency standards under your local Residential Tenancies Act? Landlords are also usually required to provide smoke detectors. Have a chat with your property manager to determine what you need to fix.

Ready to get into the investment property market? We’d love to help you start your property management journey on the right foot. For an obligation-free appraisal, contact Edwina Smith on 0429 328 086, via our website or DM on our Facebook or Instagram channels.