Note from the Editor:

Missed part one? Catch up here.

This article was written for the SDC by psychologist and member @Jan A. Jan A. works part-time, taking on clients under the Medicare Mental Health Care Plans. She works with people of all ages, from children to seniors!

This article is for those who are considering investing in a property to rent out. The information is designed to assist people who will need a mortgage to buy an investment property. If you can pay cash for a property, some of the advice may still be relevant for you.

Hopefully, some of the information in this article about navigating the property market will be useful. Please note that advice expressed in this article should not be taken as the only view or even the best one for you. It is not to be taken as professional financial advice. I am only passing on what I have learnt about this form of investment. Check with other people who have property investment experience. Consider their views, take on board what is useful for you and discard the rest. Practical experience provides the most useful information. If any readers have experience in this investment field and would like to contribute to this information, please add your comments to benefit others.



Building and Pest Inspections: When you find a property that might be suitable, you pay a small deposit for the seller to hold the property for you while you have building and pest (termite) inspections done. Always have these inspections done. The only exception is in Tasmania where you do not need a pest inspection because it is too cold for termites!

A termite inspection is vital. If you buy a house that is or has been termite infested, rectification costs could be enormous. No insurance will cover termite damage. The only 'insurance' is to have a termite barrier installed around your house to prevent damage. This barrier is worth the cost. They cost around $2,000 to $3,000 and last about 12 years. Spraying for termites only makes them run to another part of the property and set up again there. Your building inspector will check aspects of the house that are not immediately noticeable to you, such as whether there are issues with the roof. If you have inspections done and there is a problem with the property, you can claim the deposit back. If the inspections have satisfactory results, you can proceed with the purchase, and your initial deposit is included as part of your 10% deposit on the property.



Insurance: Once you buy an investment property, always have landlord’s insurance. This insurance covers more than just the building. Provided you have a lease in place, landlord’s insurance also covers losses if tenants skip out owing rent. It covers malicious and deliberate damage left by tenants. It covers accidental damage, such as a stone going through window glass when the tenant is mowing the lawn. There is always an excess for the owner to pay, usually about $300.

Agent: Engage a managing agent to look after the property and collect the rent. Check their fees and charges before signing with them. Usually, 90 days’ notice is required to dismiss an agent if they are unsatisfactory. When you engage your agent, provide bank account details where they will deposit the rent. Make sure you update your bank details if you change accounts. The managing agent will provide a statement of collections and expenses at the end of the financial year. This statement should be provided free of charge. If the agent charges for the annual statement, get another agent. Provide the agent with a copy of your landlord’s insurance, updated each year.



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