After securing your investment property, you may feel like the hardest part must be over, but the purchase is just the beginning. You are now a property owner and when you become a landlord, a lot of responsibilities will follow.
One of the most important decisions you now need to make is how you are going to manage your property. Some landlords choose to outsource to an experienced property manager, whilst other landlords prefer to self-manage to maximise returns and take control over their property.
For investors who want to think beyond the purchase and manage the asset properly from day one, working with an investment property buyers agent can help ensure the property fits both the buying strategy and the long-term management plan.
Should You Self-Manage Your Rental Property?
Although managing your rental property may appear overwhelming, it really is possible to do it yourself.
The benefits of taking control over your investment and saving on management costs could result in maximised returns, but only if you’re well versed in the requirements for property management. This approach isn’t for everyone. Be mindful that you will need to be highly organised, always keeping on top of documentation and legal requirements because if anything is amiss, you can be fined.
The responsibilities of self-management can be allocated into three areas: tenant management, property management, and financial management.
What Does Tenant Management Involve?
Legally, you will need to understand the state landlord-tenant laws and follow the Fair Housing Act. But one of the first steps in managing an investment property is to understand how you can attract tenants to your property.
Once you have received tenant applications, you will need to screen tenants and call references to ensure the tenant has a good track record of paying rent on time and will take good care of the property.
Once you have got tenants into the property, you will need to complete routine inspections, which need to be communicated to the tenants, so you will need to be aware of how much notice is required before entering the property.
One of the hardest tasks for a property manager is dealing with tenant complaints. You need to be able to compassionately listen to complaints, handle them diplomatically, but also understand where you need to draw the line on unreasonable complaints.
It’s important that you try to keep good tenants in the property, as well as reduce your tenant turnover, because this will all cost you more time and money with vacancy periods, new tenancy agreements, and the screening process.
Your tenant will need to sign a lease agreement. A huge role as property manager will be to enforce the lease agreement and deal with any disputes that may arise.
The lease agreement will set out the conditions that the tenants are taking the lease under, and sometimes this can lead to disagreements that can even be escalated to the tribunal if disagreements cannot be resolved.
What Does Property Management Involve?
Although you are not living in the property, you still have a requirement to keep the property in a safe and habitable condition for both the tenant and the surrounding neighbourhood.
Performing routine maintenance and other checks will prevent costly repairs in the future. Things like electrical checks, regular servicing of the air conditioning, pest inspections and spray, keeping gutters repaired and clear of debris, checking for broken roof tiles that may be letting water into the roof cavity, checking for any plumbing leaks, and similar tasks all matter.
When managing the property, you will need to oversee all the repairs and maintenance, which also means dealing with tradespeople and ensuring that the property is compliant.
Completing a move-in and move-out checklist with photos that both the tenant and landlord sign will assist with claiming any future damage. Documenting the condition of the home before the tenant takes possession and when the rental lease comes to an end is essential.
The tenants should also be maintaining and looking after your property with good care. You are allowed to conduct routine property inspections to ensure the property is being maintained, but keep in mind there are laws around how many inspections you are allowed to do in a 12-month period as well as how much notice you need to provide to the tenants before turning up for an inspection.
These inspections can also catch any minor maintenance needs before they become a bigger issue. It is important that you remember this is your tenant’s home, so you should always respect their privacy and give adequate and proper notice before entering the property. The requirements on this vary by state.
How Should Landlords Manage Rental Property Finances?
Since you are an investor, surely you want the property to be profitable. This means keeping a tight grip on the financial management of the property.
You will need to understand financial reports like cash flow, profit and loss statements, as well as all the reporting requirements, particularly around taxation and keeping all the relevant records. Financial management also means income management, managing how much income you will be receiving.
Setting the rental amount needs to be done with careful consideration. You will need to set the rent amount for your property while complying with applicable rent increase rules. For example, new regulations in states like NSW limit rent increases to once per year. There are also tax implications to consider: rental income is taxable, but expenses and depreciation will be deductible.
Accurately recording the cash flow, rental income, and property outgoings is important. You will also need to record the tenant’s deposit, which is held in account to cover you for damages should the tenant prove difficult. You need to lodge this rental bond with the relevant state authority.
You will need to manage all the expenses and costs like outgoings, as well as ensure you have adequate landlord’s insurance that will protect you against damages, loss of rent, and legal liability. All purchases against the property, maintenance, GST, taxes, interest on mortgage repayments, and other expenses all need to be recorded accurately.
A large operating cost for any property is the ongoing council rates and cost of utilities, including electrical, gas, and water. You need to understand who will be paying for what, and the requirements if you are requesting your tenant to pay for some utilities.
A buyers agent for investment property can also help investors think through practical ownership factors before purchase, including likely rental income, ongoing costs, and whether the property suits their investment goals.
How Do You Set the Right Amount of Rent for Your Property?
When setting an amount to charge for rent, you should be considering the demographics of the area. An area dominated by singles may be cheaper to rent than one dominated by families. What is the rental vacancy rate and days on market for a tenancy? What is the median rent the competition is charging?
What access to amenities does the property provide?
Is there anything unique about your property that deserves a more premium rent to be charged, such as a swimming pool, large garage, access to great amenities, or similar features?
Ultimately, the amount of rent that you are able to charge is all based on the economics of supply and demand, but the best indicator of what rent to charge is by looking to the competition and not being too ambitious. Otherwise, you will need to be prepared to adjust the rent downwards if your property remains vacant.
The main risks are that if you set a rent price too high, it is going to discourage some good tenants and you may have your property vacant for longer. But on the flip side, a rental that’s too low can attract the wrong tenants and reduce your profitability.
When Should You Employ a Property Manager?
If self-management isn’t for you, the more popular choice for landlords is to outsource their property management, typically due to one or more of these factors. They:
- Do not live near the property
- Do not have the time to manage the property
- Do not understand the process
- Are unfamiliar with the legal requirements
- Want an expert on their side that has the right knowledge and experience
If you are outsourcing property management, it is important to see where the property management company is located in relation to the property, read their reviews, and ensure their management style aligns with what you are trying to achieve.
The rate that you pay your property manager will most likely be a percentage of the rental income amount and come directly out of the rental payments received, before you receive the payment. The rate will vary between management agencies, but also keep in mind that you usually “get what you pay for”.
The really cheap agencies may not perform as many property inspections, have so many properties on their books that they can’t efficiently manage the tenant requests, and may take shortcuts when it comes to reviewing new tenancy applications.
Should You Invest in an Accounting System?
Some landlords use a basic spreadsheet to manage, but if you have a growing portfolio or imagine buying another property in the future, it would be smart to get a proper accounting system in place from the start to keep track of your investment and automate some processes.
Should You Invest in Property Upgrades?
Energy efficiency improvements, such as LED lighting, insulation, and efficient heating or cooling, can increase rental appeal.
Security features like deadbolts, window locks, and security screens can make your property more attractive to tenants.
What Are Some Practical Tips for Managing Tenants?
Set a competitive rental price. Consider local market supply and demand as well as the cash flow needed to make the investment viable.
Utilities can be charged to the tenant if the property is correctly installed with water-saving measures, and is separately metered from other units, if applicable.
A property investment expert can help investors look at these practical details alongside the bigger picture, especially where rental performance, tenant appeal, and long-term portfolio growth need to work together.
What Rental Laws Apply by State?
New South Wales (NSW)
- Rent increases are limited to once per year from 2024.
- Landlords must provide a reason for ending a tenancy from 2025.
- New rules are making it easier for tenants to have pets.
Victoria (VIC)
- Minimum rental standards include requirements for bathrooms, kitchens, electrical safety, and heating.
- Fixed energy-efficient heaters must be installed in the main living area for new leases.
Queensland (QLD)
- The Residential Tenancies Authority (RTA) oversees tenancy laws.
- Landlords must lodge rental bonds with the RTA and provide privacy notices before entering the property.
- Rent increase rules changed in 2024: landlords must record the date of the last increase in the lease.
Western Australia (WA)
- Landlords must provide minimum security standards, including deadlocks on doors and locks on windows.
- Rent increases can only occur every 6 months and must be stated in the lease.
South Australia (SA)
- Landlords must ensure all safety compliance requirements, including smoke alarms and pool fencing, are met.
- The residential tenancy agreement must state all costs upfront, preventing hidden fees.
Tasmania (TAS)
- The landlord must provide a condition report before and after the tenancy.
- A landlord cannot unreasonably refuse tenants to make minor modifications, such as installing hooks or water-efficient showerheads.
Northern Territory (NT)
- Rent increases require at least 30 days’ notice.
- Security deposits cannot exceed four weeks’ rent.
Australian Capital Territory (ACT)
- The rental property condition checklist is mandatory.
- The ACT has strict eviction rules, requiring landlords to prove valid grounds.
How Should Investors Approach Rental Property Management?
Managing a rental property is not just about collecting rent. It involves tenant screening, legal compliance, maintenance, insurance, cash flow tracking, rent setting, inspections, and understanding the rules that apply in your state.
Whether you self-manage or hire a property manager, the key is to stay organised and make decisions based on both short-term cash flow and long-term property performance.
Working with an investment property buyers agent can help investors choose properties with stronger tenant appeal, clearer rental potential, and a more sustainable role within their broader investment strategy.
