How much do you need to budget for?
Our research indicates that you should allow in the vicinity of 20% of your annual yield to cover your regular statutory costs (excluding land tax) and / or strata levies as well as any minor incidental repairs and maintenance expenses that could arise throughout a year.
Of course this will vary depending on the age and condition of the property. Remember, tenants are not expected to tolerate the minor annoyances that a homeowner might “just put up with”. If you have recently purchased an older investment property that has never been rented before, you might find that you will receive an initial surge of repair and maintenance requests. But don’t worry, this will eventually settle down. As hard as you might try to prepare a property for your tenants, it’s important to accept that some things can only be experienced when living in a property.
While 20+ % of your gross annual yield may sound like a lot, as far as a business goes (and that’s precisely what your investment property should be treated as), it’s actually not bad at all! The key to success is not to allow yourself to be caught short. Schedule a meeting with your Property Manager to see how they can help you budget for your known expenses and help to ensure a positive experience for you, your Property Manager and your tenant.
If you have any questions, or need clarification on any of the above, please contact Anna Marten, our Head of Property Management, on 9651 1666 or anna@guardianrealty.com.au.
Important note: Clients should not rely solely on the content of this newsletter. All endeavors are made to ensure the content is current and accurate however, we make no representations or warranties as to the accuracy, reliability, completeness, or currency of the content. Readers should seek their own independent professional advice before making decisions.