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When it comes to being an investor, you may focus mostly on getting a high rental return. But it is equally important to focus on you expenses and the ongoing costs of maintaining an investment property.

When it comes to being an investor, you may focus mostly on getting a high rental return. But it is equally important to focus on you expenses and the ongoing costs of maintaining an investment property. 

Even if the area your investment property is located in is experiencing a rental boom, if you are not focusing on the fluctuation of expenses, you may not be earning as much as you could be. So what type of costs may you not be including in your budget? Or, what expenses have you included which you ‘set and forget’ and may have resulted in you paying more than you need to? We have listed just a few below.

Landlord’s insurance

Landlord insurance is an out of pocket expense that can end up saving you big down the track. What would happen if your tenant did a runner and left major damage to a large part of your property and it wasn’t covered by the bond? Without insurance, you would be left to cover the repairs. You may not think you need insurance, but the worst possible problems often turn up at the worst possible time and you don’t want to be left stranded down the track having your property vacant while having to find the money for major repairs. It should be an expense worth considering.

Property manager fees 

Whether you choose to self-manage your property or not is completely up to you. Some investors prefer to be more hands on and don’t mind looking after all the maintenance and tenants issues themselves. However, if you don’t want to get late night phone calls or emergency messages from your tenants while you’re on holidays, it may be worth hiring a property manager. A property manager can help keep on top of all the tenant and property issues. It is important that tenants feel like they are being looked after and having their enquiries or complaints seen to as quickly as possible. The cost of having a property manager is usually 6 to 10 per cent of the total rent, but you will need to do your research to find a property manager who will fulfill the responsibilities you are looking for.

If you already have a property manager, when was the last time you shopped around to see what other property management companies were offering? Do you really know how good of a job your property manager is doing? How often do they keep in contact with you and do they keep a thorough paper trail of everything concerned with your property? It is worth regularly looking into your property manager’s progress to ensure you are getting what you are paying for.

Maintenance costs

When calculating expenses and income for your investment property, have you factored in costs such as water leaks, air conditioning repairs, garage door repairs etc? As a landlord, you are responsible for fixing maintenance issues that come up and you are also expected to fix them in a timely matter if the property is tenanted. It is a good idea to have a safety buffer of cash so that when these issues do come up, you can pay for it straight away.

Also, consider having items around the property serviced regularly to avoid maintenance issues popping up. For example, if you get your air conditioning unit serviced regularly, it will help it run more efficiently and the tradesperson may pick up on any issues and repair them before they become a bigger issue (and more expensive). Preventative care can help keep costs low.