Set and forget? Then forget about long-term property investment gains
It may not necessarily be a daily priority, but the set and forget approach to property management is bound to come unstuck for passive real estate investors.
We often hear property described as a passive investment, which it is when compared to buying and operating a small business.
However, it’s definitely not an exercise in set and forget. While there’s a lot of work involved in saving, identifying and securing a good quality residential property asset, there remains more to do after the purchase celebrations subside.
Property investors must set the right post-purchase plans in place to ensure a trouble-free journey, which, in this day and age, can mean over many years.
My colleague, Richard Wakelin, has long advocated where possible that property (providing you select the right asset) is a ‘buy, hold, never sell and repeat the process’ proposition.
Not good news for real estate sales agents, but encouraging for property managers whose world revolves around what can be intense relationships between rental provider and renter.
Their job is about attracting good renters and keeping them – helping ensure asset protection – at which experienced property managers excel.
Asset protection doesn’t just come from basic steps like buying adequate building and rental provider insurance or the installation of smoke alarms. It’s more. It is unavoidably expensive actions like maintenance of the roof and periodic painting of the exterior.
A key principle to ensuring capital and income preservation is a commitment to social responsibility from rental providers.
Now, there is nothing worse than disrespectful neighbours who are loud and noisy, have unkempt nature strips with rubbish lying around. Renters often suffer the blame, sometimes rightly, sometimes wrongly. When renters are responsible, investors are usually unaware of this neglect but, on occasion, they do know but decide to be wilfully indifferent to the problem.
This is a foolish attitude because good cohesion between renters and owner residents on a street is a win-win for all concerned and is part and parcel of asset protection for the investor.
Indeed, good behaviour begets good behaviour. Renovation by one resident often encourages neighbours to do the same and so on. Get a run of renovations and there is a noticeable improvement in the feel of the street, which lifts value for all.
It’s a phenomenon we see at a suburb level with gentrification but it can apply in smaller ways almost anywhere. And by ensuring your investment property is well-maintained, you’ll have happier neighbours who are more likely to alert you to issues or problems.
The role of the property manager is to ensure the investor is well represented throughout the course of ownership.
In this way, steady income streams and capital growth are achieved in a harmonious manner.
Successful property investment requires a methodical and long-term mindset. Vigilantly protecting established assets will ensure far greater returns than a lazy ‘set and forget’ approach.