Some property investors get into the market by specifically searching for and buying an investment property. Other investors, however, convert their family home into an investment property.
Unlike a home bought specifically for investment purposes, your family home likely has a lot of memories attached to it, so making changes to get the best return possible can feel challenging.
Holiday rental or fixed-term agreement?
There are pros and cons to making your property a holiday rental instead of offering fixed-term agreements. On the upside, if your home is in a popular getaway destination, you may be able to use your property for a short time each year while making income from it for the rest of the year.
However, downsides, such as a higher likelihood of damage and additional administration, such as regular cleaning, mean that the logistics of a holiday rental may not stack up. Beyond considering the upsides and downsides of what kind of rental you will offer, you should also think about your needs and priorities. If you’d like a stable long-term tenant, getting the help of a property manager to list your property as a fixed-term rental and attract some great tenants is likely the best option.
Get your finances sorted
You may need to refinance if you have a mortgage on your property and it’s your primary residence. You’ll need to look for clauses such as the occupancy clause, which states how long you need to live in your home before making it available to rent. Getting advice from your legal and financial advisers is essential to ensure you have everything set up correctly.
Make sure your property is compliant
You will need to have a Healthy Homes report in hand detailing the compliance requirements for your property. This will cover items such as smoke alarms, insulation, heating, ventilation, moisture and drainage & draught stopping. If you’re unsure whether you need to make changes to your property, speak with a property manager who can help you understand the current legislation and compliance requirements.
Consider renovations for a competitive edge
The navy feature wall in your master bedroom may have been your home décor dream, but it’s not going to appeal to every tenant. Small changes like fresh paint in neutral tones and updating fixtures can help your property stand out. An experienced property manager can tell you what changes are worth spending money on to get the best return possible on renovations.
Calculate your expenses There are a few key expenses associated with owning an investment property, so make sure you factor these into your numbers. These expenses include land tax, landlord insurance, council rates, maintenance and repairs, and property management fees.
Turning your family home into an investment property is an excellent way to add another income stream to your family’s wealth. However, there are factors you need to consider too. Speaking with an experienced property manager and getting advice from your financial and legal professionals will help you decide if adding the family home to your investment portfolio is the right move for you.
Remember, this blog is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.