There are several ways to turn a property into a source of profit, whether that be by buying an investment property and renting it out, renting out a room in your family home on a long-term basis, or occasionally hosting guests through Airbnb. Whichever option you chose, there are a few legal steps to take note of – and of course it doesn’t hurt to tidy up and redecorate!
Renting Out a Property
If you’re thinking of buying an investment property, there are some things to keep in mind. Buying an investment property is like buying a business, so you need to treat it like one. It’s important to have a good understanding of the law affecting property to avoid issues arising with tenants, and ensure you have money set aside for property upkeep. Things may go wrong, and if you don’t have any funds to draw on to resolve these, you can come into problems.
Consider what makes a good investment property – whether you should buy a doer-upper or a home that’s ready to buy. You’ll need to ensure that the house complies with all legal requirements before it’s rented out. Is it safe and healthy to live in? If you need any maintenance or repairs done, it’s best to get them sorted before advertising your property for rent. The Tenancy Services offers a wealth of information about the requirements set out by various laws and bylaws.
Before looking for tenants, make sure you research the rental market in your area. Websites such as trademe.co.nz and realestate.co.nz are great for ascertaining average rental prices based on location, house type, number of bedrooms etc. The Tenancy Services website is also a great source – as this is where all bonds are lodged, the stats are accurate! Don’t forget insurance, as well as a pre-tenancy application form, tenancy agreement form, and a bond lodgement form.
You can find a tenant by enlisting the help of a real estate agent, or by putting an ad up online. Be careful with finding a tenant through the internet – make sure you credit check and reference check tenant applicants, including a reference from the tenant’s current or previous landlord if possible. The combination of these two checks will give you a good view of each applicant – and the more you know about your chosen tenant, the more certain you can be that you’ve made a good choice.
It’s often a good idea to use a Property Management professional, such as Harcourts Cooper & Co, to manage investment properties. Governed by the Residential Tenancies Act, they have a thorough understand of property law, and have sound relationships with a range of recommended tradespeople who offer competitive prices – so they can deal with any issues that arise day or night! They’re also responsible for monitoring rent and ensuring everything is very much in check.
Renting Out a Room
If you plan on staying in your family home but want to rent out a room or two, the steps are basically the same as renting out an entire property. Have some basic home rules in place, so your tenant knows what kind of behaviour is expected. For example, if you have kids, you might not want the tenants smoking or having guests stay over. Lay out guidelines upfront and in writing through agreement forms and the like, to avoid misunderstandings.
If you’re not sure how to draw out a contract, there are lots of online template samples you can use and adapt accordingly. If you’re renting out a section of the house as opposed to just a room, there are laws and bylaws that you need to abide by with regards basic home facilities, so make sure you’re aware of these.
Renting Out a Room on Airbnb
If you only want to rent out a spare room during or certain periods of the year, then Airbnb is a great way to make profit in your spare time. You’re in control of your availability, prices, house rules and how you interact with guests – you can even set check-in times! Take some photos of your house and put up a listing – it’s free and easy to do. This can also be a fun way to meet people from all over the world – you might make some friends in the process! Airbnb is also a great option if you’re heading away on holiday for a long period of time and are open to renting out your entire house while you’re away.
Looking to buy an investment property or selling a house? Mickey Zhu & Team from Harcourts Cooper & Co is an experienced team of real estate agents in Auckland that can help you with North Shore real estate and more. To learn more about renting your property, get in touch with a reputable Property Management company, such as Harcourts Cooper & Co.