Congratulations! You’ve bought an investment property. Now what?

Buying your first investment property can be exciting, but signing on the dotted line is only the beginning. Once you’ve taken possession, the management side of your property-investment adventure begins. So what should you do, and what can you expect?

1. Find a good agent

A good agent will help you secure great tenants and ensure that the management of the property runs smoothly. He or she will be the one to respond to tenants’ requests for repairs and can provide good advice on economical ways to complete those repairs without lowering the value of your property.

When seeking out an agency, it’s important to compare agency fees, but you should also weigh up who will do the best job of looking after your asset. This means, among other things, selecting the best tenants and conducting regular inspections. Also, if something goes wrong, such as the tenant falls behind in rent or damages the property, you’ll need an agent who is adept at handling such problems and willing to see them through to their conclusion.

Some investors – who have the time and the knowledge – may prefer to self-manage their property or engage an agent just to find their tenants and then self-manage from there. For the uninitiated, though, there can be some difficulties, such as managing a tenant who hasn’t paid the rent, handling the payment of outgoings – water and rates, for example – yourself, appropriately reviewing rent to ensure it is at market rate and carrying out regular inspections.

2. Build a cash reserve

In the early years, it’s likely your investment property won’t be earning enough to cover the mortgage, let alone council rates, insurance, letting fees and so on. If you don’t have a buffer to cover unexpected expenses, you should start building one now. Experts say about 10 per cent of the value of the property is a good rule of thumb.

3. Renovations

Does your new property require renovations? Renovating may help you secure higher rent, attract quality tenants or enable you to let your property faster. To assess whether renovations could be beneficial to your investment, consider asking several local letting agents for their assessment of the property both in its current state and with certain renovations completed.

4. Be ready for future rate rises

Interest-rate increases are facts of life. Be smart and plan for that now.

5. Understand the tax implications

Both the Domain blog and the Australian Tax Office (ATO) provide advice on rental properties – essential reading for new investors. Check out these articles on the Domain blog:

• Own a rental property? Know your tax deductions
• Important tax tips for property investors
• Investment property tax tips

Your accountant can also talk to you about what you can and cannot claim for your investment property, as well as what records you need to maintain.

6. Maintenance

Not spending money on property repairs could hurt you in the long run. Keeping your property up to scratch both structurally (think roof leaks) and cosmetically (think peeling paint), can mean avoiding more major repair jobs later on. Further, it’ll ensure that if you ever have to put your property on the market at short notice, it’s in a good state to be sold.

Managing your first rental property doesn’t have to be difficult. Doing your research and being astute when choosing the experts you engage to help you can set you on the right path.