For many property investors, a practical strategy is to lease out the property to reduce installment costs and generate immediate income. This approach postpones holding costs and other recurring expenses associated with the property, particularly during the purchase transaction. Once the property is acquired, the investor can quickly start earning revenue through rentals and also benefit from the property’s capital appreciation in the future. After purchasing a property, the investor has four main options: reside in it, leave it vacant, hire a caretaker, or advertise it for rent. Renting out the property is a favored strategy as it helps cover the monthly mortgage payments in the short term while the investor waits to realize the benefits of capital growth.

By holding onto the property as a rental, investors can avoid property gains taxes, commissions, legal fees, and other related costs, which can collectively amount to a significant sum. Regarding rental returns, the general principle is that a higher number of rented properties translates to greater monetary gains. Renting out investment property offers several immediate benefits that investors often capitalize on, including a regular stream of residual income, making the tenant responsible for the property’s upkeep, tax advantages, and building a strong net worth over time. In many countries, investors can legally deduct all overhead costs incurred in maintaining the property from their annual taxable income. These deductible expenses include renovations to preserve the property, fees paid to agents, ground rent, assessment fees, and mortgage interest.

To ensure a favorable and profitable rental experience, investors must carefully vet potential tenants, prioritizing those who meet three key criteria: consistent and timely payment ability (ideally through prearranged bank transfers), responsibility for minor repairs, and a willingness to maintain the property in excellent condition. To establish a rewarding landlord-tenant relationship, the primary rule is to ensure a tenancy contract is signed, registered, and properly stamped. A typical Tenancy Agreement stipulates that the renter must initially provide two months’ rent as a security deposit and a specified amount as a utility deposit, both of which are usually reimbursed to the renter upon the expiry of the Tenancy Agreement. The Tenancy Agreement should also include a detailed inventory of fixtures and fittings (such as air-conditioning units, ceiling fans) and any other provided furniture. This inventory often serves as a ‘property inspection checklist’. Consequently, if any of these items are damaged during the tenancy, the tenant is responsible for compensating the landlord for the damages upon the agreement’s expiration. It is crucial that the Tenancy Agreement benefits both parties involved and is unambiguous.

Generally, the fewer movable items provided with the property, the simpler the Agreement. This also allows the renter the freedom to decorate the property according to their preferences, which often leads to the tenant taking better care of their belongings and the property’s infrastructure. Overseas investors can easily engage property managers who will be responsible for screening tenants and ensuring all necessary paperwork is signed. Once the tenant occupies the property, investors can begin enjoying the returns from the rental payments, effectively making the property ‘work’ to recoup the substantial initial investment.