Once you have purchased an investment property, you will need to find tenants for it. Both the tenancy and the property will need managing.

You can do this yourself, and many people do, but be warned, it can be a painful learning experience if you are unlucky enough to have tenants who fall behind in their rental payments or who do not look after the property.

Many real estate agencies and specialist property managers offer property management services. The normal charge for this is 7% - 8% of the rental income. These fees are usually tax deductible.

It is worth noting that these professionals generally have extensive experience in the workings of the Residential Tenancies Act and related issues. They are also used to dealing with tenants, landlords and the Tenancy Bond Office.

If you decide to manage the property yourself:

• You need not find the tenant yourself. A number of property management services will locate tenants for you and the tenant pays the fee.
• You should enter into a residential tenancy agreement which will specify the bond paid (usually of two weeks rental), that rent is paid in advance (also usually of two weeks rental), what chattels are rented with the property, how many people can live there, whether pets are allowed or not, and whether or not the tenant pays the water rates. Your lawyer can help you with this.