Real estate business often sell their rent rolls. If this happens to you, the first time you will know about it is when you receive a letter from your new agency. It is perfectly legal and acceptable, and the same terms and conditions apply to your new agent as to the old. Hold them to it.
When buying from a ‘property expert’ always get an independent valuation – don’t trust theirs.
When hiring an agent, ask for the staff to property ratio. A ratio much over 80 properties per staff member indicates the agency is understaffed, regardless of technological Improvements. Understaffing leads to poor service and financial loss.
Before hiring an agent, speak to several of their current landlords. Pick them yourself randomly from the agent’s client list.
Have your gutters cleaned annually.
Pets should be kept outside. Animal smells within a house are difficult to remove.
Possibly the worst way to choose an agent is by giving it to multiple agents and promising management to the first who finds a tenant. This encourages the agent to overlook potential problems with tenants to win the business. Disaster looms.
Remember people judge properties the same as they judge people. First impressions count.
Don’t pay extra to your agent for financial year statement.
Negative gearing – careful, there’s a clue in the name.
Remember the underestimate/overestimate theory. Always underestimate your income and overestimate your outgoings. Instead of the bill shock, you’ll probably get a pleasant surprise when the accounts are done.
Check your landlord protection insurance includes accidental damage – not just malicious damage.
If your property is not renting, reduce the rent by $10 a week. Remember, one vacant week at $400 takes 40 weeks at $390 to make up the loss. A $10 reduction is advertised rent can make a huge difference to potential tenants.
Trust is imperative with your property manager. Do you instinctively trust yours to do the right thing?
Homes are difficult to sell with bad tenants in place. If possible, wait, move the tenant on and then spend a small amount and some elbow grease cleaning up. It will help your sale greatly.
Over the long term, its nice to have an investment in bricks and mortar.
Be careful when taking advice from financial planners. They often have products to sell and receive trailing commissions.
If you receive a letter advising a new agency is now managing your property, chances are they bought the management agreement from your existing agent. It’s ok to keep them on, just insist they meet you in person.
Before purchasing an investment property, get good accounting advice regarding ownership structures. It can be expensive to change.
Noel Whittaker says, “the golden rule is that you always invest on the strength of the investment alone – any tax benefits that go with it should be regarded as the icing on the cake.”
Remember, the agent works for you, the owner. They should always represent your best interests. After all, you’re the one playing them.
If you select the wrong agent, you may not know it for years. Poor agents don’t reveal their true colours until a poor tenant tests them.
Tenants get lots of free advice and information. Make sure you also get good advice and information from the agent you are paying.
Got a good tenant? Then take it easy on the rent increases. Long-run returns are far better with stable, long-term tenants looking after your property.
If you are selling with a tenant in place, offer them compensation to keep the property neat and tidy and to ensure they allow easy access. Maybe a reduced rent?
Don’t sign a management agreement with an agency that has a termination period of longer than 30 days.
Make sure the agent puts up a sign at the property to market for tenants. It is a silent salesperson, on duty 24 hours a day. Neighbours may know of someone. Many prospective tenants still drive around the area.
Have a tax depreciation schedule done. This often makes a significant difference to your tax obligations at the end of the year.
Get a building inspection on every property you purchase. Look for maintenance issues and structural defects.
Pest inspections are essential on every property you buy. If a property has termites, it’s not the end of the world. Many areas have active termite populations. Termites can usually be killed off and repairs done at an affordable price. Put a barrier treatment in place, and you will have the safest house on the street. Negotiate with the current owner to help.
After buying an investment property, don’t automatically give management to the agent you buy from. Check their credentials thoroughly. If in doubt, shop around.
Understand why you are buying an investment property: for capital growth, return, or development.
Buying an investment property for capital growth? It’s more like speculation than an investment. Be careful.
Don’t be afraid to offer the full price for a property if the numbers stack up. If the market is moving quickly, wanting to be the best negotiator may cost you the property.
Change agents if your property manager doesn’t return calls.
If you use a financial advisor when investing in property, ask how many properties they own. This tells you if they are a theorist or a realist.
Ask these questions before employing an agent: ‘what is the average tenure of your current property managers?’ ‘when was the last time a property manager left your company?’ ‘why?’ stability in property management is a good indicator of the quality of that business.
When employing an agent to manage a property, do your best to meet them in person.
Ask your agent to check out the car a potential tenant drives. It doesn’t have to be expensive, just well maintained.
Bad tenants cost landlords thousands of dollars in missing rent and repairs every day. Select a tenant with care.
Never buy an investment property based on current government legislation. Governments change and so do the rules. Buy an investment property because it’s the right deal for you.
Don’t spend money advertising for a tenant in the newspaper. The internet will do the job.
As Noel Whittaker says, ‘buy in gloom, sell in boom’.
When selling an investment property, remember, it cant think. The property doesn’t know what you paid or what you need. It is worth market value. Market value is simply the price where there are buyers for the property.
A cheap agent is often a poor agent. Chances are the cheap agency is understaffed. Even with modern technology, understaffed agencies provide poor service to both landlords and tenants.
Before hiring an agent, confirm you won’t be held to the management agreement if they can’t rent the property. Simple rule – no tenant, no notice required.
There are lots of property management agencies, just not many good ones.
What’s the difference between a maintenance expense and a capital expense? Maintenance expenses can be immediately claimed against income. Capital expenses may be depreciated over time.
If you discover your property manager has lied to you, terminate their services immediately.
Check your monthly statement carefully. Ask your agent for clarification if needed.
Investments can look attractive with a high gross return. It’s best to check that the numbers work on the net return also.
Make the decision WHEN you want to sell an investment property. Don’t leave it until you HAVE to sell.
Choose a good agency to manage your property, not a good individual. Even good property managers shift jobs. If you choose an individual, there is no guarantee they will be looking after your property over the long term. Choose an excellent agency and there will be continuity for you and the tenant.
Buying off the plan? Make sure the numbers stack up on current valuations. If the deal relies on capital growth, the purchase becomes speculation rather than an investment. That’s fine, as long as the distinction is known.
Investigate thoroughly all body corporate information and costs if buying in a strata title complex. Also, check for pending legal matters.
Organise your own insurance.
Don’t believe the myth of the house prices doubling every seven years. The average house price in Brisbane in 1973 was $17,500. If prices had doubled every seven years, in 2014 the average price would have been $1,120,000, whereas, in 2015, it is around half that.
Residential property management is governed by various state government acts and regulations. The benefit of a good agent is that they, not you, are responsible for upholding the law on your behalf.
Remember, all the agency costs are a tax deduction.
The more you learn, the more you earn. Keep studying and learning the skills of property investment. The same as with any endeavour, you will become better at it. Knowledge is power in property investment. You can never do too much research.
If you own an investment property call Ray White Toronto & Wangi today for better performance from your investment.
Landlord 101: Written by Andrew Trim