Is it time to hire a property investment advisor?

The most successful people know that to achieve their goals, they must have a strategy in place. Being a landlord is no exception. If you want to achieve your investing goals, whether that’s owning one property or 5, start with the big picture plan and break it down into annual, monthly and weekly tasks.

If you are new to property investing, you may need to connect with an expert and employ the services of a property investment strategist to help you.

A good property investment advisor will be unbiased. They will not be trying to sell you something. They will give you honest feedback, and develop a strategy that is aligned with your financial goals, your risk profile and also aligned with your current bank balance.

Here are a few things to think about that will help you determine who will be the best fit for your needs.

Most advisors probably have their own investments so start by asking them about their track record. Find out when and how they started, what they like to invest in, how many properties they own, what mistakes they made etc. Finding out this information should provide you confidence and encouragement about their abilities.

Having their own investments is not essential, however. Regardless of whether they do this for themselves, you’ll want to see testimonials of other clients they have helped. Do your research and find out what other people have to say about them.

Investment techniques change over time as markets change. Find out how they recommend structuring investments and the techniques they use for maximising equity and cash flow for their clients.

Hiring an advisor is a big step in your investing success. What tips do you have when choosing the person who is the right fit for your unique situation?

What does a property manager actually do?

Many new landlords buy their first rental and think they can manage it themselves. And they often do, but then life gets in the way, and you start to fall behind. Or maybe, you buy a second rental and the workload piles up. Property management is a full-time job. We know! We live and breathe it every day.

If you are a business person, you’ll know that success comes when you start outsourcing/delegating. Focus on what you are good at and outsource the rest to professionals who are experts in the field. But, many you’re wondering: how will a property management company actually help me?

Property Inspections

Regular inspections of your rental is an essential part of property security and peace of mind. If your property is vacant, then we endeavour to visit the property each week to ensure all is secure and in tip-top condition. Once there are tenants in the property for 3 months, then we start regular house inspections every 6 months.

During the inspection, we look at everything and let you know if there are any issues like:

• Any short-term maintenance that needs to be done
• Any large renovation jobs that may be required in the future (giving you options of how to handle it)
• We will let you know if the tenants are looking after the property, and that nothing neglectful is happening, or likely to occur.
• We organise your annual servicing of heating, cleaning gutters and check the gardens – pruning back large trees is an easier job when you keep on top of it.

Vacancies and Tenants

We advertise your vacancy, screen potential tenants to make sure they are suitable and contact their references. We know all of our tenants well, and we can match them with the best possible rental for their needs. If they are happy that the property is close to work, shopping and desired schools, they will stay there for longer.

Other things we love to do

We make sure you are getting the maximum market rent for your area, and we spend time looking for quality tenants, which often means long-term tenants. Your vacancy periods are reduced, which then increases your income. We also collect your rent for you each week, deal with tenants who don’t pay and provide you with rental statements.

If you need help managing your rental property, contact us at True Property Management.

3 questions to ask before buying an investment property

It’s buying and selling season. The spring and summer months are always busy for real estate.

If you’ve been thinking about getting into investing, the next few months are the perfect time to start.

A buyer’s agent is your best friend when it comes to negotiating a price for a property, but if you have decided to do it yourself, there are a few key things to keep in mind.

I’m sure you’ve looked and looked at a lot of properties by now, and if you are ready to get to the negotiation table, you’ll know what similar houses are selling for.

Remember, the key number here is the final sale price, NOT the asking price.

It is fairly common that an agent will list a house 5-10% more than what the vendor will settle for, so keep that in mind when you are heading into negotiations. The asking price is just the starting point. The final sale price could be quite a bit different.

So, before you barge on through to the negotiating ring, here are a few questions to ask the seller.

Why are you asking for that price?

Sometimes a vendor will take on their agent’s advice and list their property appropriately; others will have their heart set on a particular price and will-not-budge, no matter what their Realtor says. These types of sellers are always tough to negotiate with.

Have you had any other offers?

If so, you will then know what the competition is like for this property. A lot of competition means the final sale price won’t be as low as you would like.

How long has it been listed for?

If it’s been on the market for a while, the vendor may be more willing to negotiate. If it’s just gone onto the market, then the seller may be willing to wait around to see what happens.

Why are you selling?

If you know their personal circumstances – divorce, a death in the family, a move across the country, then you know they may be willing to settle quickly (aka willing to negotiate), which may provide you with the opportunity to buy it immediately.

What other important questions do you ask the seller before you purchase their property?

Landlords, what do you look like to your tenants?

You have bought an awesome rental property, and now you need to fill it with an equally awesome tenant. Someone who will take care of your property and stay there for some time – great tenants are attracted to properties with specific qualities.

How do you come across to your tenants?

If you had a shop and customer was looking at a $15,000 item, how would you treat them?

If your tenant is paying you $300 a week rent, over 12 months that’s $15,000. Not only are they paying you money and paying the mortgage, but they are giving you all the appreciation value for free. It pays to treat your customer (and your investment) as a top priority.

Did you stop and think about how you dress when you meet your potential tenants? Do you show up in an old t-shirt and worn shoes?

Tenants will judge how well maintained your property is by the way you present yourself – both in appearance and in attitude. Present yourself well, and it will help you get what you are looking for.

Be on time and be organised

You’re hosting an open home for your rental. You are half and hour late, your car is a mess, and your fumbling to find the paperwork you’re looking for.
It doesn’t paint a pretty picture.

Or, your first prospect arrives at the open home, it’s all opened up with your checklists and application forms a neatly laid out. You then efficiently talk them through the features of the property and show them around. You let them know what’s expected of them as tenants. If they are your ideal tenant, they’ll stick around.

Turning Pro

Be professional at all times, and it will make tenants feel reassured, and they’ll know what is expected of them. Present a dishevelled chaotic persona and the bad tenants know they can treat your property with the same manner.
There is a lot to be said for personal attitude. If you don’t think you can present yourself as a professional, organised and efficient landlord, consider a property manager – an organised and professional one!

If you need a property manager, contact us at True Property Management to find out how we can help you.

What should I look for in a property management company?

Having excellent property management is essential for your investment. The owner should not need to worry about their rental at all when they hire a property manager. Here are some things to look for to make sure your property is in good hands.

Tailored fee structures

Most property management companies have a fee schedule in place. The ability to tailor this feed to meet your individual requirements is critical.

Avoid add-on fees

Many property managers are looking to make money at every opportunity and add-on fees wherever they can. These include occupancy charges, marketing fees, advertisement fees, and so on. A good property manager will give a landlord a flat rate for their costs and then stick with it. Doing this provides stability, predictability and impacts your ability to manage your investment portfolio.

Communication is essential

A good property manager regularly updates their client and lets them know immediately about any issues with the rental property. They recommend steps to stop the problem quickly. Additionally, a good manager also provides regular contact information for 24/7 access. From your initial conversation regarding the fee structure, through to regular contact concerning your investment property; you should feel comfortable asking questions, relaying instructions and receiving advice.

Not all investment properties are created equal

There are those who are general property managers and others who understand rentals with specific needs. A good property manager is one who has the experience to identify and meet the unique requirements of a property that won’t be completed by general services.

Frequent and timely financial reporting

A property investor wants to know where his income is and if there are any problems. Good property management involves coordinating and tracking the financial information for your investment property and providing this to you in an accurate, regular and easy to understanding format; keeping the value of the business safe and transparent. Many property managers now provide secure online information, allowing you to log on and look at your reports as little or as often as you required.

Provide a comprehensive service

A good property management company will understand the concept of complete management and take care of multiple services for your investment property. Beyond just collecting the rent, your chosen property manager should provide legal assistance, screening, background checks, collection services, and organising maintenance requirements through their network of tradespeople.

In summary, choosing a good property management will provide you will peace of mind knowing your investment property is protected and providing you with the best return on your investment possible.

If you are looking for a property management company to take care of your rentals, contact us today.

Would you let your tenants renovate your rental?

By letting your tenants make the house their own, they’re more likely to be happy tenants and stay in your house long-term. However, you might open the door for them to make other (unapproved) changes, which means you could spend more time and money fixing them when they move out.

There are a few pros and cons when it comes to letting your tenants make improvements to your property.

 

Pros:

There are a few advantages to having tenants be involved in decorating their space, after all, it’s their home, even if it’s your house.

If you haven’t redecorated in a while, then it may be worth considering if they have experience in what they are doing. You could get some free labour out of it. Find out what their previous experience has been, and you might be pleasantly surprised.

It could be a great selling point when renting out the property. When showing prospective tenants around you might offer that they can redecorate with your approval – it may mean that you can get them to sign a longer lease.

This could also be used as an incentive to renew their contract. You may want tenants to commit to a 6-month lease, and then upon renewal, the tenants would be able to paint a certain number of rooms (or whatever renovations they want to do) with your approval. This will develop trust, history and incentive.

 

Cons:

The horror stories are out there about what some tenants have done, and if you have been burned before you will no doubt be on the ‘No’ side of the line.

Tenants who you allow to paint one room an approved colour and they end up painting the whole house – in bright orange!

They have never painted before and end up painting over light fixtures, outlets, carpet, or even paint around furniture rather than move it.

They try to remodel the house by knocking down walls – load bearing walls.

 

Middle-ground

As with anything, it comes down expectations laid out at the very start. If you have a lease that outlines what tenants can and can’t do, then you have saved a lot of headaches.
Some things that you could consider to include in the lease:

• Have a set of approved colours.
• You purchase the paint and they provide the labour (this ensures that the paint will be in fact, the colour that you approved).
• Inspect the work afterward or supervise the painting.
• An extra deposit. Either a deposit to cover the house or an additional deposit per each room decorated.
• Spell out what sort of holes in the wall are acceptable for hanging artwork.
• Wallpaper guidelines colours and quality of the installation.
• If you have been burned once you won’t want to go down that track again, but if you have developed a good relationship and history and have good clear guidelines in the beginning, then you both can win.

Renovating and decorating is a major issue for any house, regardless of who is doing it. Contact True Property Management for advice and let us oversee any work being done to your investment property.

4 things you’re doing wrong as a new landlord

When you are a new landlord, it can be hard to know what to expect and what you need to do to maximise your income.

Here are some common pitfalls that many new landlords find out about the hard way.

 

Not charging the right rent

When you buy a property, do some research on similar properties in your area. If you set the rent too high, no one will want to rent it and it will sit vacant while you lose money. On the other hand, if the rent is set too low you won’t make any profits and not only that, you may attract undesirable tenants.

A property manager will be able to inform you on similar rentals and advise you on an acceptable price.

Not keeping track of payments

Money should always be on your mind. If your tenant doesn’t pay their rent, it can be a very lengthy process to resolve and could leave you considerably out-of-pocket.

Keep tabs every week or month when rent is due and if your tenant doesn’t pay on time, you can send them a notice. This process varies from state to state so be aware of your local laws.

Monitoring rent payments and contacting tenants sooner rather than later may help resolve issues and mitigate any financial loss.

Not doing regular maintenance

The #1 complaint from tenants is that their landlords take too long to do repairs. Not following through can put unnecessary strain on your relationship.

If a maintenance issue arises and you don’t fix it, you may be liable if your tenant injures themselves.

Sometimes, the tenant may decide to fix it himself or hire a shoddy contractor, which can cause more damage to the property. Make repairs a priority and ensure they are completed to a satisfactory standard.

Trying to self-manage a property

It can be stressful for landlords to manage their investment properties. Most of them simply don’t have time to do it. Yes, you can save money by doing it yourself, but the benefits of having someone take care of everything for you can outweigh the costs.

Property managers will check the property on a regular basis to see what maintenance needs to be done. They also find and screen tenants, and they have a list of tenants who are known for not paying rent, damaging their rentals and being evicted.

If a dispute arises with a tenant, property managers know the correct procedures to help resolve the problem as quickly as possible.

 

Hiring a property manager eliminate these mistakes for you. Contact True Property Management for more information.

How to expand your investment property portfolio

You have one rental property and it’s working out well for you.

Now, what do you think about expanding on that?

It’s the key to achieving financial independence.

One rental property gets you on the ladder, but climbing the ladder is the only way to make any real passive income.

Once you have the hang of it, you may want to take on more properties because your first property was such a success.

You have a great tenant, the maintenance issues under control, and the income you get is a nice bump each month – maybe not as big as you’d like, but it’s nice to see all the same.

Now you’ve settled into being a landlord you want to climb onto the next rung of the ladder.

Building it’s a challenge at first, but once you’ve settled into a routine, it becomes second nature.

It may feel overwhelming making that leap, but now that you’ve done it once, you can do it again.

Here are the biggest things to think about:

Finances

Getting a mortgage is the biggest barrier when it comes to expanding your property portfolio.

Taking out a mortgage is a possibility, but you are likely to get stung with extra fees, payment requirements, and approval process will probably be tougher.

Make sure you research what the rules are.

It’s important to have an accountant on your team that is familiar with property investing, as they will help you with finding the best way to go about it.

Another option is refinancing your first investment property to fund your second, or maybe consider bringing an investor on board.

Someone who doesn’t want the hassle of dealing with the property, but wants a cut of the proceeds.

Maintenance

Dealing with maintenance and repairs on one property is manageable, but once you start expanding your empire, things start to look different.

If you have two properties that are in good shape and don’t have major issues, then you’ll be busy but it’s not out of reach.

However, if your properties are older and need more work, or if you add a third or fourth rental property , then it can be too much.

Employing the services of a property manager to help you is a good idea.

On the other hand, if you’re committed to doing it yourself for a while longer then you need good contractors.

The last thing you want is for a water main to burst and you are not being able to get over there to take care of it.

Ask around for recommendations of contractors; they are worth their weight in gold!

 

Operations

Collecting the rent on time, having the right lease available, organizing open home and house inspections, paying taxes, mortgage payments.

Who’s going to take care of all these tasks?

What about when you have 5+ properties to keep an eye on?

Do you have a watertight system, so nothing falls through the cracks?

Make sure you have a good property management system at this point, or again think about hiring one.

Tenants

Along with all the above, one of the big ones is finding and keeping tenants.

Without good tenants all the other aspects of managing properties become useless.

You can’t pay the bills without tenants, so this has to be a big focus – especially initially.

Finding good tenants is hard, but once they are in the property, really all it takes is being responsive to them. Follow up on maintenance and repairs, and stay out of their way apart from ‘Thank you’ every so often.

But marketing your properties to find those tenants can take a little bit of getting used to.

Once you know how to present and sell your property and choose great tenants, it becomes fun.

Until that point, it can be a hard slog.

Don’t give up too soon.

Now you know what’s involved in taking on that second rental property it’s an excellent time to consider involving a property management company.

One investment property is easy to manage on your own, but once you start to expand your portfolio it does get more difficult.

You don’t have to use property managers for everything; you can pick and choose what tasks you would like them to do for you – just ask!

Hate property inspections? Let True Property Management do it for you

Buying a rental property is a significant investment.

A massive investment in fact.

So you need to know your tenants are looking after it.

But the thing is, you’re busy.

You work full-time; you have family commitments, perhaps you coach your son’s rugby team.

Managing your investments is a full-time job on top of all that.

When your tenant first moves in, you keep on top of everything, but slowly but surely things get postponed.

You don’t visit them. They don’t call with any issues.

Then they move out, and you realise why they haven’t called.

Your beautiful property is completely trashed.

It takes weeks to clean it up and get it rented again.

This situation happens more than you think and it can be avoided just by carrying out regular inspections.

If you don’t have the time or if it just keeps getting shoved to the bottom of your already bulging to-do list, you need to give True Property Management a call.

How we carry out inspections

Inspecting your rental is an important part of security and peace of mind.

If your property is vacant, then we visit it each week and make sure everything is secure and in perfect condition.

When tenants have been living there for three months, we will inspect every six months.

What we look for during an inspection

We make notes and report back to you:

• Urgent and non-urgent maintenance tasks that need doing now
• Any renovation jobs that will be required in the future (to give you time to plan)
• If the tenants are keeping the property to an acceptable standard

Annual Inspections

We recommend having a building inspection done every year or every 3-5 years depending on how old your property is and what condition it’s in.

Doing this makes sure the building is safe and will highlight any maintenance issues that you can’t necessarily see.

These problems could be tax-deductible, so it’s worth looking into.

Have the heating, cleaning gutters, etc. services every year and watch the landscaping – do large trees and shrubs need pruning or creeping ivy need taming?

It gets out of control quickly, so staying on top of it is the best solution.

Keep in mind that the outside grounds are a big part of the appeal to tenants and can add thousands to the capital value.

 

Exit Inspections

When tenants give notice, we do a pre-vacating inspection. This allows us to:

• Decide if any essential work is required before we can seek new tenants
• Highlight any areas for the tenants to get back to pre-arrival condition (normal wear and tear excluded)

When the tenants do vacate, a detailed exit inspection is carried out.

We do this to make sure the property is returned in an acceptable condition.

If any damage or cleaning is necessary, we’ll apply the appropriate deductions from the bond.

We are very thorough in the process of inspections as we feel that this a key way to ensure the property will:

• Appreciate in value
• Provide maximum market rent
• Attract quality tenants – which often means long-term tenants
• Vacancy periods are reduced, increasing your income

Are you worried you don’t have enough time to spend managing  your investment properties yourself? Contact True Property to find out how we can help you.

Property Investment Terminology Explained

Every industry has their jargon and unique terminology and property investing is no exception. Taking the time to learn all the words and acronyms will make life easier for you when you are negotiating and running your rental property business.

The list below is not complete by any means, but here are a few of the most common terms to get you started. How many do you already know? What other essentials do you recommend adding to the list?

AARP – Annualised Average Percentage rate. Sometimes referred to as the comparison rate and takes into account all the costs associated with a loan, and is also used to compare loans

Appraisals or Valuations – Is a written report of the estimated value of a property

Appreciation – This is an increase in the value of the property (or another asset).

Body corporate – This an administrative body which is made up of all the owners within a group of units or apartments of a strata building.

Bridging finance – This is a short-term loan intended to bridge the gap between buying a new property and selling an existing one.

Capital gain – This is the amount by which your property has increased in value compared to what you originally paid for it. For example, if you bought a property for $50,000, 20-years ago, and it is now worth $650,000 you have made a capital gain of $600,000.

CGT (capital gains tax) – If you sell a property that has increased in value, this is the tax that you pay on the profit. Using the example above, you would be paying tax on the $600,000 you made.

Cooling-off period – This is where the purchaser has a period to withdraw legally from the purchasing of the property. Each territory is different on the time frame offered so check the requirements for your area.

Cross-securitisation/cross-collateralisation – Using one of your properties as security for another property.

Default – Failure to pay a debt by the due date.

Depreciation – This is the decrease in value of an item (e.g., a building) over time. You need to declare your depreciation on your taxes each year.

Equity – This is the difference between your mortgage and your property’s value.

LMI (lenders mortgage insurance) – If you are borrowing more than 80% of the property’s value, the lender will usually require you to take out this insurance in case you default on the loan.

LOC (line of credit) – Similar to a credit card. It is money available to you to use at any time.

Low-doc loans – This is a loan that does not require as much documentation as a traditional loan. This is an attractive option for the self-employed.

LVR (loan-to-value) ratio – To calculate the ratio divide your loan amount by the value of the intended property. Multiply the figure by 100 to get a percentage. This ratio is used to see if you can truly afford the loan.

Median – The median house price is the middle price of ALL sales recorded in a particular suburb, postcode, city or state.

Negatively geared – The opposite of a positively geared property (see below). This refers to where you are spending more money on the property than you are currently getting out of the property. The benefits are that you can offset the costs against your taxes. This is a good option for high-income earners.

O&A (offer and acceptance) Form – This is the form you sign when putting an offer on a property. When the owner accepts and signs this form, it then becomes a binding contract.

Portfolio (as in property portfolio) – The is the number and type of investment properties you own. The greater the portfolio, the bigger the profit (but not always).

Positively geared – When the income you receive from the property is more than ALL the costs involved in owning the property.

PPOR or PPR – Your principal place of residence.

Principal and interest – This is the amount that was borrowed and still has to be repaid, plus the interest on the mortgage. The Principal is the portion that reduces the balance of the mortgage.

Property cycle – Property follows a period, where there is a Growth phase, a Slowdown phase, a Bust and then an Upturn. The cycle repeats every 7-10 years.

Refinance – This is the term used when you obtain additional funds usually used to pay off an old loan, by using a new (and cheaper) loan.

Rental yields (and calculations) – This is the return on investment as a percentage of the amount that you invested into the property. Multiply the weekly rent by 52 weeks in the year. Then divide that by the value of the building. Finally, multiply that figure by 100 to get a percentage.

Serviceability – Based on your income and expenses – can you make the mortgage repayments?

Stamp duty – The state government tax on the transfer of property. This is calculated based on the value of the property.

Strata title – Also known as a unit title. This title grants you ownership of a section or a ‘unit’ of a larger building.

Supply and demand – An economic term that defines the market. Determined by the amount of property that is available for sale and the number of buyers in the market. If there are a lot of properties available to purchase it is a ‘buyers’ market’ if there are a lot of buyers then, it’s a ‘sellers’ market’.

Vacancy rates – This is the measure of how many dwellings are available to rent for a specified period. If there is a low vacancy rate, it means there are not many properties available to rent which is the ideal situation for a property investor.

Vendor’s terms/Wrap – This refers to when a property owner is prepared to offer a buyer finance or other assistance to the purchaser. These may include staged payments to assist with the purchase of the building (also known as ‘wrapping’).

Yield – This is the return to an investor on investment. It is the percentage of the amount invested.

Please contact us if you need more help understanding investment property language.