Newsletter_Refurbish

Refurbish to increase your rental returns

If your property is presently vacant or is about to become vacant, now is the perfect time to refurbish and maintain your property. Not only to take advantage of tax concessions but also to increase the rent achieved and minimise your vacancy periods.

Why not see the advice of your property manager or better still, inspect the property yourself to ascertain any works that may be necessary.

Things to take into consideration are:
• Repaint inside and out
• Minor kitchen updates like changing cupboard door handles, or replacing the stove, installing a dishwasher
• Install built in wardrobes
• Install dead locks and window locks as additional security features
• Install new light shades
• Replace old curtains and blinds

From our experience, we find that these are the initial appeal points that potential tenants are looking for in a competitive rental market.

By completing the above, you are not only putting your property at the top of the rental shopping list, you are also reaping some tax advantages and can seek an increased rent and reduce the days that your property remains vacant.

Beware of Discrimination

People often say they do not discriminate, but the reality is that often they do without realising it. Discrimination is an issue within the property management industry that must be considered. As a Property Manager or Landlord we must be aware that we cannot discriminate. It is human nature that you may have preferences of who you would like to reside in your property. There may have been previous experiences that have shaped your judgement on what tenant you may choose.

When selecting tenants it’s important to focus on what is important:

1. Can the prospective tenant prove that they can afford the property?

2. Is the number of people suitable to reside in the property?

3. Can they maintain the property and grounds?

4. Can you verify the information that they have given you in their application?

5. Do you have references that check out positively?

By law you must not discriminate against, colour or race, the unemployed, children, sexuality or religion. Care must be taken when declining a tenant’s application and often it is better not to provide any further information. It is important to remember that it is not the status of a person that will determine if they will be a suitable tenant, but rather the strength of their application & reference checks.

Newsletter_FindingrightTenant

Finding the right Tenant

Securing a suitable tenant for your investment property is not as simple as opening the door and letting people see inside, handing out an application form and getting a lease signed!

We require all prospective tenants to inspect your property. This allows us to conduct an initial interview with the tenant and ask them some qualifying questions so that we can ascertain their suitability and find out why they are moving and how soon they can move in.

During this process we also listen to what the prospective tenant tells us about themselves. We do find that in some instances what people tell us at the inspection is different to what their tenancy application tells us. We proceed with caution with processing this type of application.

We require all prospective tenants to fill in a detailed tenancy application form which must be fully completed. The application is to be accompanied with 100 points of identification, employment confirmation and rental history & references.

We then call the tenancy and employment referees to verify the information provided and to ask a series of questions that enables us to make an informed decision as to the applicant’s suitability to your property.

We then cross check the information provided through a tenancy default database to confirm the details provided to us.

We will then contact you to discuss the applicant’s profile, our reference check findings and the terms that the applicant wishes to lease the property.

Although the final decision to approve or decline an application is yours, we will base our recommendations to you upon our first inspection interview and the information contained in the application and the reference check findings.

Newsletter_RightTradesman

Selecting the right Tradesperson

It seems to be accepted that when appointing a contractor to do work on an investment property that the cheapest quote is always the best. This accepted rule of thumb couldn’t be further from the truth.

We have found that the cheapest quote is not necessarily the best quote at all.

When appointing a contractor to do work on your investment property we take into consideration a host of factors determining contractor’s suitability to do the work.

Other than price the following must also be taken into consideration:

– Is the contractor licensed to complete work for that trade?

– Is the contractor insured? If the contractor is not insured you carry the risk.

– Can the contractor provide references for similar work that he has completed?

– On work such as refurbishments, have you been given a start and completion timetable?

– Is the contractor going to complete the work himself, sub contact the job or oversee other employees to complete the work?

– Have you confirmed the materials used and any warranty periods applicable?

The above may seem a little over the top, but all too often we have seen investors appoint a contractor on price alone and ignore the host of variables to be taken into consideration when appointing a contractor most suitably qualified to do the work.

We always suggest to investors to take the time and care in appointing a contractor as you would appointing a contractor in your own home.

Although we may present a quote to you for work that may seem a little high in comparison to some, the above must be taken into account in order to protect your interests, the dollars invested and your property.

Newsletter_WhenTenantGivesNotice

Steps to releasing a bond

There is more to the vacating process than a final inspection and releasing the bond. Below is a checklist to follow to ensure that all of the bases are covered before you release the tenants’ bond.

1. Tenant responsibilities: Has the tenant given the correct notice in writing? Are they breaking their lease? Are they responsible for a portion of re-letting expenses, such as advertising?

2. Will the property be re-let? Will it be for a long or short term tenancy?

3. Review the rent. Does the market allow for an increase or is it necessary to reduce the rent to give the best chance of finding a tenant in a timely manner.

4. Start the advertising process as soon as possible to give maximum advertising time.

5. Confirm in writing to the tenant their vacate date, monies owed and the expectation in relation to the final inspection regarding what needs to be cleaned, removed, etc.

6. Book a final inspection. When conducting the inspection, be thorough. The property needs to be handed back in the same condition as it was offered to the tenant. Is the property clean, gardening done, all furniture removed, rubbish removed, damaged caused by the tenant repaired?

7. Verify that all keys are returned by the tenant including any copies that may have been produced.

8. Review the condition of the property – is it ready for the next tenant, or will maintenance, repairs or improvements need to be carried out?

9. Organise any cleaners, gardeners, tradespeople…, while the property is vacant.

10. Do not release the bond before all expenses are covered where applicable, including rent to vacate or required notice period, cleaning, gardening, rubbish removal, outstanding charges for water, break lease costs, damage caused by the tenant repaired, etc.

11. Does the outgoing tenant need to be listed on a default database?

Remember: Never begin a new tenancy too close to the end of the previous one. Always allow ample time so the property is presented to the ingoing tenant in the best condition.

The above will help protect your investment and ensure you are compensated fairly where applicable.

Newsletter_ReasonsforVacancies

Why some properties remain vacant for longer than expected

Renting a property quickly to the right tenant is essentially the most important task any agent can do for their client, however we find there are factors that can cause a property to remain vacant for longer than desired.

With these factors in mind, we can improve the chances of renting a property quicker and for the right market rent by being aware. Let’s take a look at some of these factors:

The market rent is too high: With easy internet search functions allowing prospective tenants to become quickly aware of comparable properties for rent in the area, tenants are more educated on market rents than ever before. For every week it is vacant it costs 2% of your annual rental income, therefore getting it priced right, and renting it quickly is everybody’s goal!

Presentation problems: First impressions are everything and poor garden presentation, ‘tired’ rental properties with poor paintwork, old carpets and out-dated décor can deter good tenants who want to make a home out of the property and judge what they see first. If it looks unattractive and neglected they will drive right on by, unless it is the only property available in the area.

Oversupply: Sometimes there are more properties available than prospective tenants. This could occur for seasonal reasons or as a result of a number of developments in the area flooding the market with vacant properties. Having a tenant sign a lease that ends in a high demand time, and also being aware of developments occurring in the area can assist us to possibly avoid this vacancy issue.

Local facilities
: Being close to facilities like shopping centres, transport, health care and education are factors prospective tenants look for, so when you are considering your next investment property, forgo the temptation of ‘just chasing a bargain’ and think ‘location’ as a key determining factor. Properties purchased in the right area tend to have a very short vacancy period.

Newsletter_TipsforPropertySuccess

Tips for Property Investment Success

There are four key things you can do to accelerate your climb up the property ladder. Investing in property can involve significant financial commitment and also requires regular dedicated time and effort. Before making your investment, it is worthwhile seeking the advice of a financial adviser and considering the following top tips that may help you climb the property ladder.

Location, Location, Location: Investing in an area where there is strong demand for rental accommodation may significantly increase your investment return. Besides rental return, you may also be looking for capital gain. If possible, try investing in an area that has already seen its downturn and may be ready for, or beginning, its next stage of growth. New developments or expanding regions can offer great appeal. These options may be attractive to young couples or young families and may often be associated with new infrastructure and amenities such as schools, park lands and shopping precincts.

Do your research: Regardless of whether you purchase a new or established property, it may be valuable to enlist the services of a professional building inspector. An authorised inspector will check for signs of termites, salt damp, and other inconspicuous damages which may be costly to repair in the future. Before purchasing an investment property, it may be worthwhile seeking professional realty advice to determine the appropriate rental price. Setting the rent too high may make it difficult to find a tenant, while setting the rent too low may place you under financial pressure, limit your rental income and potentially attract unsuitable tenants.

Consider a property manager: The experience and knowledge of a professional property manager may outweigh the cost of their services. Property managers are able to help find suitable tenants as they have experience in screening prospective tenants and have access to a database that lists tenants with a history of defaulting on rental repayments, damaging property and eviction. As well as finding tenants, property managers are able to ensure all the required procedures take place, such as conducting property inspections, collecting rent and liaising with the tenant on behalf of the landlord. If you choose to self-manage your property, it may not be realistic for you to be able to attend to maintenance issues promptly. Delayed maintenance may lead to increased repair costs, poor professional relationships with tenants and susceptibility to legal liability claims if the tenant or their guest is injured.

Obtain appropriate insurance cover: A specialised form of landlord insurance may be something to consider, regardless of whether you choose to self-manage or appoint a property manager. A sound insurance policy should cover landlords for both malicious and accidental damage, their legal liability and the loss of rental income. A standard building and contents insurance policy generally won’t cover landlords for these risks. Check your insurance policy and seek professional advice to ensure you have the appropriate coverage.

Newsletter_RetainGoodTenants

Found the right Tenant? Keep them!

Happy Landlord, Happy Agent – that’s only part of the story.

Should tenants only hear from us when they do the wrong thing? Late rent, inspections not up to scratch, gardens overgrown! Then there is the need to contact them for maintenance or appointments. At these times, working together with the tenant is a beneficial outcome for all involved. It is when we go beyond the normal dealings and recognise the little things and reward our tenants that we make a valuable tenant ‘Happy.’ Incentives go a long way. We think it is therefore, worth the effort put in to retainging them!

Here are just a few simple ideas of how you may value a good tenant…

• Certificate of Encouragement‘ for a tenant who consistently pays on time
• Kids certificate for a tidy room at an inspection– parents do the cleanup but both will get a kick out of it
• Reduce their water bill for maintaining gardens to a high standard
• Small renovations such as updating the property with new carpets, fresh paint or a new appliance, e.g. dishwasher
• Small gift during the year or for an occasion such as Christmas, birthday or birth of a child

Even a simple thank you phone call from the Agent on behalf of the Landlord can be the little thing that shows the tenant they are valued.

Reward and recognise good tenants and increase your chance of retaining them!

Newsletter_BuildingReports

Why a building inspection report is so valuable

We are recommending to our Landlords to consider obtaining a building inspection report on their investment property as an extension of our routine inspections.

Our routine inspections are inspections to report on the tenant’s care and maintenance of your property and to detail any suggested preventative maintenance. As we are not qualified building inspectors, a building inspection report will detail preventative maintenance required from a builder’s perspective together with an estimate of cost. A building inspector will also advise if your property meets the constantly changing building compliance standards, particularly decking, stairs and hand rails which are fast becoming peak areas of litigation against property owners.

Our recommendation to undertake such a report is to minimise the potential of legal action being taken against you in the event of an accident, but it also helps to determine potential future costs. Addressing these potential future problems in the short term may save a major expense in the future.

A building inspection report is a modest cost compared to the cost of potential litigation or major repairs.

Newsletter_QualityoverPrice

Mistaking cheap fees for Quality Service

In property management we see many property investors making the mistake of assuming that all real estate companies are the same and all offer the same service. They believe that the best way to differentiate between them is to get cheaper fees. However we have found a common pattern amongst agents; the cheaper they get the lower their service levels.

How is this so? Here is a simple step by step analysis of how cheap fees lead to poor service levels;

1. Cheap fees is the starting line – Unfortunately the perception is that agencies all do ‘the same thing’, we collect rent, get repairs done and find a tenant. With this perception you might be attracted to a cheap agent, or one that substantially discounts their fee to impress you to win your business.

2. The property manager must manage more properties – because the agency has a much lower revenue base now because of their cheaper fees, the property manager is now well overloaded with too many properties to justify the same salary as the other ‘more expensive’ agency down the road.

3. Burnout and resignation – the overload of too large a property portfolio for one Property Manager can cause that property manager to become disillusioned, unable to cope and burnt out. They are unable to meet investor expectations of service levels and often end up resigning. This creates a high turnover of property managers within that Agency.

4. Good property managers now avoid this agency – once word of mouth spreads amongst property managers that to work at this agency you must manage so many more properties, the good property managers steer clear of this business. Therefore the only people the principal can employ are either inexperienced or poor performing property managers who can’t get a job in good agencies.

5. Poor service levels – due to this factor of now lower expertise levels, the result is poor service all around and disillusioned property investors who thought they had a ‘bargain’!

The end result is the property investor is now quite willing to go and find a quality agency, understanding that they need to pay a bit more to get better service and peace of mind.