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Dec 18, 2022
5 tips to manage your property investment portfolio
Investing in property can bring many rewards for your financial goals when managed effectively. Depending on your plans, investing in one or many properties could be part of your strategy to build your investment portfolio. There are various market factors to consider when you are building your portfolio including current conditions relating to property prices, rental yield, and interest rates in addition to ongoing property costs that come with renting a property to a tenant. Speak with your advisor Before beginning your building on your portfolio, it is wise to sit down with your financial advisor and discuss a strategy that will best fit your needs and what you are trying to achieve. You may discuss the reasoning behind building a property portfolio including wealth creation for retirement, you may be looking to renovate and resell at a profit or investing for a shorter term. Whatever strategy you choose, a financial advisor can assist you in making an informed decision before making large investments in the property market. Employ a qualified property manager If you are to invest wisely, it is important to employ a qualified property manager who will look after your investment including placing tenants in the property, handling changeovers of tenancies, ongoing repairs and maintenance and ensuring rent is collected and bills are paid. A great property manager will also inspect your property and provide advice on maintenance that may need to occur, potential rent increases in line with market conditions and capital works that you may need to plan for to ensure that the property is maintained and stays competitive in the rental market. Maintain the property When you are talking with your financial advisors and property managers, it is imperative to build a buffer of funds to maintain the property. Over time things will break with use, as they will in your own home and wear and tear occurs to the property over time. Ensuring that you have funds available for expenses relating to the upkeep of the property will save potential stress when you need to carry out repairs or maintenance to the home. Maintaining the property throughout the tenancy also means that when you sell in the future, you are less likely to have costs associated with bringing the property to market and may achieve more at sale. Don’t forget tax depreciation There are many items that can be claimed at tax time, including repairs, and your accountant can work with you on how to make savings and maximise your investment. Arranging a tax depreciation schedule of the property is also a great way to analyse other areas that could be claimed at tax time for depreciable items over the property. Don’t forget if you are renovating, there may be items that can be claimed with scrapping. Check-in with your advisors At least yearly, check in with your trusted advisors in finance, accounting, and your property manager to ensure that you are getting the most out of your investment and they can guide you on the next steps to investing in property and building that portfolio. If you would like to know more about how our property management team can help with arranging tax depreciation, managing your investment or finding out how much your property is worth, contact us today.
Dec 9, 2022
3 factors to consider before becoming a landlord
If you are weighing up diversifying your investment strategy and purchasing a rental property, it is important to be aware of many factors that will impact your journey as a landlord before you jump into the property investment pool. It is not as simple as purchasing the property, finding a tenant, and then sitting back to relax while the rent covers the mortgage. You may find a great property that has no repairs and an excellent yield which will mean that there are minimal future costs, however, the reality can be far different. Work out your investment strategy Your financial advisor will help you plan out your strategy and understand your affordability for purchasing an investment property. They will likely provide you with a budget that you can work with and may even make recommendations on areas for investment that may fit with what you are after. Where you purchase may determine the price that you pay for the property and the yield that it may have the potential to make each year. It is wise to research areas and speak with agents about returns before purchasing so that you can work out if the property is likely to be positively or negatively geared. Be mindful that rents will increase in line with demand and not necessarily when interest rates increase which may impact your affordability. Make allowances for ongoing costs When you make an investment in a property, the assumption is that there will be tenants in the property paying rent to you or through an agent throughout the life of the investment. As such there will be usual wear and tear on the property and costs to consider can be as simple as a leaking tap or appliance repairs to extensive items like roof repairs, fencing, or a burst hot water system. As a landlord, you are responsible for the repairs on these items, and it is smart to allow a buffer from the rent that is put away to cover minor or even major repairs that may need to be done. There will also be a life span on items like paint, carpet, kitchens, bathrooms and appliances and a savings buffer to plan for these future items will save future stress if it is already planned for. Find a great property manager to make becoming a landlord easier Employing a great property manager to manage your investment is one of the best decisions that you can make as a landlord. A professional property manager is well versed in the requirements of the legislation to cover you in case anything goes wrong at the property and will provide professional recommendations and advice on what needs to be done to maximise your investment. For the minimal cost that you invest in fees, they will find and help you select great tenants and work through resolutions should the unexpected happen. They will also work with trades to find competitive prices when it comes to repairs and maintenance. They can also advise you on the current rental market and advise if the rent needs to be increased depending on market conditions, and the current tenants in the property, working with you to find the best solution. If you are looking for your next investment, contact our sales team to talk about our available properties. They will also connect you with our property management team to discuss your investment property options. Additional reading: why should I hire a property manager?
Nov 30, 2022
Should I sell my investment property?
Making the decision to sell your investment property is usually one that is not made lightly, and you may find that you spend some time deliberating over whether to sell the property or hold onto the investment. Timing when to sell your property is often a major factor and the length of time that you keep the property will depend on your investment goals. Will it be affected by market conditions? Consider the current market and what is trending when assessing your decision to sell or retain. A booming market, maybe a great time to sell, however, think about at what point in the boom you are selling and if it is on a downturn. There is no one expert who can accurately predict when a market may rise or fall, and it is important to carry out your due diligence when looking at selling to ensure that you are in the right market for your needs. Property will always sell, and people will always need housing. What you achieve from the sale, in the end, will depend on a number of factors including your expectations, what the market will pay and having a great agent in your corner. Should you be keeping it for a longer-term? One factor to think about is the length of time in which you have owned the property and if selling for a profit, how capital gains may impact your decision. Before choosing to sell, speak with your financial advisor about how selling might affect your finances and future investment. On the flip side, your advisor may also speak with you about options if you are losing money on the property and with rises and falls in costs, ongoing maintenance, and potential vacancy expenses, how this impacts your income and the investment. Are there opportunities to diversify your investment? As life changes, opportunities may come your way to mix your investment strategies and selling your investment property may be necessary to free up cash to move on to the next investment whether that be in more property or mixed sources. A changing market and the chance for more gains in the final sale price may assist in achieving those investment goals and diversifying your strategy. For more information on how much your investment property may be worth in the current market or for a strategy session on your next move, speak with our sales team about your options. If you are thinking about selling have you considered the benefits of video when selling?
Nov 23, 2022
Dispute resolution and your investment
When it comes to owning an investment property, it is inevitable that at some point, things will go wrong, and disputes may arise between you and the tenants. A qualified and efficient property manager will be well-trained in conflict management and dispute resolution and will largely be able to resolve any disputes on your behalf. For large conflicts that may occur, they will know which avenues need to be taken to achieve a resolution through the tribunal. Disputes can occur from a range of scenarios relating to maintenance, rent increases, property condition and one of the more common areas, vacate inspections and bond disputes. Set expectations from the beginning Like the start of any relationship, it is important to set expectations in the beginning and avoid potential conflict down the track. Many disputes can occur due to miscommunication and a lack of understanding of the expectations, and this is where it is beneficial to provide information to the tenants at the beginning of a tenancy on the expectations around rent payments, maintenance and repairs, property upkeep and inspections and the vacate. Find a resolution with the tenants Our property management team provide guidelines and thorough information to tenants at the start, throughout and at the end of their tenancy and will address any issues as soon as they arise. They will communicate with you throughout the dispute to discuss the ramifications of inaction, and compliance with the legislation of both parties and make suggestions that may find an amicable resolution. The property management team will also keep thorough notes on file of the timeline of the dispute and how the matter was resolved so that should the dispute go further, they have everything documented to represent you at the tribunal. Stay on top of repairs and maintenance A core area of disputes in property management comes from repairs and maintenance and there are certain requirements in each state to ensure that your investment property meets the requirements to an acceptable standard. It is important to stay on top of repairs and maintenance and your property manager will advise you of future work that they feel may be needed. Capital works may need to be carried out at the property and it is wise to budget for this. One of the benefits of staying on top of repairs is that it can help achieve a higher rental yield and many of the costs can be claimed at tax time. You will also attract more great tenants to your property if they can see that it is well-maintained. If you would like to know more about our how our property management team can reduce the stress in your investment, contact us for a chat. If you are wondering if you need a property manager for your investment property - consider the benefits.
Nov 18, 2022
What are the benefits of landlord insurance
Purchasing an investment property can be an exciting step in life and it can be overwhelming as you work through the steps of tasks that you need to have organised to ensure that your property is ready for new tenants. One factor that is often overlooked is landlord insurance and how important it is in covering you in case the unplanned happens during the lifetime of your investment. What is landlord insurance Landlord insurance covers the rental property for the duration of a tenancy and between tenancies for unforeseen events that may occur at the property. It will cover incidents like damage, theft, costs associated with a lease break, rental default and any eviction costs that may be required. A good policy will also cover public liability in case anything should occur to the tenants and guests on the property as well as for storms, fires, and floods. Risks versus benefits Any investment comes with risks and while you may be lucky to have an investment that never has defaulting tenants or damage to the property via the tenants or weather events, there is always that element of risk in the what-if. The benefits of landlord insurance are the protection against the unknown, especially in changing markets. While your property manager can thoroughly check applicants prior to approval for tenancy, we can’t always predict what may happen, and this is where insurance will cover if the tenant stops paying their rent, breaks the lease or damages the property. A good policy will also protect in cases of strata buildings. A strata building insurance policy will only cover building facilities and not the individual apartment. Should an incident like flooding occur from a burst pipe or mould takeover, you would need to defer to your own policy to cover the cost of contents repairs and potential compensation to the tenant. In cases of damage by the tenant, remember that only the equivalent of four weeks is collected from the bond and in the worst case, this may not cover any rent arrears, cleaning, or damage. The costs of the investment There are many specialised landlord insurance policies on the market and the costs for the policy will vary depending on the state that you are in and the value of the property. It is wise to shop around for a good insurance policy that covers the protection over the investment and look for one that covers loss of rent, pet, malicious and accidental damage as well as natural or otherwise disaster events. Don’t forget to check the excess in addition to the premium, a lower excess may mean a higher premium and that is worth weighing up. If you would like to know more speak with one of our property management team who would be happy to help. Another thing to consider for your investment property is compliance awareness.
Oct 7, 2022
Compliance awareness: investment property
When you make the choice to invest in property, it is important to recognise and be aware of the areas of compliance that you are responsible for as an investor and property owner. There are certain safety areas in the property that need to be made safe to comply with regulations and legislation including areas relating to pools, safety switches, smoke alarms, blinds and windows, balconies, and decks as well as electricity and gas. Pool compliance If your property has a pool, you will need to ensure that any fencing complies with legislation and is inspected and signed off in line with relevant local council requirements. Compliance companies will issue a certificate to show compliance or advise of work that does not meet regulations and needs addressing. Smoke alarm compliance There is a requirement for smoke alarms to be tested and checked annually and to ensure that they are in working order to protect the lives of the property occupants and the property. Smoke alarm companies can be employed to carry out these checks and repair faulty alarms, change batteries and ensure that they are working in line with legislation. Blind cords and window locks Open windows can pose a hazard, especially at certain heights and there are requirements to have limiters and safety devices installed in windows to protect property occupants, especially small children. Blind cords are another area that can be hazardous with loose cords causing choking hazards and they must be secured correctly. These should be checked prior to a tenancy and at regular routine inspections or annually by a service professional. Electricity and gas devices A safety switch should be installed on the main switchboard to protect the property from any electrical faults and the risk of electrical fires. Gas outlets and devices should also be checked regularly to monitor for potential leaks and efficiencies and carry out repairs to these as soon as possible to prevent hazards and protect the property occupants. Balconies and decks Over time timber decking and balconies exposed to the elements can weather and wear. If not maintained, they can fall into a state of disrepair, and they must be maintained to the regulations set by the Building Code of Australia and the associated safety standards. Any maintenance should be completed to keep balconies and decks up to code and install new measures like railings to comply with the relevant safety standards, protecting the property occupants and any guests. Each state is different, and the thought of compliance may seem like a lot of work, however, employing a qualified and experienced property manager who has industry contacts and works with compliance trades can remove this stress from your property investment. Talk with our property managers about how they can help minimise your risks as a property investor and ensure that your property meets compliance requirements.
Oct 5, 2022
Strata fees and your investment
Purchasing an apartment, unit or townhouse can bring the opportunity to live in a property with lower maintenance than a house with minimal to no requirements to maintain yards or other buildings. It can also provide lifestyle amenities such as pools, gyms, and other facilities, however, these also need to be maintained. In many complexes, this is where strata are employed, for a fee to maintain common areas and ensure that any works that need to be carried out to the complex including the facilities, grounds and buildings are covered and these are communicated with the Owner’s Corporation. Strata fees are charged by strata companies for the management of accounts relating to strata levies collected for the property as well as the arrangement of any repairs, maintenance and upkeep of the common areas and spaces of the buildings in the complex. All owners will contribute to the strata levies which are charged out on a quarterly basis and collection is reported to the Body Corporate at regular meetings to ascertain the amount of funds that have been collected from levies. They will then decide on the allocation of these funds to work that needs to be carried out. Kinds of things you might pay for Typically, there are several types of strata fees that are charged out in a complex: Capital work levies or a sinking fund which is collected to pay for the out-of-the-ordinary and more expensive repair items that may need to be carried out. This might include items like upgrading windows, repairs to balconies or updating items in common areas. Admin levies cover the management of the building expenses that occur on a regular basis such as gardening and landscaping, insurance premiums, smoke alarm and fire testing, cleaning, and any utilities such as gas or electricity. Special levies are additional levies that are charged if something unexpected needs to be repaired or is required at the property and cannot be covered by the funds in the capital works levies account. Strata management fees When employing a strata management company to administer and manage the property on behalf of the body corporate, they will also charge administration fees for their services including the daily management of the property and administration of financial records and reports. These fees may include a base management fee on the collection of the levies and in some cases, they may also charge a ‘Schedule B’ fee for managing any disbursements that are related to the property and the Body Corporate decisions. If your property is being used for investment purposes, these fees can also be tax deductible and should be discussed with your tax advisor. Also, our Property Management team can pay these accounts on your behalf from your rental funds as part of our property management service. It is a great idea to ask them how they can help to streamline this task for you.
Oct 3, 2022
Buying your first investment property
Property investment can be one of the safest assets with a strong capital growth and is one of the more popular forms of investment. While the initial and ongoing outlay can be costly, investing in the right areas with robust rental yields can prove rewarding in providing a passive income. Work out your ‘why’ Before choosing to invest in property, work out the reasons why you would like to diversify into this type of asset and if it’s the right path for you. Property investment, unlike buying your own home should be more strategic in the approach with less of an emotional connection. Is it an investment that you would like over the short term with a good rental return, in the medium term to kick start a wealth creation focus or longer-term while planning for retirement? All of these factors may impact the suburbs that you look to invest in and the type of property that you are after. Work out your investment property budget Similar to purchasing your own home, there are requirements that you will need to meet to ensure that you can finance an investment property. Financial lenders may take any equity over your own home into account when considering how much you can borrow for an investment. They will also weigh up the risk factors around your history and expenses that may be required for the property including rates, levies, any capital works, and maintenance. Lenders will also consider the location that you are looking to buy in and current and forecast capital growth in the area and potential income that may come from the property to determine if the rent will cover expenses or if a portion of your income will need to cover the mortgage repayments and other expenses. Work out your location and property type Once you have your why and finance in check, then you can consider the location and the type of property that you are after for investment. It is important to work out if you would like to invest in a house, townhouse, unit, or another style of property as each has different levels of obligations when it comes to regular maintenance and general upkeep. If you choose to invest in apartments, strata levies and responsibilities need to be considered and if a strata complex has a pool, lift access or landscaped gardens, all of these are factored into the strata levies and can increase your costs each quarter, especially if capital works need to be carried out. All property styles will have regular maintenance and upkeep that is required and depending on the age of the home, will determine how soon that needs to be done. You should consider setting aside funds each month to cover for when things go wrong like leaking taps and toilets as well as future refurbishments like paint, carpet, blinds kitchens and bathrooms. An experienced Property Manager can help to take the pressure points off the day-to-day running of your investment property and provide expert advice to maximise your investment. Talk to our property management team on how they can help to find solutions for you to make owning an investment property seamless. If you are considering buying your first investment property, check out this recent post: What is rental yield and how to calculate it.