- Have you Accidentally Discriminated against your Tenants?
15 Oct 2013When rent out your property, you want the right tenants. You want great tenants, ones who will look after your property as if it were their own, and pay the rent on time. Figuring out who those perfect tenants are can be a bit tricky, as you cannot chose tenants based on personally characteristics, and can only look at an applicants history.In Victoria it is against the law to discriminate on areas such as: (Taken from Consumer Affairs Victoria )
ChildrenSome landlords like to have children (under age 16) in their property - parents tend to be stable tenants and don't like to move frequently. Whereas, some landlords aren't happy about having children in the property. However, be aware that you cannot refuse children in your property, unless:
- carer status, family responsibilities, parental status
- disability (including physical, sensory and intellectual disability, work related injury, medical conditions, mental, psychological and learning disabilities)
- employment activity
- gender identity, lawful sexual activity, sexual orientation
- industrial activity
- marital status
- physical features
- political belief or activity
- pregnancy, breastfeeding
- race (including colour, nationality, ethnicity and ethnic origin)
- religious belief or activity
- personal association with someone who has, or is assumed to have, one of these personal characteristics.
So you can see how it can be easy to accidentally discriminate if you are not fully versed in discrimination law. Have you been close to making a mistake when it comes to choosing tenants?
- property is the landlord’s main residence
- property’s location and design make it unsuitable for occupation by a child.
- Some Pro Tips for Property Investing
13 Oct 2013You would've heard these time and time again, and the reason you hear them frequently is because they remain true, which means you can never hear them enough.So get your team in order, your finances in order and your head in order and then lets have a look at this list.Choose a property that tenants will likeIt's not about you, it's about them. It's about what tenants find attractive. What's attractive? Close to amenities, good sized bedrooms, clean, light-filled, not too close to a main road, off-street parking, safe neighborhood. Get as many of these as possible in a property and you will be able to attract lots of good tenants.
How will it grow?Choose a property that will grow in value, by choosing a property in a good location. As above, tenants want amenities so near schools, restaurants, public transport and the CBD are good choices. Properties close to these, are likely to grow in value in a good market and hold their own in a down market.What can you do to Improve it?Now you have your property, give it a quick spruce up to instantly improve the value of your property. Landscaping, painting, installing new curtains and flooring, change out hardware and cupboard doors, spend some time on the property and you will hopefully be financially rewarded (if you've chosen well that is).Your Emergency FundIf you haven't got an emergency fund, then you need to get on it - PRONTO! What you can do, when your property grows in value you can refinance it, so you have a little wiggle room if things go south in the other areas of you rife.Make Em Long-termKeep your tenants happy. That way they (hopefully) will turn into long-term tenants, which means more money and less stress for you. A good way to do that is to hire a property manager as they are experienced in vetting the good tenants.So would you agree with the list? Is there anything missing that you think is vital to property investing?
- Do You Know What Makes a Good Investment Property?
9 Oct 2013Investing in property is much different from home buying. It is all about the numbers and has nothing to do with emotions. Choosing a good property means you have to think logically and long-term, with perspectives of future developments in the area or location of choice.
Here are some hints to help you determine if you are choosing a property that makes for a good investment:
In these changing economic times, good property investment is needed than ever. Take a careful look at properties that are promising enough to bring you much dough. Seeking the help of experienced property manager with a proven track record is essential.
- The property caters to an existing market. When there is no need to create demand for a property, because there is one place, this is a good sign. An academic community with a nearby university or colleges is good for acquiring investments such as units or apartments suitable for students or faculty staff. There is already a demographic profile of people that you can take advantage of when deciding on which properties to buy.
- A good property to invest in is one that is set to be “up and coming” – meaning it promises to be a booming metropolis or progressive place in the future. This way, you can acquire properties at a cheaper price, while benefiting from it in the future. Increases in the property or rental price along with the continuous development of the place make a great opportunity. You can ask the help of your reliable buyers agent for this. This is probably the key when buying at a good price, but is also the trickiest, especially if the area hasn't started the gentrification process.
- Think about your target tenants. If you wish your property to maximize profits, it has to be tenant-friendly. Look for a place where people will find roads to the metropolis or city accessible. Proximity to commercial establishments, schools, and health care should also be considered. A 50km to 100km radius within the metropolis is good indication of a worthwhile property investment.
- Steps to Take When Your Tenants have a Violent Situation.
6 Oct 2013This is definitely something you hope to avoid as landlord or property manager, but unfortunately it does happen. This is why it is wise to have a general idea on how to handle a situation like this. A situation, that is far too important to ignore.If your tenant is involved with a family violence situation there is in fact a set of steps you can help your tenant to follow.If your tenant has confided in you that there is an issue, encourage them to work with your state's law. This information is for Victoria, so be sure you know what is required in your state. I would advise that in any situation like this, you get legal counsel so you can understand the ramifications of any decisions you make. Out of the goodness of your heart you may think that changing the lease without legal intervention is the right way to go, but it depends on the case, and you never know, by jumping the gun you may do more harm than good. So again, seek out legal counsel first and foremost.For this discussion we are going to assume that if changing the lease quickly was the right thing to do, you would. But so you don't get yourself in hot water, here are the actual steps your tenant needs to follow.This is what is required of the tenant:
The Landlord in this situation:
- The tenant/victim needs to apply to the Victorian Civil and Administrative Tribunal (VCAT) to have their tenancy arrangements changed.
- This can be done only after a family violence intervention order is finalized by a magistrate.
- The protected person(s) (i.e. your tenant) can apply to VCAT to end the lease early or arrange for a new tenancy agreement even if their names are not on the existing lease.
- VCAT will determine who is entitled to any bond or who is responsible for any damage.
As you can see VCAT is where the power is in this situation, and without it your tenant may create more problems for themselves.For further information on this please see Consumer Affairs Victoria.Have you ever had to deal with this before? What was your first step?
- Has the right to have a new 'Condition Report' provided on the property and also be given entry to the property to view the condition of the property (after property notice has been given).
- Is buying a home and buying an investment property the same?
2 Oct 2013No, buying a house for you and buying an investment property are two different purchases.You may be buying property in both cases, but the motivation for doing so are quite different. One, you a buying with your heart and the other you are buying with the calculator.When you are buying your own home, you have a personal wish list that you want to achieve - or as close as you can. Maybe you want to live in a certain area, with a minimum number of bedrooms and space with all of this coming within budget.With an investment property, all that matters is finding a property that is in demand that will increase in value overtime. So it doesn't matter what you personally think of the property, it's about how easy it would be to rent out, how easy it is to maintain and how much it will increase in value over time. So who cares if it's got 3 bedrooms instead of 4 and there isn't much of a backyard, because the rental yield looks fantastic, and the value of the property is on the up and up.So make sure that when you are looking at property that you have the right 'hat' on. Ask yourself a few questions:
An investment property will take extra work to find. The best ones are usually in popular suburbs, are close to amenities such as transport, schools, restaurants, employment and parks. Which means competition to find these properties will be fierce. So making sure you have a reliable team on your side helping with those purchases will do two things:1 Allow you to pounce on the deals as fast as possible.2 Keep your heart out of it, and make sure it comes down to the numbers only.So no, buying an investment property is quite different than buying your own residence. You need to approach it differently and always keep in mind, it's not about you, it's about other people who will be living in it.
- Is this property purchase about my financial future or is it about my day-to-day life?
- What do I want this property to do for me in the long-term?
- Am I going to live here?
- Yes, you need to keep on top of maintenance!
29 Sep 2013There's a reason it's called maintenance, it means you have to be constantly checking on things to make sure your rental property stays in tip top condition.Tenants are legally entitled to a safe and habitable property, but it also makes good business sense - if it's not kept in good repair then your tenants will be few and far between and you will be losing money.So lets have a look at maintenance.The Tenant's ViewMake sure you keep in mind that other people are going to be living here and you want them to be safe and happy. Happy usually means they will turn into long-term tenants and that's what you want. So look at it from their perspective. What would put someone off? Is the gate hanging on it's hinges? Is the paint peeling? Are there dripping taps? These things don't take too much money to fix, but they have a big impact on what the place looks like and how your tenants feel about the place.
The OngoingWhen you don't perform regular maintenance and repairs, a few things start happening.
What does that all mean? It means less money in your pocket.When you touch up paint, update fixtures and appliances it shows you are invested in the property and potential tenants will appreciate this. Tenants are also more likely to take care of a property that is already in good shape. If a single broken window can cause a neighborhood to deteriorate, then a what could a single broken window do to your property and your tenants?When a tenant says there is a problem, it behooves you to investigate. Most tenants are not in the habit of calling their landlord 'just because', they prefer to live without the landlord breathing down their neck. So when a tenant calls, then it's (most likely) for a good reason.ForesightTo minimize those calls you can in fact think ahead as to the type of issues may come up. A swimming pool is asking for a lot of work, as well as a large grassy areas and appliances such as a waste disposal. So think about your property and think about any changes that you could make that may mean you'll save yourself time and money in the long run.What activities do you do to ensure your investment property stays in tip top shape?
- The problems get bigger and take more money and time to fix.
- The value of the property is more than likely to decrease
- The time between tenants will be longer and longer
- DIY Property Manager Traps
25 Sep 2013You've decided to forgo the use of a Property Manager in favor of managing your property on your own. Now you need to brush up on your skills so that you don't fall into some of many potential traps out there.
Most DIY property managers assume the hardest part will be dealing with the day-today side of things: Tenants not paying rent. Phone calls in the middle of the night. Not abiding by the rules etc. Yes, they can be frustrating, but I would argue, however, that the toughest part for any DIY Property Manager is the legal side of things. If you are not 100% up to speed on tenancy legislation and the paperwork required, you may find yourself in some unwanted hot water.
There are lots of areas to look out for, but here are a few common problems that may arise with new DIY Property Managers.
A handshake and a promise is not legally binding. You need to have a legally binding contract that outlines your tenants responsibilities. The very minimum that it should cover is the length of the lease, the rent to be paid (and when) and the condition the property is currently in and what it should be returned to upon vacating.
No Condition Report
A condition report needs to be filled in on a regular basis. It is designed to make sure both parties are protected. But it is pretty useless having one, if it is not filled out and approved by both parties.
Not asking for a bond or not handing the bond correctly can set you up for heartache down the line. Asking for a bond and putting it in your bank account is big non-no. Along with not asking for a bond at all. What will you do if your tenant damages your property and you have no bond to correct the damage?
How much do you understand about tenancy law in your area? Not understanding tenancy legislation is not a valid defense, so if you may be fined if you don't comply with all the rules and regulations. So make sure you understand the law in detail, or you have some help here.
Entering the Property
Even though you own the property your tenants live there and they have the right to be left alone and not have you breathing down their neck. You must give notice before entering the property either for a property inspection or if you are working on the property. Make sure you are aware of how much notice to give.
So are you ready to be a DIY Property Manager? It is a lot more involved than most people think, and there are a lot of pitfalls for the unsuspecting.
Have you tried to be a DIY property manager? how did it work out for you?
- A Successful Rental Open Home vs a Failure
22 Sep 2013So you have your rental property ready to go and now you need to show it. You've advertised that it is open for viewing on a certain day and time and now you need tenants. What can you do to make sure it's a success and not a failure?
Just like a good Boy Scout (or Girl Guide), you need to be prepared. Make sure you are confident with your property and the open home will go a lot smoother.
See, all it takes is knowing your property inside and out, getting it to a 'move-in' ready state and being prepared with paperwork and answers and you will have a great showing. Alternatively of course, you can employ a property manager to take care of all these things for you. But it is still wise to be involved in this process. Remember that investing in property doesn't mean that you set it and walk away.
- Are you on time? (That means being there at least 30 mins before the scheduled open time). You can guarantee that people will show up early if the property is in the right location and ticks lots of boxes. So be there before everyone else. Maybe even get there an hour before, just to be safe.
- Do you have all the forms you need? Telling prospective tenants to 'go online and download the forms' may put off that perfect tenant. Have multiple application forms on hand, and more than you think you may need. Bringing one set is not going to cut it.
- Lets step back a bit and look around the property. Have you prepared it properly? Are you sure it's 'move-in' ready? You will put off a lot of potentials if the carpet is rolled up along the wall and paint cans lying around. It doesn't matter if you say "I promise that the carpet will be in and the place repainted before you move in." Tenants will not be able to see past that.
- Is the outside looking good, garden tidy and the lawns mowed?
- Is everything working inside? Light switches all functioning, no missing lightbulbs? No leaking taps or broken tiles? Smoke alarms are working with new batteries.
- You want to avoid receiving 15 phone calls straight after the tenants have moved in asking to come and look at this and take. It will save you time and money in long run by making sure everything is in working order.
- Can you answer all the questions?: How much is rent? When is rent due? What is the length of the lease? What is the neighbourhood like? What is the crime rate in the area? What additional expenses are there? What is the policy on pets? When is rubbish collected? What is your decorating policy? Why did the last tenant move out? What ongoing issues are there with the property?
- The DO NOT INSTALL List for your Investment property
18 Sep 2013You have a rental property and you want to make it as attractive to tenants as possible, but there are certain amenities that if you do install, will only create headaches for you. By headaches I mean, they will suck up money on maintenance and time to get them fixed. Anything that is likely to break, will break at some point, so you need to strike a balance between adding a feature that will attract tenants, and a feature that will cause you headaches.So what are they?A PoolWhy on earth would you want to install a pool, unless of course the tenant is responsible for all care and maintenance? You do not want to be responsible for cleaning filters and green pools and broken pumps. This is also does not take into consideration laws around fencing and pools. Pools also includes spa pools too. Lots of headaches here.Waste disposalHow many times do you want to be called out because of the tenant shoving eggshells down the waste disposal and jamming it? Yes there are good quality waste disposals units around, but a fork being munched in the unit will adversely affect it forever. So avoid it.BidetAnything over and above the basic bath/shower/toilet and vanity is probably asking for extra work. You could consider installing a heated towel rail to add an extra touch, but again, anything that may break will break, so just be prepared.
Water FilterThis is not the end of the world if you do install one in you property. For it to be worth it your tenant it will need to have the filters changed regularly. If that is not such a big deal, and you don't mind the odd call out for a dripping tap, then maybe it is a nice feature for your tenant.AppliancesWashing machines, dryers fridges and freezers etc. It's not common for these to be included in rentals in Australia and that's a good thing, the more a tenant can be responsible for the better.Features that may break but really are worth it:Heating/CoolingHeat pump or some kind of built in heating/cooling device is a good thing, especially in a market like Melbourne. The summers can get very hot and with winters cold, tenants are looking for ways to make their life more comfortable.DishwasherYes they break, but tenants will look for this, or at the very least a space where they can install their own if you are wary of including one. Modern day living means modern day features, and dishwashers are more and more a 'necessity'.AlarmI'm on the fence about this one. I think it often depends on the area that the property is in. If all surrounding properties have one then it would behoove you to install one too. They don't need to be hard-wired to a security company and can act like more of a deterrent to untoward activity. It does show your tenants that you care about their safety and that of the property, but like with anything, there is maintenance involved and they can be tripped by insects or heat.Solar WaterThis is a tough one, because the environmental benefits are wonderful, the appeal to a tenant is huge, the value you may or may not add is debatable and the amount of maintenance can be high. I guess if your property is in a very competitive area, this maybe what you need to include. A vegetable garden and solar heating would definitely set you apart.So did I miss anything on the list? What would you not install in your rental property?
- Make Improvements to your Rental Property - on a Tight Budget
15 Sep 2013So you have a rental property but a very tight budget to make improvements on it.You know you need to add value to maximise returns on your rental, but what can you do?The good news is you can keep your rental in good condition and add value without breaking the bank. By making upgrades and renovations wisely, you will not eat into your maintenance budget and you can still come out on top. So where to start?New Paint:The fastest way to make something look fresh, new and clean is paint. So look at the outside and see either a power wash or a paint is in order. If it's been more than 5 years since it's been painted, then paint may be the best option. On the inside, just paint it. Don't bother about trying to clean it off, just put on a fresh coat of paint.There is a catch with a new coat of paint - it has to look professional. A slap dash approach to painting will make it look worse. If you don't prepare the surfaces properly and then don't clean up the spills and splashes, you make the place look worse, rather than better. So if your painting skills aren't all the best, then call in the professionals.Make sure you paint in a neutral color to maximize your tenant base. read more about that here.Landscaping:Sometimes you don't even need to spend money on the landscaping, you just have to put the time in, so this is a good place to save money on a tight budget. Mow the lawns, give it a really good weed. You can even transplant some plants from one area of the house to another, to make it look fresh. Ask around to see if people are getting rid of plants and plant those - if appropriate. There are usually lots of plants for sale at your school fair and garage sales. You don't have to spend money at the nursery.Inside:A good bang for your buck here is changing out window treatments, cupboard doors, hardware and giving the floors a good clean. If the carpet is from the 70's, change it. You can't get around that one I'm afraid. So put in something hardy and neutral and you will reap the benefits.Clean, Clean Clean:Make the place sparkle. Windows, walls, ceilings, in every crease and crevice. Clean, clean clean! This is a good opportunity to find anything that needs fixing.You do not need to spend thousands and thousands on your rental. Put what you can into the place without going over your budget, as time and money allows ,you can improve the property. A lot of landlords go out with guns blazing and have grand plans to overhaul their properties, only to find out that they have overspent. Take your time, if you have chosen wisely the property can wait for the big bathroom and kitchen renovation.What are you favorite initial upgrades you do to your rental properties?
- What could you buy for $300k?
11 Sep 2013So you have $300,000 and you want to invest in property. What solid properties are available in some popular places across Australia?Here are some options:Lakelands (Perth/Mandurah) WAThis is a 3 Bed, 2 bath property, garaging for 2 cars. It is 'on the doorstep' for activities such as fishing, cafes and restaurants.Melbourne VICThis is in the heart of Fitzroy and features 2 bed, 2 bath and a parking space. This would appeal to many investors.Adelaide SAThe carrot with this property is that the current owner will pay the Stamp Duty. This is another 2 bed, 2 bath property, but no parking space included. This property is in the heart of the CBDHobart (TAS)This would be a renovators dream, since it hasn't been looked after in the past 20 years! But if you're inspired by a blank canvas, this 4 bed, 1 bath property may just tick the boxes.Sydney NSWA serviced apartment with a net return of over 6%. This is a luxury furnished studio apartment.So this is what $300,000 will buy you at the moment, are any of these properties appealing?
- What utilities are you responsible for?
8 Sep 2013As a landlord you know you know you have to pay taxes, the mortgage, maintenance costs, fees to any of your team members that you may use on a regular basis (like a property manager for example) But what about utilities, can't you just make your tenant pay for everything?Well in a way they are through the rent that they pay, but this comes directly from the Consumer Affairs Victoria website. Which spells out exactly what tenants and Landlords are responsible forWaterIf the property has its own meter, the tenant must:
- pay for water consumption, and
- (in the Melbourne metropolitan area) sewage disposal, unless the landlord has agreed to pay these charges.
For information about who is responsible for smart meters, visit the Department of Primary Industries website.Have you been in a situation where you didn't know who was responsible for what? How did you handle it? If you use a Property Manager, they will ensure that you and your tenant know who is responsible!Source: www.consumer.vic.gov.au
- The landlord must pay all installation and initial connection costs for electricity, gas and oil supply. If there is a separate meter, the tenant must pay for all other charges, unless otherwise agreed. If there is no separate meter, the landlord must pay.
- Where bottled gas is provided, the landlord pays for the supply or hire of bottles and the tenant pays for the gas. A landlord must reimburse the tenant for the costs of any utilities for which the landlord is liable.
- The landlord must reimburse the tenant for any rates or taxes paid to a public authority that are not part of consumption charges for the service. However, the tenant may be responsible for these costs if their lease is for a fixed period of more than one year and the lease agreement states this.
- Director of Housing tenants may be charged separately for expenses such as heating and laundry.
- Tenants are responsible for phone line and internet connections, unless the lease states that the landlord will provide these services.
- If an external antenna is part of the property and cannot receive digital signals, the landlord must upgrade or replace it if the:
- original antenna could receive analog signals when the tenant moved in, and
- lease is covered by the Residential Tenancies Act 1997.
- House vs Apartment: Which investment is right for you?
4 Sep 2013One question that comes up more than any other is, “Wouldn’t a house with a backyard make a better property investment than a one bedroom apartment?” The answer is the most frustrating of all - “it depends”! It depends on the property, it depends on your budget, it depends on the location, and it also depends on your investment strategy.Choosing a House for your Investment
- Houses have better potential for growth. Land will always appreciate and there is more land attached to houses than apartments. Land is also in short supply. In following the principal of supply and demand this means that good growth is to be expected.
- Greater capacity for development. It is possible to increase the market value of a house through decorating, landscaping, extensions and remodelling. The same scope for improvement is not present in an apartment.
- Potential to sub-divide, cross lease or sell well located property as land becomes more sought after.
- No body corporate fees.
- No restrictions (in many cases) placed on fencing, external colour schemes and pets.
- Cheaper maintenance costs than the upkeep of a rental home.
- Easy to rent with the draw of inner city living, transport efficiencies, easy care lifestyle.
- No gardens to upkeep.
- Less investment capital required when compared to a house.
- Purchasing a parking space along with the apartment can be used as secondary investment - lease out separately, or in addition to the apartment
- 7 Investment Property Calculators
1 Sep 2013So you are considering buying an investment property - good choice! It can feel overwhelming with all the numbers to keep in mind - Do I have enough money? How much money will I make? How much rent to charge? There are a lot of free calculators online that will help you give you an idea of the numbers. I would recommend if this is your first time out, that you develop your team who will be able to give you full and complete advice on what to do.
But here is a collection of various calculators that might help you decide on taking that first step.
Have you used an online calculator before? Did it help you with any decisions you had to make?
- Can I afford and Investment Property? Calculator From: yourmortgage.com.au
- Can I afford and Investment Property? Calculator From: yourinvestmentpropertymag.com.au
- Investment property Cashflow Calculator From: smartline.com.au
- Investment Property Purchase Calculator From: ssfs.com.au
- Investment Property Calculator From: mortgagehouse.com.au
- Negative Gearing Tax Calculator From: mybank.com.au
- Negative Gearing Calculator From: dolmanbateman.com.au
- Who do you have on your team?
28 Aug 2013If you are going to be a successful property investor it's best to have a solid team that you trust. Make sure you get recommendations from family and friends. You're looking for team members who are successful investors themselves. Also keep in mind the best way to see if they would be a good part of your team, is to see how well they have done for others.Once you have a list of people go and talk to them and see if they fit with you. Find out how your investing strategy fits with their philosophy.But who is it you should have on your team?
The MoneyYou need to know how much you have to spend and your Finance Broker is just the person to sort you out. There's no point looking for deals if you can't buy them straight away. The best deals are not going to sit around and wait while you go from bank to bank to finance a deal. Your Broker on the other hand, can almost create miracles and allow you to get those great deals.The AgentYour Buyers Agent can find you the deals that you wouldn't normally have access to. You do have to pay them to find you the best deals, but it works out to be a win/win for everyone.The LegalYou need someone to be able to read the contracts, know what they mean and be able to interpret them for you. Be aware that there are differences from state to state, so you need to have your Solicitor to be aware of those nuances. When it's in writing it's binding, so you want to make sure you know what you're signing.The NumbersYour investing needs to be structured in such a way that you are protected, that you are paying the right amount of tax, and you are getting the most out of your investment. If you get this wrong you will pay dearly. Make sure they know your strategy and they will help structure things in the right way.InsuranceYou need insurance and this is often overlooked. Most don't consider it to be of vital importance until after the purchase has been made and tenants are in the door. Make sure you get Landlord insurance ASAP - as soon as the deal has gone unconditional. That way you will have peace of mind and it covers pretty much every eventuality.The ManagerHow could I give you a its of people on your team if I don't talk about a Property Manager? We take away the day to day frustrations, and ensure your property stays in tip top condition (among other things). Make sure you know how your property management company is structured - who exactly will be managing your property. This is a big asset of yours and you want it to be looked after with tender loving care.So do you think I missed someone from the team that I haven't included? If you would like some help in tracking down some team members, get in touch.