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- harb wrote:wealth4life.com wrote:
The major banks are making it very difficult for burrowers and are applying pressure on reputable valuers to get it right or else. Some banks are that concerned with some areas of the market that they have shut down lending in some of their banking sectors.
What country are we talking about here ? I sniffed around CBA and NAB and is business as normal, unless of course you are/have been bankrupt or have a stained credit record. Even then its not that difficult.
I agree with you Harb, I am not so sure that it is so bad. I went with a mate to the bank last Friday to look at how much he can borrow for his first investment property. He is a former bankrupt and recently had a $10K credit card bill he just rolled over into his existing home mortgage – so he's not your perfect customer. Within 45 minutes, he had pre-approval from CBA for $250K. By the sounds of it, he could've borrowed more if he was prepared to pay LMI.
Here are some tips that worked for me when choosing my PM who I’ve been very happy with (sorry they’re not in Ormeau):
- Get a minimum of 3 PMs to come to the property to give a rental appraisal
- Find out how they run their business. Will there be just one PM or several looking after the property? Where will they advertise the property? When a lease is running out, how soon will they advertise for a new tenant?
- Look for a PM that gets a lot of their business from property management rather than a PM that has property management as a side thing to their main business of sales
- Try to meet who will actually be looking after your property
- Find out their fees – management, advertising, inspection. These can vary. See if they will give you a discount on the management fee for multiple properties
A PM from another agency just offered last month to give me free rental appraisals on all my properties to assess where the properties are at. All they needed was addresses, number of bedrooms/bathrooms/living areas, extras eg. alarm, dishwasher, intercom, security shutters etc, car spaces and any other information which I believe is value adding. No photos were needed. If they want your business, they'll be happy to give their opinion on rental returns. You're not obligated to go with them.
I would have thought that the PM could give your tenants notice that they were going to enter the property and take some photos but I could be wrong. My PM has done that before.
Have you shown your property manager your research into rental prices? Giving them some examples of similar property rented for more may change their tune. At least then you can get them to justify why your property is not able to be rented at the price you think it should be. Or maybe you could get a second opinion from another real estate agency.A place like Bunnings can also organise a plumber and/or electrician if you want. Personally, I found it easier for them to do that as well. Or you can organise your own trades.
Pulling out the old kitchen is a good way to save money and get involved first time round, but be wary of asbestos and take appropriate precautions.I found Seven Steps to Wealth by John Fitzgerald and How You Could Build a $10 Million Property Portfolio in Just 10 Years to be very helpful when I first started investing. They talk about how you can build up a property portfolio of multiple properties over time.
With our property manager, we normally leave it up to them to find us a tenant and do checks as to whether they are a good tenant. I figure that’s what we pay them money to do. They will call us if they find a tenant and give us the opportunity to accept or reject a tenant’s application.
I do like to be an active investor myself so I will keep up to date with how the property manager is going with finding a tenant. So I will call the pm if I haven’t heard from them to see how they are progressing. I will also provide my input into the process if I think there is a better way. For example, the last property my pm rented for us, I advised them that I didn’t want to have my property listed on the 3 web sites they would normally list the property on. I wanted it listed on only one and they were happy to do that for me.
I personally don’t give gifts as I haven’t found it to be necessary.When I first started investing in property, I privately managed my property. I found it very hard to increase the rent. I also found that the tenants seemed to ask for things a lot more since they had direct contact with me. They would ask for things like curtains instead of drapes in the bedroom, vinyl instead of carpet in the lounge…the list goes on. When the lease ran out, I got a property manager and they marketed the property $25 per week more than what I had it rented. Since that first property, I have put all further property purchases with a property manager. I would recommend getting a property manager as I think they pay for themselves. They usually know of good maintenance people and it saves you having to receive calls from a tenant at inconvenient times.
I would normally choose a P&I loan for a property I owner occupy and interest-only on an investment property as the interest payments are tax deductible anyway. That way, you can free up cashflow to get more property.
Hi Matt, I think your plan to buy a place now and convert it into a rental in 12-18 months time is a great plan. It's good to just take action and get started. If you don’t have a big deposit, you can still buy a property. You may have to adjust what you’re looking for accordingly. Go for a unit rather than a house, look a little further from the CBD or buy a property that needs renovation.
Cheers,
TJIt's in a group of 4 so I guess being in such a small group it is possible to have no strata manager. My concerns are with how it's run. I am also very sceptical about how it will all work without having any meetings. I agree, there won't be any way of knowing the outgoings and what's been going on with the group.
Thanks for the advice. I will look at speaking to the contacts you've suggested.
Hi Murtle,
I think it’s better to buy as much property as you can as soon as you can. You might need to change your strategy to suit the market at times. For example, when I first started, I just bought and held property as the market was booming. These days, without the same market growth, I look for ways to add value to get more equity out of my property.
The interest rate rises and US sub-prime market meltdown are making me nervous too but I plan to stay in the property market. I keep more money on the side for a rainy day and stick to the lower end of the market as I think they will sell more easily if I do get into trouble as there is a bigger pool of potential buyers.
Stick with it and good luck.
I sure do!
I used to own a 2003 BMW that I bought from new and lost $13000 in value in the year and a half that I owned it. I wish I had read The Millionaire Next Door sooner. Upon reading it, I replaced my BMW with a 1995 Daihatsu Charade. I only recently bought a second car, a 1998 Ford Falcon. I prefer having the cheaper cars as I'm not fretting about where to park, keeping the car immaculately clean, paying exorbinant insurance, etc.
Hi donkey33,
I bought my first property on a single income when I was 23 years old. I decided to live with my parents for longer and rent out the property I bought so that the tenants could help me with my loan repayments. I didn’t buy a house as they were out of my price range. Instead, I bought a 2 bedroom Torrens Title maisonette in the suburbs about 20km from the Adelaide CBD. I’ve since been able to buy a house to live in using the equity I've gained from that first property.
I found that the first property was the hardest to buy. I treated it as a stepping stone to the house I wanted to live in. Once you get your foot in the door of the property market, it gets easier.
Good luck.
