Hi Gentlemanjim,

I would have thought that the rental income would be of a primary consideration by the lender too. But it did actually happen to me, I rang a lender, I was inquiring about finance for an investment property and whilst we were discussing loan serviceability, they stated that they do not take into account rental income as they had to make sure that the loan could be serviced, regardless wether the property was tenanted or not. I made the comment because ‘I think’ it was Aussie, but it was so long ago that I just can’t remember for sure. Anyway, they may have changed policy now. Some lenders have all sorts of weird policy over what incomes they will and won’t take into account.

Cheers
Kym

Hi all,

My two cents worth………

I choose to do my own property management, for two main reasons. First, as you are all saying, all you wind up doing is arguing with the property manager, rather than the tenant. After bonds have been returned to tenants, it can be difficult at that point to recover for damages. The second reason is, it can be difficult to find managers who treat both the owners and tenants with a healthy level of respect and who respond to the needs of both in an attentive way.

Now, even though I have a current ‘situation’ with a tenant (damage to property / late rent), I have arranged a visit and we are going to discuss matters and come to an arrangement. If not, a magistrate can help us decide. At the end of the day, even if I end up wearing costs due to this ‘situation’, when I do the sums am I any worse off financially than what I would have been, had I employed a managing agent? Probably not a lot, if I am any worse off at all. This ‘situation’ has occurred mid-lease. If the ‘situation’ had been allowed to continue until the end of the lease by a less than diligent property manager, would I be worse off? Probably.

I friend of mine recently had his house re-painted by two 15year old, unsupervised teenagers (mother left them to live in the house by themselves). They did a great job, including the laminated kitchen and bathroom cabinets, power points, security sensors, light fittings, aluminium window frames and the glazing. (lots of pink and bright yellow – wow!). Other issues like stains to carpets, broken tiles – the list became quite impressive. I think the thing that really turned him on the most was that the managing agent only became aware of these damages after the tenants moved out. So much for the regular inspections!!

Here’s my strategy. I buy a property. I immediately introduce myself and leave my contact details with all of the neighbours. I let them know of my intention to rent the property, and make them feel comfortable about calling me at any time. I discuss any issues that could concern us both, things like fences needing repair, overhanging trees etc. I also always include garden maintenance in the weekly rent and use my own contractor. I pay him in person, so I deliberately talk to him once a fortnight. I also have a regular maintenance contractor who I have developed a great rapport with and he visits the property prior to tenants moving in to do any odd jobs, so he is aware of it’s original condition.

I believe that when a situation of concern arrises at a rental property, the neighbours are usually the first to know. Most may make a phone call, if only they knew who to call. Garden maintenance contractors notice things like dead lawns, emptied swimming pools, broken windows etc. Maintenance contractors notice things like holes in walls, ripped curtains, burnt carpets, whilst repairing exhaust fans etc. I probably should also point out that I never have asked, nor will I ever ask any of these people to deliberately snoop or pry into the tenant’s affairs or actions, I am a firm believer in allowing tenants their privacy, treating them with respect at all times (even if I believe they are in the wrong) and I never attend a property unless I absolutely have to, or even drive past it, unless I’m on my way somewhere else.

All, I’m saying is that having a ring of people around you that feel comfortable talking to you, can alert you to problems before they get too far out of hand. Even in the face of adversity, with regard to the current ‘situation’ at hand, I feel more in control and more comfortable than what I would have done had there had been a property manager involved.

Cheers
Kym

Hi Celivia,

I’m a Drafting Manager for a residential builder. Over the years, I have dealt with many sub-divisions and disappointed clients when they realise that they can’t actually achieve what they had hoped for after having purchased a property they think can be sub-divided or redeveloped. Not meaning to dampen your sprits, but after reading your post, my first and foremost comment would be – prior to entering a contract to purchase the neighbouring property, contact your local authority to ensure you can achieve your aim. There are residential building codes, local by-laws and the like that dictate the minium sizes for blocks of land and so forth. So, I’d suggest some research into what you can / can’t do would be wise. Where the residence next door is located on the land may also be an issue, as there are requirements as to minium distances from boundaries, minium requirements for outdoor living areas etc. The list of potential issues is vast, and without knowing the situation, it’s impossible to be specific.

From an investment point of view, it may also be wise to investigate the cost of the proposed re-allocation of land. You may find it to be quite costly (varies from state to state). Then in relation to the value of both properties, are you left with a favourable outcome? There will also be surveyors’ fees, fence relocation costs, cost of restoring gardens etc.

Hope this helps
Cheers
Kym

Hi Kristine,

As per picja1 – need some more info.

Never , ever loose hope! Always remember,if at first you don’t succeed, try again – always.

On face value, it seems to me Aussie may not be taking into account any Potential income you would be earning from your investment property. I talked to a lender once that would not take rental income into account when assessing the loan?? Go figure! – I just can’t remember who it was.

Most lenders have calculators on their web sites that will help you determine your borrowing capacity, the one I use from time to time is on the Rams web site. You can use it to explore “what if” type scenarios. For example, ‘what if’ you reduced your credit card down to a $1000 limit – what would your borrowing capacity be then?

www.rams.com.au

Another option you could explore – ‘what if’ you were to refinance your borrowings for your PPOR? Perhaps over an extended number of years, to lower your monthly commitments or maybe you could explore the option of I/O for your PPOR. Some lenders don’t allow this, but you could shop around or employ the services of a mortgage broker to assist. (If you are in Perth I could recommend one).

Which brings me to another point, where are you looking at purchasing & how much finance do you actually require?

Hope this helps.

Cheers
Kym[]

Hi Peter,

Yes, I think you are right. I tend to think that a balance of intellect or fact mixed with a healthy dose of intuition or ‘gut feeling’ is the way to go. I generally find that most people (myself included – although I try really hard not too [xx(]) tend to distort the facts based upon their attitudes &/or beliefs when making decissions. ie: they let their emotions get in the way. This happens with every decission – investment or not!!

I recently attended a series of management workshops. The usual hum-dum type stuff. One particular day we were working with visions / goals and the distinction between the two. Anyway, to cut a long story short, I was openly & honestly discussing my goals & what I ‘thought’ was my vision with regard to property investment with a participant in the course. I told her that it was my ‘vision’ to aquire ‘x’ number of properties in ‘x’ number of years totalling ‘x’ number of $$ etc. She then asked me why I wanted to do that. I replied, what ever I feel like when I get there. For expample, I might want to buy a yacht and sail around Australia, or I might not. I may want to spend my days doing volunteer work, donating money to charity, or it may be someting else. I’ll decide once I get there.
She then said something to me which I found very inspiring, and I’m sure I will be thanking her for many years to come.

She said:-

To aquire ‘x’ number of properties in ‘x’ number of years totalling ‘x’ number of $$ etc, that is not your vision, that is your goal that you can work on to achieve your vision.
What your real vision is can be summed up in two words – oppurtunity & freedom.

Again, something complex simplified into it’s basic form. That simple discussion, allowed me to clarify even further the direction in which im heading. And the more you can clarify something, (I believe) the greater chances of sucess.

So, yes i agree, that “with wisdom it should be possible to condense your financial goals and investing technique down to one paragraph or so.”

Cheers
Kym []

Hi,

A few useful sites (mainly for WA research) as that’s where I’m from []

www.propertyvalue.com.au
www.reiwa.com.au
www.aussiehomes.com.au
www.abs.gov.au
www.vgo.wa.gov.au

Cheers
Kym