Forum Replies Created
- b.free2live wrote:
Have a system whereby they are checking that the trades people have completed their work. Alot of them rely on the tenant calling them to advise that the trades person didn't turn up or the owner calling a couple of months after being advised of the repair and not receiving any bill.
That's a really good one, we've spent years perfecting how to do this. It's really just about your PM following up on jobs on a regular basis, minimum once a month, which is an easy ask.
You can absolutely get an agent involved to lease the property. We've done this at our office and we still put as much effort in leasing as we would if we were to manage the property – because the way I see it one day that owner may go overseas or decide to go with an agent so why would we give them bad service?
Also this business is based on reputation so find an agent with a good one and approach them about taking care of the leasing process.
Leasing can be time consuming and recently I've been approached by many landlords to take over management because of difficulty in leasing. Without the expertise to property screen tenants we've also seen a huge jump in private landlords unknowingly leasing to problem tenants.
I'm not a huge fan of OTP purchases in the suburbs unless you get a discounted deal which many developers are now offering (feel sorry for people who bought at full price).
First of all, look at the suburb. Luxury apartments in Sunshine? Doesn't match the demographic.
OTP isn't all bad as there are some great depreciaiton incentives, but you need to look at the Owners Corporation Fees. <moderator: delete advertising>
If you manage the property yourself you may have trouble with some insurers. Also look out for terms in the policy that do not cover you if the tenants are not on a fixed term lease.
Your property manager should have an insurance company that they have had good experience dealing with. Personally, I've always found Terri Scheer Landlords Insurance to be great. They have a pretty cost-effective policy that covers quite a lot and also cover for self managed properties.
We work in and around Melbourne with fees as follows:
Commission: Up to 2.5% plus GST of the selling price – this figure is negotiable based on the estimated selling price and we always discount for current clients, i.e. if you bring the management of your investment property over for the purpose of selling which can make the process smoother and we would discount the commission.
Advertising: Depends on market conditions and the type of property. With advertising, it's not just about the cost – it's about maximum exposure with the right mediums to reach your target buyers. Auctions can run into the thousands, again it's dependent on the property – I would rarely auction an apartment as historically the additional advertising costs don't pay off in our area.
At the end of the day, whilst cost is always a consideration, it shouldn't be the only reason to choose a particular agent.
Which state are you in?
You can hire an independent buyer's agent.
Sounds like you're on the right track to find what's suitable for your situation. If you do your sums and the selling costs won't eat too much out of your profits and puts you in a better position, go for it.
You could continue to try to lease the property on say a 6 month lease (or offer negotiable lease term) whilst marketing for sale to have some rental income. You'd then be pitching to both investors who don't want an empty property and owner occupiers – by the time it's on the market if you've got an owner occupier looking a longer settlement period could be arranged to coincide with lease expiry then give notice to tenants.
Matthew_W wrote:NHG wrote:First property, I felt I was being rude offering such a 'low' price. My dad who always has an opinion told me off for not negotionating hard enough.Fast forward 6 months, purchased property number 2. This time dad was uncomfortable as I was putting in 'low ball' offers. I stuck to what I felt was the right price for me in order for said property to meet my cash-flow criteria, amusingly all offers have come back with a yes (some 2-3 months later). I took the one that I felt was a great buy.
Lesson learnt, now working on improving research and negotiating skills.
I don't really want to go OT, but just a quick question in regards to offers/negotiating:
Say the agent is asking $140k-$150k for the property – you know it's a bargain already. However, you offer $110k-$120k to try and get it that extra bit cheaper for your returns, yet someone else offers $135k. Even though you expressed interest, but your offer is lower, would they come back to you, or take the $135k offer?
A good agent would come back to you – to create competition between the two of you in the hope of achieving a higher price. If you can only justify matching the offer the next point to sweeten the deal for the vendor is to look at conditions – does the other prospective purchaser have conditions that you don't need?
As a property manager the main point I always stress to prospective property investors is… Make sure you've got money in the bank in case something goes wrong!
I see so many landlords whose focus was solely on obtaining the property (yields, price, outgoings etc etc) that they overlooked the possibility of the hot water service bursting 3 weeks after settlement or the oven breaking down – and there's no money to fix it, which equals panic.
Best wishes for your future investing.
Price dropping is the one thing most investors struggle with. Yes, the last tenant was paying more previously, but what is the rental market doing now? How many tenants are making it to open inspections? Are properties leasing quickly in the area or is the market slow? If there is a lot of stock and yours is the second cheapest anyway… how long have the others been on the market? Longer?
A bird in the hand is better than two in the bush. Every week that goes by is potential rent in your pocket.
Why is there no interest? There are three factors to look at when a property is not leasing (or selling…):
1. Property: Does it present well? Does it need some TLC? What are prospective tenants saying about the property at open for inspections (your agent should be asking them and passing on the feedback)? Is there some small update you can make to push the property (replace the kitchen blind, do some gardening)?
2. Location: Has the location deterred tenants? – again, your agent needs to get feedback from prospective tenants. Not much you can do here but reconsider pricing to generate more interest.
3. Price: A drop in the market may mean that the previous tenants were paying more than market value before they vacated, but you're expecting to get at least the same rent if not higher because traditionally you should, right? I'm seeing this a lot in Melbourne and it's a difficult situation. A property is only worth what a tenant is willing to pay for it, so adjust accordingly.
If you don't your agent's assessment of the market value and trust their knowledge of the market – why are you letting them lease and manage your property? There are some great agents out there so take the time to sift through the crap and find someone who cares about getting you the best result!
If you're happy to stay with your agent, go and see the property and then do your own assessment based on available comparable properties, these are your competition. Whilst much of pricing is to do with the agent's experience in the market (hence I always recommend you go with someone who knows the area), you can get a good idea of what it's worth – just remember to be objective.
Ask for mid-week open for inspections to be held in addition to Saturday opens. Preferably 5:30-5:45pm depending on location of the property so that people can attend after work. If it's in close proximity to the CBD then 12:30-12:45pm so people can attend on their lunch break. If your agent argues with this – find someone who won't.
The closest I've got to Hampton is Brighton, which has had a slight downturn in demand for lower-end rentals. Anything within walking distance from the shore is generally popular, however the commute to the CBD via road has seen Prahran take over in popularity, recently leased a property in Prahran with a majority of prospective tenants looking to move closer from brighton, Brighton east and Hampton due to traffic.
As I said, haven't got one there but based on surrounding suburb trends I'd say push a point of difference when leasing and keep rent increases a touch below market value (say $5-$10 per week).
Thanks for the reply Richard, I understand it's a long shot with it being so close to the date.
Are your presentation nights fully booked as yet? if not, would you mind emailing me the details?
Great question! Please do reply to this post everyone, would love to hear more.
I always ask what a client expects from me (it just fits in with my tailoring program) and tend to get mixed responses… some owners want an update once a fortnight, some don't want to be contacted unless it's major, others I go for a coffee with once a month – every person is different so I don't think there is one straight answer.
But the one thing I hear a lot is echoed in this post – owners frustrated with a lack of communication.
As for what owners can do to assist a PM… It's out job to assist you, not the other way around! Agree with the crest – getting back to your PM to approve quotes or give the go ahead for R & M in a timely manner is important.
Vacancy rates in Melbourne at the moment aren't ideal, however there are a few pockets that seem to be protected from the ups and downs of the market. Look for suburbs with a good culture of cafes, restaurants, bars, shops and easy access to the CBD through public transport and via roads. Statistics and data don't always reflect true demand – the rental market can change on a monthly basis so never rely on data alone.
My pick of in demand suburbs:
– Carlton: Because of its close proximity to the CBD and funky cafe lifestyle. The only properties that are hard to move here are small apartments (in the new developments), but in general there's a really healthy market and we've always leased the difficult ones in under a month.
– Brunswick/Brunswick East: 2 to 3 bedroom townhouses tend to 'fly off the shelves'. The Brunswick area has become very on trend and in demand over the last 4-5 years.
– Northcote: A little further out but well worth it. Again a very trendy suburb, we've seen the kinds of open for inspections where we've had lines of tenants out to the curb – most popular property type is 3 bedroom houses.My pick of suburbs to tread with caution:
– Southbank: over the next few years to 2015 there are multiple developments settling which is likely to create a higher vacancy. If you're looking to buy an apartment, look for a property in a low-rise building with plenty of services and a bit of 'WOW' factor.
– Maribyrnong: I really feel for a few owners who bought high with developers predicting a boom suburb. Tenants see this suburb as a real 'bang for your buck', I've watched a few properties sit on the market for 8-10 weeks of late.
– Coburg: in particular the Pentridge development. It hasn't taken off as yet in terms of demand and is dragging down the suburb. If you're looking long term growth it's achievable, but vacancy periods right now are atrocious.If you have a particular suburb you've been researching I'd be happy to share some insight, we've got properties all over Melbourne from Maribyrnong to Frankston and all in between…
Land tax is a huge pain… but as it stands the guidelines for you in Victoria would be:
If you lease out your PPOR for a continuous period 6 months or more it becomes eligible to be assessed for land tax if it has a taxable value of $250,000 or more.
Emma, the State Revenue Office has a scale for rates if you're curious:
http://www.sro.vic.gov.au/sro/SROnav.nsf/LinkView/DA6A217C7F452EF8CA2575D20021EBE7C580F3A333F4AD44CA2575D10080AD1CLike everything, when researching you can find yourself with information overload – so many contradictory theories and you end up not knowing where to start! I'm experiencing this at the moment on another topic so I know how you feel.
Agree with the above, grab onto a recommended system and stick to it. You've obviously done a lot of research so whilst going through a program you may find bits and pieces to tweak to suit your needs.
Whenever someone tells me I can't do something – I take it as a challenge. Listen to yourself, if you think you can do it… Why not have a go!
I'm in Carlton and would be happy to catch up for a coffee and a chat about how the markets are going at the moment (data is usually a month or so old and very general) and what the outlook is for 2013-2014 once developments begin to settle.
Hi Keiko,
Unfortunately this is one for you, not the tenant. Do they usually pay water usage or have you included it in the rental? If they usually pay usage, make sure you calculate their portion of usage and forward that charge to them before paying the bill.
I would calculate usage like this:
Last bill total / number of days in month = daily usage
daily usage x number of days in month = deduction from the current billThe formula is not 100% accurate but it is the closet you'll get and it is how we calculate usage for Corporate Tenancies where utilities are included.
They made a small error on our account (not worthy of a drama but you've got to take every opportunity) so between myself and our director we've negotiated 6000 unaddressed mail pieces to be delivered for free – thousands of dollars worth of postage for simply asking the question.
Certainly not Carlton, Victoria… or I would have bought something there. Good one!
Dubstep wrote:I also found out that women know where all the jewellery stores are, I mean they really know where all the jewellery stores are.Absolutely!!!
