Hello all,
we have been living in our unit which is our PPOR for the last 8months. it was our first home. however we have decided to rent a unit in the city (which is 1.5hrs away) so we can be closer to our jobs and can afford it as we will be saving on travel costs and intend to rent out our PPOR.What I am trying fish out from you all is that it will be our first time to be a landlords and want to know what are the things we need to consider? should we use a REA or PM to manage our IP? or DIY it? landlord insurance? Also what can we use to offset our tax? what tips and tricks can help us out?
Sorry for all the questions, I have tried doing a search on this website and forums but no “free” info comes up.
if this is too much to answer can someone please point me in the right direction to find the answers.
Thanks. sorry for the long post.
Regards
JasonAHi Jason,
I have been PM my rental property for almost 2 years now. In that time I have had 2 tenants. My tenants have been great and I have found PM to be pretty straight forward and simple, and enjoyable! However, I have not had any dramas with my tenants so I haven’t had anything to worry about really. But I think, so long as you read up on the relevant tenancy acts, legislation, etc, then you should be right.
It’s a good, peace-of-mind, idea to get Landlord Insurance…..just in case something goes wrong. And then all the other usual stuff like make sure you do a Beginning and End Condition Report (to accompany the Bond Lodgement), Bond money (usually 4 weeks rent), and then it’s usually 2 weeks rent upfront. Check their references, esp. if they have a rental history, and I like the rent to be paid electronically and automatically if possible, ummmmmmmmm what else? Will you allow them to have pets, smoke, etc? Oh, and the obvious one of a signed lease/tenancy agreement. You can get good templates of these online (at least for ACT properties you can).
This should get you on the right track to PM, if that’s what you decide to do.
Good Luck
pasandbec
thanks for the reply.
excuse my ignorance, but is it possible for a REA to advertise my IP and leaving myself to PM?cheers
You can negotiate anything you want with the REA. I know of people who have paid the agent to find the tenant and then they take it over once the tenant is in the property.
I know of others who have the tenant but want the agent just to collect the rental for them and handle that side of it.
You can negotiate the actual commission that you pay the agent.
My advice is to book an appointment with every property manager in the area and meet them personally one at a time. Ask as many questions as you want and can. They should provide helpful advice freely. And I believe that once you speak to a few property managers you will soon be able to separate the good ones from the bad.
When talking to them – ask lots and lots of ‘stupid’ questions. They should answer them fully. If they do not then walk out and try someone else.
If you do decide to appoint an agent and you find they are not helpful or not working out, then go to another agent and sign an authority for the new agent to take over the property. They will chase up all info from original agent. (That’s what I did when I had an agent who repeatedly did not return my calls – easy)
We have had IPs for more than 25 years and never paid a PM. My parents bought their first IP when I was 15 so I knew a bit about how to go about things by the time I bought my first IP.
Over the years I have (many times) offered the first week’s rent to local PM to find a tenant. I have only ever had that happen one time. I believe (and I also understand why) that they prefer to put people in the houses they will be managing on an ongoing basis. I don’t bother doing that anymore.
We put the ad in the major city newspaper and meet the prospective tenants ourselves. We have an application form which we have made up ourselves. It gives you the chance to say “Ill take your information and let you know when we have met all applicants.” It gives you an easy way out, if you will, if you don’t like the look of the applicant. Of course, if we do like the look of them, we just grab them with both hands.
We usually trust gut instinct, because we don’t have access to the databases the PMs use. We have only got it wrong a couple of times, nothing drastic.
Because you are only less than 2 hours away, you could do it easily. Why not give it a try. If you don’t like it, or your tenants hassle you, hand it over to a PM.
Regards Wylie
I have PM for some of my properties and also do it myself for others. Definitely go with some type of PI depending on the value of the property, location and type of tenants the property may attract. I would probably go with a PM first (sorry wylie) and if everything runs smoothly then consider taking it over your self. I would also suggest to go over the place with a fine tooth comb and find everything that needs to be fixed and replace anything that is looking a bit on the jaded side, but not until you have changed it to an IP so everything is tax deductible (check with your acountant). If you do that now you should have less problems later.
I had an REA manage my first until I had tenants that I ‘trusted’; they paid the rent on time, were not demanding in any way, and always porduced great inspection results. I then chanced the arrangements to self-management. Too many variables to advise you to do the same, but it has worked out well for me.
I also used a greta insurance coverage from CGU in the piece. They cover loss of rent while under contract and damage by visitors to the household or the tenant. Many insurance companies won’t cover some common situations. Once I trusted the tenants I changed to a cheaper cover that didn’t cover as many things and increased my excess.
What I am saying is ‘safety first’. You are moving out to save train fare, you don’t want this to turn sour with a bad management team and bad tenants. One missed week of rest could be $300, that’s a lot of train fare.
Good Luck.AXJ
In answer to the question REA or self manage I would first ask how close you are to the property?
For example I self manage my properties that are in the same town, but the ones in other towns ie about 1000 km away I have an agent. Its just logistics.I am around my local IPs all the time because they are mostly in one prefered area so if the place started to look bad I would start asking questions
The thing I find most important is REFERENCES. I prefer the company variety so I have a policy of at least 2 references. 1 being rental ref and one employment ref.and I wont accept a persons name because it could be their best friend answering the phone.
And secondly your own personality. Arm yourself with all the information in regard to Residential Tennancy Act and be aware of everyones rights.
Can you be tough if you need to be? What would you do if someone defaulted?
Its not about whats best its about whats best for you.
Jodie
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