A/C & property manager

[brains]

I sent an email to my pm a while back stating that because i dont intend to buy any more investment properties for a while id like to install a split system-reverse cycle air conditioner and an alarm system into my existing properties. This would add to the value of the houses and could she put it to the tenants if they want them installed there will be a $10-$15/week rent increase. (Which is about 26% ROI per house and would take the average yield to about 9.5% from my purchase prices)

She replied they wouldnt go for it and dont worry about it. I said at least give them the option, but she pretty much said it would be wasting every ones time. She also said "if im throwing away money, i can give it to her" ...haha.....yeah right!

Im not sure what to do here. Should i contact the tenants myself and ask them or talk to the principal of the agency or wait in between tenants and then install them or just let it go.

Forumites opinions would be appreciated.

 

[Gill Bates]

brains,

what is your strategy if the tennets say they want the air-con and alarm , they stay for 6 months and then move out? Then the next lot of tennants do not want the extra's

 

[Gemini]

Brisbane, particularly away from the water, is very hot most of the year. Already this week we have had 33 degrees!

A/con is a definite plus, however it depends on the demographics of the suburb the IP's are in, as to whether the increased rent will still be affordable to the potential renters in that area.

Know your looking for deprec'n benefits, but maybe phone a couple of RE offices in area and say you're looking speicifically to rent an A/con'd house and see how many there are ?

We put split systems in our Bne rentals (master bedrm & lounge) but are in the higher end of the market 3klm city area.

regards,

Gemini

 

[Mitzi]

Hi Brains

No matter what your Property Manager thinks of your proposition, she is working for you and therefore takes her instructions on YOUR property from YOU. How dare she speak for the tenants. is she a mind reader? They are entitled to know what your offer is - she is the go between. Her professional (or is it personal) opinion should be considered of course but she is not THE LAW. Some PMs get carried away with their own authority. I did the job (not an easy one) for many years but never lost sight of the fact that the owner was Numero Uno. I would tell her you want the tenants notified (don't approach them yourself) and that if she won't do it, you will have to look for someone who will take instructions from you. Maybe you should change PMs- sounds like she is way too high handed. Good ones are hard to get!

Mitzi

 

[D.T.]

Hi Mitzi,

Thats a fairly harsh statement. What if this PM knows his /her suburb really well and from the tenant enquiries shes had while working in the area indicate a/c is not neccessary?

-Just a thought

Dave

 

[brains]

Thanks guys, i dont realy want to change pm's cause i negotiated agreat rate for 5 house and to go naywhere else id have to pay at least 3% more managemnet fees.

 

[asy]

Hiya Brains,

Wow, wish you were my LL, I offerred to pay an additional $10 in rent if they would put an A/C in, but she said no. I have finally got her to agree to my having a ceiling fan installed in my bedroom if I pay for the fan, whilst the sparkie is here doing another job... hehe

However, back to the point...

I pretty much agree with the first half of Mitzi's post, the PM really needs to at least ring the tenant's to ask them whether they would be interested, if that's what you have asked her to do.

Gemini pretty much hit the nail on the head, we don't know the demographic of your IP's, but the area may not be able to take an additional $10 for A/C, in that houses with a/c may not get that much more than houses without.

Definately worth investigating, but the other question is, how much value does an a/c add, if you are looking at reval, might it be worth looking at adding something else like a deck? (I know a deck is worth more than an a/c, but perhaps add a deck on half the properties... just a thought).

hope this helps,

asy

 

[Bill.L]

Hi all,

Brains, The first thing we did with the place we bought in Brissy was to install an A/C(split -system). We figured that even if it didn't attract a higher rent, then the place would be more let-able should vacancies rise in the area. Also the tenants we have are more likely to stay because of the comfort offered by the A/C.
Our property is not dissimilar to yours in that it is 4 X 2 in outer suburb(Tanah Merah) and probably attracts the same type of tenants.

The reality of the situation is that it did not add to the rental return, but the first tenant was going to move out for months, but stuck around til the middle of winter.

bye

 

[Blitzkrieg]

I agree with Bill L. because that is exactly what I did, I bought a place which the REA told me would get 190 per week, I spent 2,500 fixing stuff up and repainting etc, etc, and I advertised for .... 190 per week, rented immediately. It made little difference to overall purchase price but ensured a easy letting. Tenant said that of all the houses in the area around the same prices that this was the best! 3 months later they believe I'm a good landlord and haven't missed a payment.

It's a bit of a different situation when you have had the place for a while but if you are in an area where (like most metro areas that I'm watching) rental ads are increasing, therefore supply and demand may reduce prices, then keeping tenants happy will keep rents at a premium when area goes down, so they may end up overpaying for market rents without even knowing.

If you fly me up there, I'll install it for you!


Your call

Blitzkrieg

 

[brains]

Thanks for the advice guys, if i cant get an increase in rent, i wont worry about it. Id be better off investing the money elsewhere for now.

 

[Mikhaila]

Hi brains,

Tenants approached me about installing some sort of A/C about 15 months ago. I figured out that it is a good idea in New Farm, QLD and collected some quotes. The cheapest was around $3,000 for the dual head split system plus ceiling fan. I told the tenants via PM that it is a large amount and they have to pay $15pw more to have it. PM did a good job communicating the message to tenants and they agreed without any issues. Tenants re-signed for the 3rd year in August and rent went up again for $10pw. The feedback from PMs in Brisbane ( New Farm and Morningside) is definitely in favor of having A/C – higher rent (usually) and MUCH easier to rent (almost always) .

I’d ask the PM to write a letter to tenants and forward a copy to you. Unless the area is really populated by low income tenants it is unlikely somebody will refuse A/C for 10-15pw in QLD! Well at least this is my view from Melbourne, maybe people more heat tolerant up South.

 

[multi]

First, split systems are not tax effective - they depreciate over 40 years.

Second - only hell knows what tenants do to remote controls. Usually first tenant in - remote is broken and it is "fair wear and tear"

Much more intelligent tactics - wall air conditioner. Depreciates much faster, no remote and most of all easily removable.

I agree wholeheartedly with those guys who say that if you can get rent increase from current tenant for aircon, next tenant will take it for granted and most of the increase has gone.

When tenant moves out - I move out ALL extras - air conditioners, dishwashers, etc but leave signs that they were there.

Usually after a while request comes from the tenant for extras, and then we talk rent increase. 15 minutes - and yor AC/dishwasher back in place.

Needless to say, if you invest $200 in the extra garden shed where you store all demounted appliances (locked), you still can claim depreciation - appliances are in fact at your IP....

 

[brains]

Multi

Thanks but im not that anal about it. I just put in a split system and be done with it. From then on the rent is at the increased amount for every tenant, ive checked and the market should handle it. As for the missing/broken remote, no biggie, i'll just get another one or put a clause in the lease re replacement at tenants expense.

I think its crazy to install/remove an A/C every time a tenant leaves as its a fixed appliance.

 

[multi]

Thats fine mate,

I am wondering every time how did you come choosing your username.

I think it is pretty anal to overcapitalise on the appliance depreciable at 2.5% a year (clear loss - you wait at least 4 years until rent increase pays for your A/C). Do you have any idea how much split system maintenance costs, especially when tenant is smoking? And what split system does to your wall when drainage gets clogged? When your wall gets covered in mould, tenants will demand rent reduction.

And I think it is pretty anal to brand 10 minute job "crazy". Not less anal than to call the thing that is hold by 4 screws a "fixed appliance".

Buy yourself a calculator, "well financially educated person". $2 investment can do wonders to you.

 

[brains]

HAHAHA!!!.....love it

Thats gotta win the silliest post of the day award.

Originally posted by multi
Thats fine mate,

I am wondering every time how did you come choosing your username.

I think it is pretty anal to overcapitalise on the appliance depreciable at 2.5% a year (clear loss - you wait at least 4 years until rent increase pays for your A/C). Do you have any idea how much split system maintenance costs, especially when tenant is smoking? And what split system does to your wall when drainage gets clogged? When your wall gets covered in mould, tenants will demand rent reduction.

And I think it is pretty anal to brand 10 minute job "crazy". Not less anal than to call the thing that is hold by 4 screws a "fixed appliance".

Buy yourself a calculator, "well financially educated person". $2 investment can do wonders to you.

 

[Gill Bates]

Re

Needless to say, if you invest $200 in the extra garden shed where you store all demounted appliances (locked), you still can claim depreciation - appliances are in fact at your IP....


Re about depreciating appliances that are stored away - have u checked this with the tax department ? I believe that appliances must be installed and/or ready for use to be able to claim depreciation

 

[NigelW]

Originally posted by brains
I sent an email to my pm a while back stating that because i dont intend to buy any more investment properties for a while id like to install a split system-reverse cycle air conditioner and an alarm system into my existing properties. This would add to the value of the houses and could she put it to the tenants if they want them installed there will be a $10-$15/week rent increase. (Which is about 26% ROI per house and would take the average yield to about 9.5% from my purchase prices)

She replied they wouldnt go for it and dont worry about it. I said at least give them the option, but she pretty much said it would be wasting every ones time. She also said "if im throwing away money, i can give it to her" ...haha.....yeah right!

Im not sure what to do here. Should i contact the tenants myself and ask them or talk to the principal of the agency or wait in between tenants and then install them or just let it go.

Forumites opinions would be appreciated.

Brains

I'm amazed at this post from you! You're normally a kick-butt, take charge, opinionated ars@*& I mean go-getter...

Don't take that crap from your PM. Accept her experience (if she has any) but make your own judgment call. Remind the PM who she's working for and take your business elsewhere unless you get some service!

Cheers
N.

 

[Mikhaila]

Originally posted by multi
First, split systems are not tax effective - they depreciate over 40 years.

It’s nonsense unless we talk about different type of split systems. I want to know about split systems with 40 years life expectancy.

Here is some food for thoughts
http://law.ato.gov.au/pdf/tr00-018.pdf

Cheers

 

[Bill.L]

Hi all,

Our split system A/C is depreciated over a much smaller time frame (10 years I think, can't find the QS report at the moment).

bye

 

[brains]

Re: Re: A/C & property manager

Nigel,

Im amazed at this post from you. Youre normally an inoffensive, mild mannered kind of guy

I dont want to take my business elsewhere as ive negotiated such a good management rate with her. (Could be a case of you get wot you pay for )

But im not that silly that i wont ask for advice, i always concede there are more experienced property investors on here than me.

Ive since convinced her to write a letter to the tenants and she grudgingly agreed, after i sort of implied i could ask the agent principal to draft the letter.

Im going to use this post for an off topic question:

In Steve McKnights book (which i finished last night and thought was a literary masterpiece), in the two case histories at the back of the book they both thank god for their success and are obviously religious. Also there are a couple of other religious references throughout the book.

What has it got to do with a property investing book. Especially for non religious (in a christian sense) readers like myself. I thought it was a mild form of evangelism.

Im thinking of writing a property investing book and including a few examples from my pagan group with references to same.

Any comments or contributors?

Originally posted by NigelW
Brains

I'm amazed at this post from you! You're normally a kick-butt, take charge, opinionated ars@*& I mean go-getter...

Don't take that crap from your PM. Accept her experience (if she has any) but make your own judgment call. Remind the PM who she's working for and take your business elsewhere unless you get some service!

Cheers
N.