Advice for a new Landlord

[shermy]

Hi all, first post on this forum and about to start down the road of Property Investing.

Our first move is quite straight forward. We're turning our PPoR into an IP and it'd be great to gather some useful tips and advice from others who've travelled this same path.

Here's a few of the questions I have churning away in my head.

1. Selecting a PM. Questions to ask, things to be wary of?

2. PM's fees and charges. What's reasonable, what's a rort. When do I see the money (ie: monthly etc)

3. Getting the house ready. This sounds almost obvious but I think one of the big hurdles we're going to face is letting go emotionally of our "home". I've got all sorts of little questions about this. Like, should I leave my left over paint tins that I use for touch ups in the shed? Should I remove ornamental stones from the garden? Obviously I can kiss a lot of the garden good-bye.

4. Insurance matters. The property is an old Edwardian with no in built cupboards etc. When we moved in I had attic storage installed. This is accessed by a ladder from the tall ceilings. I'm a bit worried about 2 things here. Firstly, I'm concerned that after a few tenants have been through I'm going to end up with an attic full of junk.
Secondly, most home accidents occur from falling off ladders. Should I be getting specialised liabilty insurance?

Does anyone think I should just lock the attic up and not let tenants have access at all?

5. Alarm. The house has a good alarm system and I'm cancelling the back to base monitoring on it. But I was thinking of keeping the Master Code to myself so that in any emergency I can turn it off, have quick access to the property etc. This way, each new tenant can select their own "code" for the alarm but I'll have the master which would be useful for eliminating old ones. Is this a breach of the tenants rights?

Any other tips, hints and advice would be greatly appreaciated. I nearly backed off the whole idea after reading some of the "tenant from hell" stories in this forum but I'm going to push on. I gotta plan and I'm going to stick with it.

thanks

Sherm

 

[alexlee]

2. PM's fees and charges. What's reasonable, what's a rort. When do I see the money (ie: monthly etc)

Interview a few. They should charge about the same %. You usually see money every 2 weeks.

3. Getting the house ready. This sounds almost obvious but I think one of the big hurdles we're going to face is letting go emotionally of our "home". I've got all sorts of little questions about this. Like, should I leave my left over paint tins that I use for touch ups in the shed? Should I remove ornamental stones from the garden? Obviously I can kiss a lot of the garden good-bye.

Take whatever isn't nailed down and you don't want the tenant to have.

4. Insurance matters. The property is an old Edwardian with no in built cupboards etc. When we moved in I had attic storage installed. This is accessed by a ladder from the tall ceilings. I'm a bit worried about 2 things here. Firstly, I'm concerned that after a few tenants have been through I'm going to end up with an attic full of junk.
Secondly, most home accidents occur from falling off ladders. Should I be getting specialised liabilty insurance?

Does anyone think I should just lock the attic up and not let tenants have access at all?

You could, but without built ins it might be an issue with lack of storage. As for junk, the tenant is obliged to remove everything of theirs when they vacate. Check with your landlords insurance company as to whether they cover this sort of thing.

Any other tips, hints and advice would be greatly appreaciated. I nearly backed off the whole idea after reading some of the "tenant from hell" stories in this forum but I'm going to push on. I gotta plan and I'm going to stick with it.

Just make the leap. With a dash of luck and a bit of time, you're going to be able to afford a much better house. This one is just a stepping stone. Start to think of property as just an investment and a bunch of numbers.
Alex

 

[shermy]

Thanks for that Alex,

have already started looking at it as a 'bunch of numbers' and you've picked up on our goal of moving into a bigger PPoR somewhere down the track.

The big surprise in all of the lead up research was to discover that it's more financially viable to rent our PPoR out and rent a bigger house ourselves and then tap into our equity for the 2nd IP. But baby steps first. Gotta get this one tenanted first, find a new place for us and then onto the next purchase.

sherm

 

[im sparticus]

Best advice I could give and discovered through my experiances:

1/Do your own inspection after each tennant vacates and before the bond is released (oh and ask to see an invioce for the steam cleaning). and be there with the pm to carry out the initial condition report. dont just trust the pm when they tell you "the property is in geat condition and well looked after", everthing else i leave in the pms capable hands.

2/make sure the place is spotless, no marks on walls , all damage repaired, carpets steam cleaned etc before letting, that way there is no grey area on what condition the place should be in when they vacate they will have to maintain the high standard and your place wont be slowly devalued


example: recently my tennant moved out and my pm gave me the usual everthing is great line, i checked it out for myself and the place wasnt clean and there were stickon hooks on the walls that when removed would damage the paint and chipped wall from them moving out.

result: two walls repaired and repainted and a pro cleaner coming in all at the tennants expence.

you can see how after afew tennants all leave there legacy on the place it doesnt take long for it to be ruined and the costs will be at your expence because the pm would have released the bond and new tennants would have marked previous tennants damage on the condition report making it look like thats how the place has always been.

3/ do your market research and know how much "the marked" says you place is worth and how much of an increase is deserved and when. dont just take the pms "oh we might put it up $10-$15", I recently asked a pm how much of an increase he thaught my place was worth and got the $15 line (recomended $15 instead of $10 because of the current high rental demand...shesh) when i told him i thaught it was worth much more he than asked me for particulars about the place "does it have a garage and how many bedrooms etc"....HELLO you just recomended a price increase your representing my property and you dont know a thing about it????

Result: rent was increased $50pw


Its up to you to drive your investment

 

[PropertyFi]

Hi shermy
I have a checklist of questions that I've complied to find the right property manager. Email me if you'd like a copy.
Cheers, Fiona

 

[sailor]

1. Selecting a PM. Questions to ask, things to be wary of?
PM's that have too high a workload, ie too many properties to manage. So ask them how big their rentroll is and how many staff they have to cope with it.

2. PM's fees and charges. What's reasonable, what's a rort. When do I see the money (ie: monthly etc)
I pay 7.5% but that's considered cheap, and I only get that cos I have several properties with them. It really depends on your locality...and can differ between companies. So phone around and get some quotes.

One of my PM's pays monthly, the other PM gave me the choice of fortnightly or monthly. I chose monthly as it means less paperwork for me.

3. should I leave my left over paint tins that I use for touch ups in the shed?
I store mine at my PPOR shed. Tis always handy to be able to match up the paint.
Should I remove ornamental stones from the garden?
I didn't when I turned my PPOR into an IP.
Obviously I can kiss a lot of the garden good-bye.
Not necessarily. I have a gardener comes around monthly to do the lawns and the garden. Tis included in the rent, and is a tax deduction. Having a gardener means you are not relying on the tenants to do the maintenance, and continues to preserve the value of your property.

4. Insurance matters. The property is an old Edwardian with no in built cupboards etc. When we moved in I had attic storage installed. This is accessed by a ladder from the tall ceilings. I'm a bit worried about 2 things here. Firstly, I'm concerned that after a few tenants have been through I'm going to end up with an attic full of junk.
Make sure the PM checks it at the vacating time.
Secondly, most home accidents occur from falling off ladders. Should I be getting specialised liabilty insurance?
Get LandLords insurance. Worth it's weight in gold.

Does anyone think I should just lock the attic up and not let tenants have access at all?
Just get insurance.

5. Alarm. The house has a good alarm system and I'm cancelling the back to base monitoring on it. But I was thinking of keeping the Master Code to myself so that in any emergency I can turn it off, have quick access to the property etc. This way, each new tenant can select their own "code" for the alarm but I'll have the master which would be useful for eliminating old ones. Is this a breach of the tenants rights?
No. I have master keys to all my properties. This is very important if the tenant is away and there's an emergency...eg fire/flood/etc. You need instant access for repairs and rescue.

Any other tips, hints and advice would be greatly appreaciated. I nearly backed off the whole idea after reading some of the "tenant from hell" stories in this forum but I'm going to push on. I gotta plan and I'm going to stick with it.
I converted my PPOR to an IP 5 months ago...sure tis hard letting go of the memories...but twas a business/financial decision which I've not regretted. And I just love where I'm living now. Upwards and onwards!

thanks

Sherm

Just a few of my thoughts...please continue to ask questions on the forum. This is how I learned.

 

[shermy]

Thanks for the detailed response Sailor,

Have started interviewing PM's and doing minor repairs around the place. Hardest job of all though is finding a new place to live. I'm getting rapid responses from REA's when I'm looking for a PM...but as a prospective tenant , that's another story.

Am going to see if I can combine the two. I'll give you my business if you get me into a place.

Fiona, I'll email you for the list of questions, thanks

Shermy

 

[Xenia]

Here is a list of questions you could ask:
http://www.adprop.com.au/cgi-bin/page.cgi?id=288