dogs - the property type (no offence intended MonSqueek)

[weg]

A few here have described a property in their portfolio as 'a dog'; one that always attracts the problem tenants, or generally doesn't perform as well as their other properties.

Curious as to why you thought these particular properties didn't do well, and whether these problems could have been anticipated?

Were these properties all at the lower end of the market, or just badly located?

I thought asking could possibly help others when purchasing.

 

[beachgurl]

I own a dog in Wagga. Bought it last year for 123K and was last tenanted at $200 per week. It took a few months to find a reasonable tenant and when we did, they stuck around long enough to do some damage to the place and leave with rent in arrears while still within their 6 month lease.

Hindsight is a great thing, but next time I buy, I will look at RP Data to determine the number of Department of Housing properties in the street and local area. The larger the proportion of DOH, the harder it is to find tenants and the less effort the agents tend to make to finding a tenant for you.

My property is at the bottom end of the market and badly located. If we don't find another tenant soon, we'll probably sell it and just cut our losses.

 

[Bill.L]

Hi Weg,

I'm one who has mentioned 'shooting a dog' a couple of times. We did make a >50% cap gain in 5 years on it and when it was tenanted, it was cash positive, not just cashflow.

However, it was a dog because it always attracted the wrong tenants. Overall we missed many weeks of rent. Our choice of PM was limited to 3, we used the one that was reported to us as being the best in town. This was a mistake (having a choice of only 3).

The property was near the CBD, but on a main road, and at the lower end of the market.

Basically the combination of all of the above, had us taking 4 or 5 lots of tenants to the tribunal, usually unpaid rent and getting them out of there, plus damage, rubbish left behind (sorry valuable personal possessions of the tenant) etc, etc.

bye

 

[wylie]

We have a place in Coorparoo, great street, great house (after we spent some elbow grease and money on it), but we had a succession of about three bad tenants. The neighbours suggested we get somebody in to "cleanse" the house. I was seriously thinking that it was not such a bad idea.

The truth was, the house was not "a dog" but because we had borrowed to buy it, we were too anxious to get a tenant in, that we lowered our radar and ignored our usual "gut instincts" to a certain extent.

The tenants in each case were not "red flag" tenants, but we did have reservations, and in hindsight, we should have said "no" and waited. We didn't lose any rent but one chap did some deliberate damage (on a drug bender) which was covered by insurance.

After three "less than great" tenants moved on we have now had three or four great tenants. Our problem was not wanting to lose any rent, and accepting somebody that we would probably not have accepted without the pressure of those initial high repayments.

So, in our case, "property dogs" can sometimes be our own fault, and not the property's fault.

 

[Xenia]

My company manages a small rent roll about 150 properties. We used to take properties on anywhere in Adelaide when we were a new agency and just starting out. We found that "dog" properties tended to be concentrated in just a few areas. Far North and far south in Adelaide.

We made it an office policy not to take on properties north of Salisbury or South of Seaford in Adelaide. Now we have
less tribunal hearings
less rent payment defaults
less stress
less staff turnover
less property damage to deal with

Our office is now running smoothly as a result of getting saying no to properties in certain areas!

Although, that was a business descision for us, I still do think that those areas have alot of potential in terms of capital growth and are a great choice for investors.

 

[The Y-man]

Were these properties all at the lower end of the market, or just badly located?
.

"Upper end" apartments can be serious dogs:

1. Lifts - biggest cost item for mainenance - can go into millions for recabling etc on a 20 storey building (let alone something like the Eureka!)

2. Common areas - theft (of ornaments, pictures, furnishings), damage, cleaning (who was the b@$tard that threw up in the lift?)

3. Gym - amazing how one has to replace the exercise bike every week!

4. Pool - check the method of heating it was designed for. We had a place where they installed an electric heaer instead of gas (as designed) - cost a monumental amount in power to keep heated....

5. Electronic remote security doors, locks, gates, garages - exactly why is it that these things break down 10 times a month requiring a tradie to come out at $500 a call? (usu at 2:00am on a Sunday)

etc

Cheers,

The Y-man

 

[MonSqueek]

Lol no offence taken at all!

 

[Alabex]

My company manages a small rent roll about 150 properties. We used to take properties on anywhere in Adelaide when we were a new agency and just starting out. We found that "dog" properties tended to be concentrated in just a few areas. Far North and far south in Adelaide.

We made it an office policy not to take on properties north of Salisbury or South of Seaford in Adelaide. Now we have
less tribunal hearings
less rent payment defaults
less stress
less staff turnover
less property damage to deal with

Our office is now running smoothly as a result of getting saying no to properties in certain areas!

Although, that was a business descision for us, I still do think that those areas have alot of potential in terms of capital growth and are a great choice for investors.

Our agency is the same.. we manage about 350 properties concentrated in a fairly small area around our office.. however there is a couple of neighbouring suburbs/areas we keep clear of... and one street in particular. Mainly because they are hard to rent, take ages to get tenants... then the tenants they get are terrible.


We do have one property that springs to mind that i have no idea why people dont like it, or the supposibly "good" (on paper) tenants go bad. In five years we have had three horror tenants trash the place... not pay rent and then having to replace the carpet and repaint after each one. And the LL still doesn't have LL insurance! The current tenant is better, pays the rent on time but is a REALLY heavy smoker! And i quite like the unit - neat, new kitchen, good white bathroom, carparking, walk to beach (three blocks)... we have plenty of other properties in worse locations/conditions that dont have problems....

 

[kyliej]

Basically badly cared for and presented properties will attract people who do not really care about what they live in. Alot of owners will buy a dump to demolish in the next year or so and say they dont really care who the agent puts in there. But properties in the lower price brackets attract a certain type of tenant and as an agent it is not worth the money we make to have constant maintenace and rent arrears to chase up. Investors will probably find that either they wont be able to find a decent agent to manage dogs or they will get charged higher management fees for the priviledge.
In saying that we manage a few properties in areas where we would usually steer clear of...Elizabeth. But these properties are well cared for and in okay streets and so far we have had lovely families who are trying to get ahead by living further out of the city and paying less rent. Basically it comes down to tenant selection and carring out all the right checks (many that only an agent has access to)

 

[sash]

I tend to buy on the bottom 30% of the market. I have had one or two issues...but nothing major in the so called suburbs like Elizabeth.

I agree that the way the property is presented attracts tenants accordingly. My advice is to find a competent property manager. I have one who inspects my places religiously every 3mths and if there is an arrears over two weeks it goes to the tribunal...usually they are put on a payment plan or pay up.

To me this is a business....you have to take the good with the bad.

I am glad I bought in Elizabeth the increase has been great over the last 4 years.