Had Enough of This

[ice]

I have been investing for some time now & I should be doing well. However it seems that everything turns to custard constantly.

I have several properties in a Regional area that I want to sell, but can't due to stupid PM's & tradies. It is a long story, but it means that I am screwed. I have tenants that winge & whine constantly in the same properties who are always late with rent & the maintenance costs are off the roof.

I have several IP's that are reasonably close to home that constantly are a source of headache as, despite a good PM, the tenants start off well, then turn into tenants from hell who need to be evicted. The latest ones have damaged the property & stopped paying rent (we need that for Christmas) but the tribunal said "There's kids involved, lets give them one more chance." Meanwhile they are effectively stealing $230pw from me & get off scott free. It just isn't fair! I've got kids too. What about the fact that I have no money to provide for them because of drop kicks like this.

I also have huge losses due to the wrong structure due to bad advice many years ago. We won't go there, suffice to say that I am paying around $30k pa that can not be neg geared as it is quarantined.

So, here I am, struggling financially while 3 of my 15 tenants live it up (courtesy of me, the "rich" landlord).

My expenses keep going up, my equity keeps going down to help pay for the expenses. Rents have gone up slightly, but not as much as the interest rates, AND to cap it all off my wage is going nowhere fast.

Don't get me wrong, a few of my IP's are great & there has never been a problem, but they are in the minority. I am so frustrated.

 

[toony]

Maybe its time to assess your portfolio and sell the dogs.

 

[stumunro]

with a property portfolio your size wouldn't hurt to sell the dogs and put your money somewhere better.

Is the situation likely to be turned around at all? Might be cheaper waiting it out for a month and getting new tenants?

 

[evand]

Exactly. Sell the dogs. Take profit. Take your family on a holiday and do something useful with the rest.

I bought my wife a $2k ring and put the balance into business/shares/cash. Three of the most useful things i could think of at the time.

The last thing you want to do is get hung up on dud properties/bad tenants/PMs etc. Life's too short mate.

 

[BayView]

With the rental market supposedly in an upturn, would it be an idea to evict the whingers, do some renos and put up the rent for the next lot?

 

[steveadl]

If 3 out of your 15 tenants are causing the problems - wouldn't they be in the minority? Most of your IP's would be good then and only a few bad one's?

Also, you said you have a good PM, but part of the job is securing good stable tenants. Just something to reflect on.

Otherwise, I'd probably agree with the others. With that many properties, sell the dogs and either buy better one's elsewhere, or diversify into other assets etc. Not worth it if they are constantly emotionally and financially draining.

 

[kathryn d]

ice,
Don't let the tenants get the best of you.I know how you feel cause we have tenants just like that...and I'm seething at the moment also.
I'm curious about your statement "stupid PM's and tradies"
Maybe they are your real problem?The expenseive maintenance costs, are they really necessary or they to improve the unit for the tenant?
Someone here once said said they don't allow any repairs/maintenance organised by the PM until they ok it.

 

[ice]

ice,
Don't let the tenants get the best of you.I know how you feel cause we have tenants just like that...and I'm seething at the moment also.
I'm curious about your statement "stupid PM's and tradies"
Maybe they are your real problem?The expenseive maintenance costs, are they really necessary or they to improve the unit for the tenant?
Someone here once said said they don't allow any repairs/maintenance organised by the PM until they ok it.

Hi Kathryn

The stupid PM's part has to do with the area. There are only so many PM's in this Regional area. Mine is the best of a bad bunch. She is pretty useless, but I have already tried all the rest & so she will have to do. The tradies are part of the maintenance problems. There is a huge shortage of tradies, so any maintenance costs a bomb. They already have orders that no maintenance is to be done without prior approval, however even just doing what needs to be done costs around 4 times the cost that it should. I don't believe in doing unnecessary improvements. I want to sell out of this area altogether, however that is proving to be impossible as the one & only building inspector gives routinely bad building reports so that the sales either fall through (& he can reproduce the same one many times for profit) or he quotes on & then does the jobs (again, for a hefty fee).

 

[ice]

If 3 out of your 15 tenants are causing the problems - wouldn't they be in the minority? Most of your IP's would be good then and only a few bad one's?

Also, you said you have a good PM, but part of the job is securing good stable tenants. Just something to reflect on.

Otherwise, I'd probably agree with the others. With that many properties, sell the dogs and either buy better one's elsewhere, or diversify into other assets etc. Not worth it if they are constantly emotionally and financially draining.

You've got it wrong. It is 3 out of the 15 that are not paying & one is going to eventually get evicted once the tribunal pull their head in. The other 2 are long term, but each Christmas give me the tom tits becasue they "can't afford the rent", then play catch up for 6 months.

I do have a good PM for these properties, however one of them always seems to attract tenants that start out good & end bad. It is the regional ones that have the bad PM, but I can't do anything about that as she is the best of a bad bunch.

I'd like to sell the dogs, but as in the previous post, I am having difficulties in this area.

 

[Aaron Sice]

sounds like you need to do what we did.

boot the tenants, wear the 6 weeks or so of lost rent, roll up your sleeves and do it yourself.

our tenants decided to keep 2 (that's right, not one, but 2) alaskan malimous (sp?) (they're bloody great big white dogs - liek huskies).

they DESTROYED the back yard, retaining walls collapsing, fencing cracked....you name it.

top it off, they were smoking inside and had no idea that a sponge and warm soapy water might make the place a bit clean.

we booted them, rolled up our sleeves, and got into it.

it took 6 weeks of weekend work, but now we had a fully fresh painted house, new bathroom tiles and taps, new carpet, new blinds, new backyard with fresh native plants and sold it first home open for $10k under the cheapest house in the suburb.

why? to move it and re-invest the cash elsewhere.

sorry to hear about your troubles though. but it sounds like that old saying - if you want something done right, do it yourself.

 

[Ausprop]

makes a margin loan against a bunch of BHP shares look pretty appealling huh?

 

[s_t]

Makes investing in cities, with more capital gains, plenty of pm's to choose from, more tradies in the area, and ability to select areas with more upmarket tenants seem much more attractive........

 

[feihong]

Not sure which regional town you bought in, but when I was looking at the one I bought in, I know it's easy to rent out to companies as big projects are about to start soon. I'd say that's probably one of the better tenants you could have

 

[Kennethkohsg]

Not sure which regional town you bought in, but when I was looking at the one I bought in, I know it's easy to rent out to companies as big projects are about to start soon. I'd say that's probably one of the better tenants you could have

**************************
Dear Ice and Feihong,

1. I'm not sure if you are presently fully aware of all the investing risks associated in investing in the regional areas. Two of the investing gurus, Jan Somers and John FritzGerald have specifically written a chapter on this topic in their respective books, to warn their readers against investing in regional areas.

2. Among the many inherent risks involved, is the often un-spoken risks of minimal capital growth for regional properties with high rental yields and that regional properties tend to fail to maintain their market values during bad times.

3. For your further comments/discussion, please.

4. Thank you.

Cheers,
Kenneth KOH

 

[Ausprop]

**************************
Dear Feihong,

1. I'm not sure if you are presently fully aware of all the investing risks associated in investing in the regional areas. Two of the investing gurus, Jan Somers and John FritzGerald have specifically written a chapter on this topic in their respective books, to warn their readers against investing in regional areas.

2. Among the many inherent risks involved, is the often un-spoken risks of minimal capital growth for regional properties with high rental yields and that regional properties tend to fail to maintain their market values during bad times.

3. For your further comments/discussion, please.

4. Thank you.

Cheers,
Kenneth KOH

i think it importnat to point out to new investors that writing a book doesn't automaticaly qualify you as an impartial guru, often books are used as quasi marketing material to push a broader agenda. personally I have made - and plan to continue - a lot of money in regional towns that others dismiss as risky. I don't care where the town is, I care about what it costs to get in, the level of demand (rent/buy) and potential profit

 

[Welcome]

My expenses keep going up, my equity keeps going down to help pay for the expenses.

If your expenses are growing faster than the capital gains for 15 houses you must have some serious expenses or some minimal CG!

If you do decide to sell may be worth looking at some other income producing investments that can be distributed to the loss making trust to help mop up some of the losses.

Good luck with it.

 

[feihong]

**************************
Dear Feihong,

1. I'm not sure if you are presently fully aware of all the investing risks associated in investing in the regional areas. Two of the investing gurus, Jan Somers and John FritzGerald have specifically written a chapter on this topic in their respective books, to warn their readers against investing in regional areas.

2. Among the many inherent risks involved, is the often un-spoken risks of minimal capital growth for regional properties with high rental yields and that regional properties tend to fail to maintain their market values during bad times.

3. For your further comments/discussion, please.

4. Thank you.

Cheers,
Kenneth KOH

Maybe there's risk in general, but there's also specific risk, like shares. I've looked at the performance history of this town (it's actually a city officially), and both fundamental and technical analysis tells me there is more upside risk to this place than downside, so I just took a leap in blind faith. Not speculating on any capital gain, but by the time I finish my reno (~12k cost), it would at least be valued at 220k, so that's 19% instant C.G. (including purchase cost+stamp duty+reno cost) by not doing much. The yield would be in excess of 8%, because I can rent out the house and the bungalow separately.

 

[Bazza]

I want to sell out of this area altogether, however that is proving to be impossible as the one & only building inspector gives routinely bad building reports so that the sales either fall through (& he can reproduce the same one many times for profit) or he quotes on & then does the jobs (again, for a hefty fee).

Hi Ice,

May be you should have a talk (or a few beers) with the building inspector and see how you can turn this around? There must be a reason why he is so agro towards you.

Cheers,

Bazza

 

[wombat]

Hi Ice,

What regional area are we talking about here? WA, SA, Qld, Vic???

rgs

wombat

 

[The Y-man]

Don't get me wrong, a few of my IP's are great & there has never been a problem, but they are in the minority. I am so frustrated.

IMHO offload the source of frustration - sell off everything bar the few that are ok - even if this is at a loss. If it is causing you that much angst and pain, I believe (without knowing the detailed financaials etc) it is better to put it down as an interesting experience, and move on.

Cheers,

The Y-man