Maintenance Cost and PM

[letitbe]

Not sure if this the right forum but I need help....

I'm about to lease out my PPOR. it's 1 year old in sydney north west.

In your experience, how much the average maintenance cost annually?

My local PM charges 8.8% for the top service, is it reasonable?

Are the PM and maintenance cost tax deductible?

Thanks in advance

 

[Propertunity]

7.7% is the standard rate
8.8% if they charge high
6.6% if you have 2 properties
5.5% if you have multiple or are a good negotiater
lower than that & they lose interest in doing a good job

All PM fees and other maintenance costs (but not capital works), rates, insurances etc are tax deductible.

 

[Beau Miller]

You will find if your home is only 1 year old the maintenance will be minimal. Things like smoke alarms & gutter cleaning is something to consider as an ongoing expense.

It might be worth getting a Tax Depreciation Schedule done for the property as well to help with the deductions - I have recently been working with BMT and they have provided a bit of an FAQ and calculator for me. Here is a link:

http://www.bmtqs.com.au/other/depre...onCalculatorInfo.aspx?company=beautiquerealty

 

[twobobsworth]

What's the weekly rent and which district?

 

[letitbe]

7.7% is the standard rate
8.8% if they charge high
All PM fees... rates, insurances etc are tax deductible.

Just call another agent, and they told me between 7 - 9%, it's insane!

You will find if your home is only 1 year old the maintenance will be minimal.

Thanks for the advice. I'm worried with "small" maintenance like that. Will the PM charge ridiculous amount?

About "Tax Depreciation Schedule" do I need the surveyor to estimate the depreciation every year or just before I lease out the property?

What's the weekly rent and which district?

I'm expecting about 550pw, in hills area.

Can we say roughly 20% of rental income (that include PM fee)?

 

[Don K]

Do not forget about LL insurance. Fix up everything and do not leave anything high maintenance. PM may charge 5% of maintenance cost or you can arrange by yourself. It is better if you have less maintenance issues so remove things which may break easily. Why are you renting out your PPOR may I ask?

 

[travelbug]

The Depreciation report lasts 20 years. Get it done now. Being only 1 year old you will get more than your money back in the first year. try

www.depreciator.com.au

7-9% is crazy. Should be 7% + the damn GST. Tax deductable. Don't be overly concerned about maintenance. Set a limit for the agent or get them to ring you for all if you are that worried.

I was happy with Richardson & Wrench at Baulkham Hills (a few years ago now).

 

[jaycee]

Do not forget about LL insurance. Fix up everything and do not leave anything high maintenance. PM may charge 5% of maintenance cost or you can arrange by yourself. It is better if you have less maintenance issues so remove things which may break easily. Why are you renting out your PPOR may I ask?

Why would the PM charge ANYTHING for maintenance?

They ring a tradesman and they pay his bill - that's it

 

[Don K]

Why would the PM charge ANYTHING for maintenance?

They ring a tradesman and they pay his bill - that's it

Good point. Some of PMs in this forum may be able to answer.

 

[letitbe]

Do not forget about LL insurance... remove things which may break easily. Why are you renting out your PPOR may I ask?

Thanks for the tips. About LL insurance. Does it worth to claim less than the excess amount? I can't think of anything that I can remove , it is unfurnished property

well, I'm about to move to bigger place.

The Depreciation report lasts 20 years. Get it done now.

Thanks travelbug. How much does the surveyor cost roughly?

Being only 1 year old you will get more than your money back in the first year.

Still don't understand how depreciation work.
How come the return is higher in the first year?
How much (ie. percentage or maximum) we can claim in the tax yearly?
Can we update the depreciation schedule ourselves for the following years?

 

[twobobsworth]

Just call another agent, and they told me between 7 - 9%, it's insane!

8.8% is high however I have some properties in surounding areas. One agent charged 6.6% another 8.8%. I moved away from the 6.6% agent.

 

[travelbug]

Still don't understand how depreciation work.
How come the return is higher in the first year?
How much (ie. percentage or maximum) we can claim in the tax yearly?
Can we update the depreciation schedule ourselves for the following years?

A depreciation schedule allows for items to be depreciated over time. Some things depreciate quickly so the amount is higher at the beginning (or you can level it out and have the same amount each year).

There's isn't a maximum. The amount depends on your individual items. You don't choose how much. The depreciation schedule does.
Ity lasts 20 years. Getting one done each year would be a waste of money.

cost $500+ (varies to your circumstances). Ring or send an Email with your details. They will give you an estimate.

I really think you are too stressed out to consider renting your home. LL insurance will not pay for breakdowns, minor (wear and tear) repairs. You need to let go and not worry about tiny things that may not happen.

 

[Don K]

Thanks for the tips. About LL insurance. Does it worth to claim less than the excess amount? I can't think of anything that I can remove , it is unfurnished property

well, I'm about to move to bigger place.

Such as a kitchen cabinet circular shelf which often breaks. You can choose your excess for LL insureance depends on compamies.Better to have one. All of tenants are not like you.

 

[Sez]

Just in answer to the above with charging for maintenance, unfortunately some property management places do charge a 'maintenance commission' for arranging maintenance at your property - be sure to choose an agent who does not charge this!! Basically they take commission based on the cost of the invoice or a set fee.

Most agencies just pay the invoice given by the trade without charging their own commission, another reason to read the small print on your authority!!

As to why some agencies do this? I don't know, I don't think it can be justified at all, charging extra fees to do their job when they are already charging you for them to do their job......? Bit like VCAT attendance fees I guess but each to his own!!!

 

[jaycee]

Just in answer to the above with charging for maintenance, unfortunately some property management places do charge a 'maintenance commission' for arranging maintenance at your property - be sure to choose an agent who does not charge this!! Basically they take commission based on the cost of the invoice or a set fee.

Most agencies just pay the invoice given by the trade without charging their own commission, another reason to read the small print on your authority!!

As to why some agencies do this? I don't know, I don't think it can be justified at all, charging extra fees to do their job when they are already charging you for them to do their job......? Bit like VCAT attendance fees I guess but each to his own!!!

How pathetic are we ?

I have to blame myself, I jumped into this thinking I'd be dealing with "professionals" who knew what they were doing more than me


And we still go on about how good an investment class this is whilst at the same time caomplaining about tenants / tradies & property managers / the RTA / tribunals etc !!!

 

[letitbe]

... Some things depreciate quickly so the amount is higher at the beginning (or you can level it out and have the same amount each year).... cost $500+ (varies to your circumstances).

...You need to let go and not worry about tiny things that may not happen.

Got a call from depreciator friday last week. A bit surprise that the survey only last for 30 - 45 mins. The guy gave me the cost on the phone (more than $550)
and ask me to pay deposit.... Hmm I know it is for 20 years but can I go with the shorter time frame and pay lower fee?

 

[twobobsworth]

Got a call from depreciator friday last week. A bit surprise that the survey only last for 30 - 45 mins. The guy gave me the cost on the phone (more than $550)
and ask me to pay deposit.... Hmm I know it is for 20 years but can I go with the shorter time frame and pay lower fee?

Are you sure property investing is for you?

 

[Ricky]

Shouldn't the OP also obtain a sworn valuation on the property she is about to rent out for future capital gains tax ?

 

[Jaggannath]

Are you sure property investing is for you?

Agreed. Letitbe, sometimes you have to spend money to make a whole lot more. If you're not depreciating for 20 years, you're losing money for nothing, as the cost for the schedule will be about the same.

It's also something you can sell with the property if you get rid of it, that may help in negotiations with a buyer

 

[letitbe]

Agreed. Letitbe, sometimes you have to spend money to make a whole lot more. If you're not depreciating for 20 years, you're losing money for nothing, as the cost for the schedule will be about the same.

Thanks for the input. But what I have in mind is I'm planning to back living in that house. At this stage, I don't have plan to make it an IP forever, might sell it when the time is right.