Continued from
http://www.somersoft.com/forums/showthread.php?t=75594
Routine Inspections Are For More Than Just The Condition Of The Property
When most people speak about routine inspections the majority of the emphasis is on the condition of the property. Whilst this is an important part of the inspection, it is not the only reason for conducting a routine inspection. Using this opportunity to speak with the tenant will enable you or your property manager to find information relating to the tenant and which may affect the owner in the future. For example when speaking with the tenant, your property manager might uncover that the tenant is interested in applying for a job interstate or overseas and will be vacating shortly, or the tenant may have an intention to move their partner into the property, or that the tenant may have been made redundant recently from their employment. This type of information can be extremely helpful for the owner and knowing it means the landlord can begin to make preparations in case the tenant vacates, or the property manager should monitor the tenant’s rental payment more closely as they have a higher chance to default while they are unemployed.
Lease The Property As Fast As Possible
While this may sound like a no brainer, it is surprising how many property managers or landlords will wait for the property to be vacating and the keys to be returned before they begin showing the property to perspective tenants. The usual notice period received from a vacating tenant is 21 days, and the property can be inspected within the last 14 days of the tenancy. As soon as the vacating notice has been received from the tenant, book inspection times with the current tenant to ensure perspective tenants can be shown through. I try and book 2 mid week inspections and 1 weekend inspection each week for about 20 minutes each. As the majority of perspective tenants require on average 1 – 2 weeks before they can occupy the property, this timing is important if you want to achieve a low vacancy rate.
Forward Plan Your Leases
Having a tenant on a current lease (not an expired agreement with a month by month clause) can be the most secure tenancy available however ensure that you make a note of upcoming events and factor them into your agreements. A common oversight with agreements is signing a standard 6 month lease which finishes in December. December is traditionally a tough month for leasing a property and by having a tenancy agreement which finishes around Christmas increases the risk of a vacant property. Instead think about signing a 7 or 8 month agreement which finishes early in the New Year. The extra few months will help with your cash flow over Christmas and reduce the stress of having a vacant property at the wrong time of year.
Charge For Everything Allowed
Whether referring to water usage in houses or claiming from the bond at the completion of a tenancy, make sure you charge the tenant for everything which is allowed. This also links into the paragraphs, compliance is essential and have good relationships with your tradesmen. With the recent changes to legislation, before you can charge for water usage the property needs to be fitted with water efficiency devices which limit the flow of water to 9 litres per minute. By installing these devices, you will be able to charge water usage to the tenant and recover several hundreds of dollars each year. At the completion of the tenancy your trades will be able to tell you how an item broke and whether it is general maintenance or damage caused by the tenant. For example; I may just see that the stove gas burner is not working correctly however a tradesman can see that the outlet is full of grease from inadequate cleaning. This type of repair could be charged to the tenants bond as it was preventable if they cleaned the stove correctly while they lived in the property, something which may not have been known if the tradesman did not report back.
Keep Accurate & Up to Date Documentation
Technology has advanced to the point where keeping actuate documentation is quite easy; however it still requires the Landlord or property manager input the data correctly. You want to keep a full history on the property, every repair, important conversations with the tenant, emails, and letters basically anything which you can use as a reference if an issue was to arise. By keeping your information up to date and easily accessible it can often avoid issues as it allows you to confidently counter any complaint which has arisen. The main example that springs to mind is with repairs, even if you have great trades occasionally there will be something which is not repaired completely, by keeping the information at hand you can have the tradesman re-inspect the job at no charge instead of sending them again thinking it’s a new issue and paying for the repair twice.
Hit Arrears Hard and Fast
Arrears can be one of the most frustrating parts of managing an investment property. The tenant entered into a rental agreement knowing their responsibilities to pay the rent on time however the process to enforce payment once the tenant is in arrears can be lengthily. The best way to combat arrears is not to have any by adopting a zero tolerance for rental arrears. The legislation states that a tenant cannot be chased for arrears until they are 1 day in arrears. Once they are 1 day behind, the recovery process should begin, this may be just a “friendly” phone call with a reminder the rent was not received and to see if there was a problem. What this call is really telling the tenant is that you are on the ball and noticed the rent was not paid. Having an arrears management plan which is followed for all tenants who fall in arrears is advisable, for example: 1st day in arrears tenant receives a call, 3rd day in arrears the tenant is sent a letter, 5th day in arrears the tenant is called again etc.
Mixing the communication also contributes to the effectiveness of the recovery process as if a tenant falls in arrears several times and they can anticipate that on day 3 a letter will come, the letter has less effect because they have received the same letter before. Use all communication mediums available, phone calls, text messages, emails, letters and visiting them personally. This will increase the chances of recovering the arrears quickly and if the issue is escalated to the tenancy tribunal you will be able to show that you have tried to recover the funds and resolve the issue.
Get A Depreciation Schedule For Your Property
A depreciation schedule outlines the decline in value of the assets contained in your property over a period of time. There are 2 types of costs which can be depreciated for a rental property; the first is wear and tear of the fixtures and fittings of a property. The second relates to capital works deductions which are applied to the cost of the buildings construction and spread over a time period. One of the main advantages of depreciations is that they are non-cash deductions. This means that you do not have to outlay funds in order to claim the deduction. The tax department allows you to make the claim as they realise fixtures and fittings reduce in value over time and will require replacement.
I hope you have found this information to be helpful, if you would like to discuss these topics further or if you would like to discuss a rental strategy for your investment property please do not hesitate to contact me. Alternatively further information can be found at Pure Property – Articles or at About Pure Property.
http://www.somersoft.com/forums/showthread.php?t=75594
Routine Inspections Are For More Than Just The Condition Of The Property
When most people speak about routine inspections the majority of the emphasis is on the condition of the property. Whilst this is an important part of the inspection, it is not the only reason for conducting a routine inspection. Using this opportunity to speak with the tenant will enable you or your property manager to find information relating to the tenant and which may affect the owner in the future. For example when speaking with the tenant, your property manager might uncover that the tenant is interested in applying for a job interstate or overseas and will be vacating shortly, or the tenant may have an intention to move their partner into the property, or that the tenant may have been made redundant recently from their employment. This type of information can be extremely helpful for the owner and knowing it means the landlord can begin to make preparations in case the tenant vacates, or the property manager should monitor the tenant’s rental payment more closely as they have a higher chance to default while they are unemployed.
Lease The Property As Fast As Possible
While this may sound like a no brainer, it is surprising how many property managers or landlords will wait for the property to be vacating and the keys to be returned before they begin showing the property to perspective tenants. The usual notice period received from a vacating tenant is 21 days, and the property can be inspected within the last 14 days of the tenancy. As soon as the vacating notice has been received from the tenant, book inspection times with the current tenant to ensure perspective tenants can be shown through. I try and book 2 mid week inspections and 1 weekend inspection each week for about 20 minutes each. As the majority of perspective tenants require on average 1 – 2 weeks before they can occupy the property, this timing is important if you want to achieve a low vacancy rate.
Forward Plan Your Leases
Having a tenant on a current lease (not an expired agreement with a month by month clause) can be the most secure tenancy available however ensure that you make a note of upcoming events and factor them into your agreements. A common oversight with agreements is signing a standard 6 month lease which finishes in December. December is traditionally a tough month for leasing a property and by having a tenancy agreement which finishes around Christmas increases the risk of a vacant property. Instead think about signing a 7 or 8 month agreement which finishes early in the New Year. The extra few months will help with your cash flow over Christmas and reduce the stress of having a vacant property at the wrong time of year.
Charge For Everything Allowed
Whether referring to water usage in houses or claiming from the bond at the completion of a tenancy, make sure you charge the tenant for everything which is allowed. This also links into the paragraphs, compliance is essential and have good relationships with your tradesmen. With the recent changes to legislation, before you can charge for water usage the property needs to be fitted with water efficiency devices which limit the flow of water to 9 litres per minute. By installing these devices, you will be able to charge water usage to the tenant and recover several hundreds of dollars each year. At the completion of the tenancy your trades will be able to tell you how an item broke and whether it is general maintenance or damage caused by the tenant. For example; I may just see that the stove gas burner is not working correctly however a tradesman can see that the outlet is full of grease from inadequate cleaning. This type of repair could be charged to the tenants bond as it was preventable if they cleaned the stove correctly while they lived in the property, something which may not have been known if the tradesman did not report back.
Keep Accurate & Up to Date Documentation
Technology has advanced to the point where keeping actuate documentation is quite easy; however it still requires the Landlord or property manager input the data correctly. You want to keep a full history on the property, every repair, important conversations with the tenant, emails, and letters basically anything which you can use as a reference if an issue was to arise. By keeping your information up to date and easily accessible it can often avoid issues as it allows you to confidently counter any complaint which has arisen. The main example that springs to mind is with repairs, even if you have great trades occasionally there will be something which is not repaired completely, by keeping the information at hand you can have the tradesman re-inspect the job at no charge instead of sending them again thinking it’s a new issue and paying for the repair twice.
Hit Arrears Hard and Fast
Arrears can be one of the most frustrating parts of managing an investment property. The tenant entered into a rental agreement knowing their responsibilities to pay the rent on time however the process to enforce payment once the tenant is in arrears can be lengthily. The best way to combat arrears is not to have any by adopting a zero tolerance for rental arrears. The legislation states that a tenant cannot be chased for arrears until they are 1 day in arrears. Once they are 1 day behind, the recovery process should begin, this may be just a “friendly” phone call with a reminder the rent was not received and to see if there was a problem. What this call is really telling the tenant is that you are on the ball and noticed the rent was not paid. Having an arrears management plan which is followed for all tenants who fall in arrears is advisable, for example: 1st day in arrears tenant receives a call, 3rd day in arrears the tenant is sent a letter, 5th day in arrears the tenant is called again etc.
Mixing the communication also contributes to the effectiveness of the recovery process as if a tenant falls in arrears several times and they can anticipate that on day 3 a letter will come, the letter has less effect because they have received the same letter before. Use all communication mediums available, phone calls, text messages, emails, letters and visiting them personally. This will increase the chances of recovering the arrears quickly and if the issue is escalated to the tenancy tribunal you will be able to show that you have tried to recover the funds and resolve the issue.
Get A Depreciation Schedule For Your Property
A depreciation schedule outlines the decline in value of the assets contained in your property over a period of time. There are 2 types of costs which can be depreciated for a rental property; the first is wear and tear of the fixtures and fittings of a property. The second relates to capital works deductions which are applied to the cost of the buildings construction and spread over a time period. One of the main advantages of depreciations is that they are non-cash deductions. This means that you do not have to outlay funds in order to claim the deduction. The tax department allows you to make the claim as they realise fixtures and fittings reduce in value over time and will require replacement.
I hope you have found this information to be helpful, if you would like to discuss these topics further or if you would like to discuss a rental strategy for your investment property please do not hesitate to contact me. Alternatively further information can be found at Pure Property – Articles or at About Pure Property.
