self managing an ip

R

r3ckless

Hi all,

Looking at my next purchase. This time around it will be a house and i will be letting it to a family member. That said i will be self managing the property.

Besides collecting the rent, paying bills, and addressing any maontenance issues etc.

i would like to know what else I should keep note of.
 
we have done it twice.
Once to a mother in laW
and second time to a brother in law.

The Brother in law we went through an agency, be cause he is rubbish at paying bills. It gets hard to put up the rent to market with family in, but you must remember its a business.

I think you should go through an agent as you will get a professional P and L statement and all income and costs will be documented for tax time.

Also if you go through an agency and get landlords insurance it will be easier to claim if anything happens.

just be careful.
 
r3ckless said:
Hi all,

Looking at my next purchase. This time around it will be a house and i will be letting it to a family member. That said i will be self managing the property.

Besides collecting the rent, paying bills, and addressing any maontenance issues etc.

i would like to know what else I should keep note of.
Click to expand...

Just ring up the insurance company you use and see if you are covered for self-management some have a clause about self-management..imho..
 
I'd save the hassle and a get a property manager to look after it.

Property investing should be treated as a business - mixing business and family can end badly.

Cheers

Jamie
 
r3ckless said:
i would like to know what else I should keep note of.
Click to expand...

An (IPCR) initial property condition report wouldn't go astray, complete with heaps of photos, detailing everything and signed by both Tenant and Landlord on every page.

Without the Tenant's signature, it is worthless.

Helps establish what sort of condition the property was in, avoiding a bunch of headaches later on down the track when you as the Landlord describe the place at handover as a palace and they describe it as a rundown hovel.
 
Considering the OP is renting out to family, the condition report is the least of his worries. Legal agreements are only as good as your willingness to enforce your rights.
 
True Alex, but then Reckless did ask what else he should take note of.

I didn't want to come across as a harsh bar steward and stick him with the "you're a dopey plonker for renting to relatives as your appetite for suing the living bejesus out of 'em" might not quite have the same effect.

You've done the hard yards though, so well done you !!
 
I have an IP rented out to a friend that i self manage. It's not difficult to self manage if you know they will be realible, pay the rent on time and look after your property. The hard part is increasing the rent. You need to remember its an bunsiness. I just put mine up an extra $35 per week today. Don't feel good about it but it needs to done. Like other have said at the end of the day it's an business.
 
The family member is my partners mother... there is absolute no way she eould not pay - in our situation

thabk you all to who provided other things to look out for and not just simply state go get it leased thru a pm... totally worthless post. If the tenant was not intermediate family i would no doubt take up a lease
 
This is my preposition,

Set up new transaction account for this new property. All loan rrpayments/strata/council and water rates to be debited from the account. All rental income to be deposited into the same account. That way i know all income and expenses coming out for this properyy solely.
besides signing a lease agreement. Is therr any other document to legally show it is an investment property etc
 
r3ckless said:
i would like to know what else I should keep note of.
Click to expand...
Make sure that you can justify to the ATO that you're charging market rent. A lot of people mistakenly think they can rent a property out to a relative at below market rent as a way to "help" their relative, and still claim a deduction on expenses. If you're charging below market rent, the investment is not for the purpose of generating taxable income and you can't claim a deduction on expenses.

So make sure you either have a written appraisal (email is fine) from a local real estate agent, or print out ads of comparable local places for rent, so that you can confirm to the ATO that you're charging market rent in the event that you're audited in future.
 
r3ckless said:
Is therr any other document to legally show it is an investment property etc
Click to expand...

Good work
When you purchased the property you would have paid stamp duty to the state govt based on whether it is your PPOR or an IP. I don't know about your state, in Qld the solicitor asks us the question at purchase and we get charged double SD for IPs.

I agree with having a real lease, entry condition report and lots of photos. Lodge the bond with appropriate documentation, all signed correctly in front of witnesses.
 
Yeah, it seems that most readers/posters are under the view that I am doing dodgeys or something. Im really not. I am buying it as an ip. And everything will be correct and legal. The only thing i am not doing (as with my other purchases) is I will be self managing this due to two reasons:

Its family.
and the family member has little if any english so engaging with a pm is pretty futile and there will be novalue...
 
r3ckless said:
Yeah, it seems that most readers/posters are under the view that I am doing dodgeys or something. Im really not. I am buying it as an ip. And everything will be correct and legal.
Click to expand...

And there is no possibility of ever having disputes with family..........
 
Hey R3ckless,

I think its important to be totally up front with them from the start on how you expect this tenancy to unfold. Tell them up front you can't afford to let things slip just because your family.
"Here is what I'm going to do if you late with your rent...."
"Here is how I expect you to pay your rent..."
"I will be doing 6 monthly inspections" (depending on your state)

I would do this regardless (if they were family), so I guess at end of the day you should treat it as per any tenancy.

Tenants seem to remember what you say before the tenancy begins rather than during it. So set a precedence from the start. Be Nice but professional.
 
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