<![CDATA[News]]> <![CDATA[April 2012 Newsletter]]> With winter around the corner, it may be wise to do a routine maintenance check on your investment property

Winter is about to arrive on the back of extreme wet weather certainly playing havoc in most areas. Whether it is flooding, cyclones, gusty winds or all three, it pays to check that your property can weather the storm, so to speak. Any repairs or damages should be carried out promptly before they become a serious issue or cause danger to your tenants.

Remember that you are responsible for:
• Ensuring all repairs and maintenance are carried out in a timely manner;
• Cleaning/maintaining gutters and downpipes;
• Ensuring all water pipes are functioning and there are no leaks or cracks;
• Making sure your property is safe to live in; • Any overhanging branches are removed;
• Checking fences are well maintained and secure. Check with neighbouring property owners if there is a shared fence or boundary as often the repair/cost is a joint responsibility;
• Checking for cracked pavers or floor tiles which could pose a legal issue if a tenant trips and injures themselves; and
• Checking the roof tiles are functioning and fixing any loose or broken tiles, broken ridge capping or loose flashing (rotting or water damaged eaves can lead to salt damage and mould issues).

As an added bonus to protect your asset, it may be worth installing an automatic cut-out facility, which prevents power surges and will prevent damage to electrical items.

What’s the best investment – an old or new property?

It can be quite a daunting task to try and evaluate what property to buy when building up your investment portfolio. Do you buy new properties or old properties? Do you buy a unit or a house? Do you buy in an established area or a new development?

Of course all of the answers to these questions can only be answered by your personal preferences but there are a couple of important things to remember when entering the property market for investment purposes:
• Always buy a property that other people would want to move into, in an area that they would want to buy or rent. Of course remember how you present your property determines the type of tenant you will attract. Tenants will be attracted to a property that presents value for money, has security, in a good location, is clean, has good sized bedrooms, low maintenance and offers heating or cooling facilities with off road parking.
• Always do your research beforehand. Use statistical information to find high growth areas and look for high rental yields in your price range. Identify the potential returns on your investment and ensure it covers your loan repayments.
• Try and buy in a suburb that is experiencing a growth spurt rather than buying at the peak of the growth.
• Don’t buy a property that needs a lot of upkeep. • Your investment should be tax effective and provide you with good depreciation costs.
• If you have more than one property in the same area, it may be prudent to have one property manager making the process easier and more streamlined.

Re-visit the mortgage to improve your financial future

What better time to think of improving your financial future than now? Interest rates are trending down and lenders are offering discounts to attract new customers. Re-visiting your mortgage can mean savings which in turn can help improve your overall finances. However, it has to be done systematically. If you don't have the time or the knowledge to undertake the exercise yourself, seek professional help.

First, it is important to ascertain if you have the best loan product to suit your individual needs. You may have had the best product when the loan was originally taken out, but with changing personal circumstances as well as the economic trends, there may be another lender and/or product more suited to your needs now.

Then take a good look at your budget. See if there are any expense areas that you can trim. Every dollar saved and put into the mortgage will make a huge difference in the long run.

If you have been comfortably paying the mortgage at the higher interest rate, continue to do so even when the interest rate is reduced. The extra amount you are paying will reduce the loan term and help save on total interest payable.

Also think of other minor adjustments to the repayment. For instance, if you are paying the mortgage monthly, change it to fortnightly. If your minimum repayment amount is an odd figure, for example $1,862 per month; round it up to $1,900 or if you can afford it to $2,000. The additional repayments will cut many years off the loan term.]]> Sun, 01 Apr 2012 00:00:00 GMT <![CDATA[March 2012 Newsletter]]> Property damage is on the rise

Most landlords are aware of the possibility of damage to their rental properties and have insurance in place to cover for these situations. Surprisingly, according to recent statistics, damage to rental properties is on the rise – and it’s not all malicious.
The figures show that there was a 34% increase in the frequency of malicious damage claims paid over the last year as opposed to a 46% increase for accidental damage. There was also an increase in the average size of the malicious damage claims by 3.6% as opposed to a much higher 16% for accidental damage.
“These figures challenge the stereotypes that exist in relation to rental property damage,” Terri Scheer Insurance Manager Ms Carolyn Majda said.
“There is a widely held misconception that good tenants won’t cause damage. The figures show that this is far from true. Even the best tenant can cause accidental damage to a property.”
Accidental damage is defined as something that is caused by a sudden or unexpected event such as a broken window or wine spilling on a carpet. It must not be confused with general wear and tear which is sustained over a period of time and not covered by insurance.
Malicious damage, on the other hand, is when the tenant causes “damage to a property out of spite or ill will”, for example, holes being punched in the wall, doors being broken off their hinges, arson, or carpets being ripped up.
Malicious damage remains a more common type of claim with figures showing that the average value of individual malicious damage claims is 27% higher than claims for accidental damage.
“Malicious damage is often more extensive than accidental damage and more likely to be spread over a number of rooms,” Ms Majda said.
“Terri Scheer has paid claims as high as $40,000 to repair malicious damage by tenants. In addition, malicious damage claims are often accompanied by claims for loss of rental income during the time it takes for the damage to be repaired.”
Although the figures don’t explain why the damage claims are increasing Ms Majda believes it may be a result of “uncertain economic times”.
“When times are tough, tenants may be more inclined to take out their frustrations on their rental properties. This is why landlord insurance is so important to minimise the impact of damage caused by tenants.”
Regular property inspections are vital in order to keep on top of any malicious or accidental damage.
“The sooner a landlord is aware of the damage, the sooner they can prevent further damage occurring and lodge an insurance claim,” Ms Majda said.

A landlord’s obligation to maintain and repair

Rats, mould and broken appliances – sounds like a movie set! Unfortunately this was a real-life setting which one unlucky tenant endured before the landlord remedied the situation.
The tenant argued that the landlord failed to maintain and repair the premises in accordance with the legal requirements and claimed $6,500 for having:
• Rats on the premises;
• A half functioning oven; and
• Mould.

The tenant claimed a further:
• $1,960 for mould damage to mattresses, bags, sheets, sofa bed and clothes
• $10,000 for pain, suffering, sickness and stress.

The tenancy agreement began on 12 March 2011 and the tenant informed the landlord in April and again in May that there were rats and cockroaches on the premises. The premises were treated on 13 May 2011 and another treatment was necessary in late June 2011 to eradicate the vermin.
The tenant argued that the mould and damp affected the health of her family. The landlord organised for a plumber to inspect the premises and was advised that the problem was a result of the tenant failing to ventilate the premises (there was no evidence to support this except for an unsigned and undated statement from the plumber). The tenant was told that the mould could be removed with sugar soap.
Given the lack of evidence provided in support of the mould damage and oven malfunction and the fact that the landlord took two months to rid the property of vermin and showed no support toward the tenants in terms of the mould problem, the landlord was ordered to pay $780.00 to the tenant.
No allowance for pain and suffering was given as the claim did not meet the relevant criteria.

Power lines and trees!                                                                                                                                                   

High winds, floods, heatwaves and cold snaps are becoming part of everyday life in Australia. With such weather events come the dangers of damage to property and falling power lines and trees. As a landlord you should ensure your property is safe from these dangers.
For example if a tree on your property is touching a power line this can cause a very real danger to people and property in the surrounding area: it can start a fire or cause a power failure. Although energy suppliers carry out regular inspections they are not responsible for any tree on your property that is growing close to a power line.
Check with your local council to see who is responsible for trimming these trees but keep in mind that generally speaking it is up to you to ensure your trees do not touch the power lines. There are rules and regulations concerning how close you can get to and how close a tree can grow to the power line. Trimming trees can be a hazardous activity and it is advisable to pay an arborist to do the job.
It is also worth noting that if a tree on your property falls onto a neighbour’s property and causes damage, your insurance company will cover only half of the costs, leaving the innocent neighbour to pay the rest.]]> Thu, 01 Mar 2012 00:00:00 GMT <![CDATA[February 2012 Newsletter]]> Attracting the best possible tenants to your rental property

Leading property stylist, Hayley Harris from Essential Key, highlights the following tips as being the best way to attract the best possible tenant for your property:
• A property can never be too clean especially bathrooms and kitchens. The best prospective tenants are notoriously picky on the cleanliness test, especially focusing on carpets if the family market is your main target market.
• Letting light into a property can make a huge difference to the way the property feels and the way it is perceived by prospective tenants. Making sure that all windows are spotlessly clean will help allow as much light as possible into the property, it is amazing the difference to the amount of light a clean window lets in.
• Bathrooms and kitchens are generally one of the key selling points to any property. A few tricks are to paint over old tiles, sand and paint timber cabinets and replacing old taps and towel rails. These few simple and affordable tasks can breathe life back into any kitchen or bathroom and can promise to impress.
• Everyday clutter needs to go. Everyone knows that cleaning and household duties need to be done on a daily basis; however prospective tenants don’t want to see it out on display.
The more attractive you make the property to potential tenants the more quality applications you are likely to receive.

Landlord Insurance

Whether it is the first in a long line of investments or simply just the one to ease you into retirement, you need to protect your investment property.
The easiest and most convenient way is to take out Landlord Insurance, an often neglected policy. Let’s face it – nobody will take care of your property in the same way that you would and whilst wear and tear is a natural process of renting, there are occasions where insurance will certainly provide you with peace of mind.

There are a number of polices available aimed at protecting you, the Landlord from some or all of the following:
• Accidental damage
• Malicious damage
• Loss of rent
• Any legal issues
• Tax audits
• Furniture

Prices for Landlord Insurance vary between States and it is a good idea to contact each provider to understand just what they have to offer.

The often neglected feature of your home!

Now that we are in times of economic uncertainty and stress, it is all too easy to become part of the problem by neglecting that one feature of your home that adds significantly to its value – the swimming pool.
This is the view of Mr Chris Fitzmaurice, Swimart's National Manager who said that there is now also a growing trend among discerning Property Managers and Real Estate Agents to enlist the services of professional companies like Swimart to maintain their pools on a regular basis.
“Not only does this give landlords peace of mind, it also goes a long way to keeping tenants happy while ensuring that the pool remains an important attraction as far as their property is concerned. This is becoming an important strategy many Real Estate Agents are using to attract the best quality tenant possible.”

Energy efficiency

Draughty homes with little insulation, halogen lights, windows that don’t open or close properly, no insulation, no water tank or badly placed solar panels – does this sound familiar? Not only are these issues off putting to potential tenants but they can end up costing you and the tenant more money in the long run!
The easy solution would be to green-proof your investment which in turn would make it more attractive to potential tenants? There are many good reasons to spend money in order to reduce heating and cooling costs of a home and reduce greenhouse gas emissions.

Recommended yearly inspections

The following inspections are recommended on a yearly basis to ensure your property is well maintained and safe for tenants to live in: gutter and downpipe, termite, electrical and building. These inspections are also classified as tax deductions.]]> Wed, 01 Feb 2012 00:00:00 GMT <![CDATA[January 2012 Newsletter]]> Tenant unsuccessfully sues landlord for flood damage

The tenant occupied the rental premises in a strata plan apartment block. On June 2 2011, the bathroom flooded and the water level rose up through the floor and shower waste. The tenant telephoned the landlord’s managing agent and was authorised to contact a plumber to deal with the emergency. The plumber arrived an hour later and made temporary repairs to stop the flooding, he returned the next morning and made some more repairs. At this stage the tenant believed that all the repairs were finished.

A week or so later the tenant went away for the weekend and was contacted by the managing agent who had been advised that water was leaking from the rental premises. The agent did not have a key and the tenant was on the way back from Queensland. When the tenant finally arrived home it was to a flooded apartment with water and sewerage throughout the premises. The furniture, clothing and other goods were ruined and the tenant had to find temporary accommodation immediately. At such short notice all that was available for the night was a hotel.

The tenant did not have contents insurance but the Owners Corporation agreed to pay $9000, the equivalent value of the damaged possessions. However, the tenant was still out of pocket for the cost of the hotel and so made a claim against the landlord for accommodation costs, distress and inconvenience caused by the events.

In order to establish the claim the tenant had to prove that the landlord had breached the residential tenancy agreement, in particular the obligation of the landlord to provide and maintain the premises in a reasonable state of repair. The tenant must also show that the landlord knew of the defect and failed to carry out the repairs in a timely manner. This was not the case, the tenant had contacted the emergency plumber immediately and had believed that the complaint had been rectified. It was found that the flooding which had caused the damage was actually caused by a defect in the common property drainage system and both the landlord and the tenant were under the assumption that the original defect had been fixed.

It was decided by members of the tribunal that the landlord was unaware of the underlying defect and could therefore not be in breach of the obligation to maintain the premises in a state of good repair. The tenant was therefore unable to claim for loss of accommodation costs, distress and inconvenience.

Understanding the GST component of property transactions

The Australian Taxation Office (ATO) has made it easier for property owner’s to understand the GST implications of property-related transactions. Their new internet-based GST property tool is designed to explain tax matters in a clear and concise way.

"The GST property tool helps people dealing with property to understand their taxation obligations and entitlements," Acting Tax Commissioner Jennie Granger said.
 
"This tool complements the recently created ATO property webpage. Together these initiatives are a great starting point for anyone who wants tax matters to be explained properly and simply."

It is easy to use and takes you through a series of interactive questions about: buying; selling; transferring; leasing or developing property; claiming GST credits; margin scheme eligibility; and GST-free supplies of real property.
 
"The GST property tool covers an extensive range of topics to give you the guidance and advice you are after.

"Topics include residential premises, commercial premises and vacant land. The tool also carries information on claiming GST credits, margin scheme eligibility, and GST-free supplies of real property.

"The interactive question and answer section allows you to model information for your own property circumstances.
 
"It takes about five minutes to complete and you will be provided with a summary of your situation and how GST applies to your property transaction.

"The internet tool is free, confidential and you remain anonymous when using it," Ms Granger said.

It is a great way to learn and teach yourself about the issues surrounding GST on property sales. For further information visit the ATO website at www.ato.gov.au

Government inquiry into strata insurance

An inquiry has been launched into residential strata insurance following the release of the Gillard Government’s new Terms of Reference.

The inquiry is headed by the House of Representatives Standing Committee on Social Policy and Legal Affairs. Assistant Treasurer Bill Shorten said "As I've looked more closely at insurance issues in Queensland, I've become aware the affordability of residential strata insurance has become an increasingly serious issue now that many people are renewing their strata title insurance policies."

"In particular I've been concerned about the news coming out of cities and towns like Cairns, Townsville, Port Douglas and others in the region, where anecdotal evidence suggests residential strata insurance is becoming an increasing issue."

The new terms of reference will be included in the Inquiry into the insurance industry’s response to the extreme weather conditions of 2010-2011.]]> Sun, 01 Jan 2012 00:00:00 GMT <![CDATA[December 2011 Newsletter]]> Let your property manager help you maximise your rental…

Whether you are starting a property portfolio or looking at investing in more properties, the simple question remains – how do I maximise my rental return/s?

As a landlord, it pays to do your research and talk to the experts to ensure that your property is constantly occupied and kept in good condition. Our advice on how to be a successful landlord includes the following:
• An empty property equals loss of rent, so try to keep your property tenanted 100% of the time. Easier said than done? Not really. If you have purchased an empty property or your tenants have given notice to vacate, start working on your marketing as soon as you can. We will discuss with you the best way to attract new tenants and the marketing strategies that are available to you.
• Be a proactive landlord and regularly maintain your property and ensure that repairs are seen to as quickly as possible. Not only will the tenant be less likely to vacate the premises but also a well-kept property is easier to lease than a poorly maintained one.
• If your property is vacant and it needs an up-grade, now may be the time to do it – major overhauls that increase the value of your property will also increase the rent that you can command. Talking to us before you do major renovations will help you decide what type of rent you can command and whether it is viable taking into consideration the area in which the property is situated and other economic factors.
• Let us manage all of your calls regarding repairs and emergencies. It takes a lot more time than you think, especially when you start charging your time at an hourly rate. We also have on hand a list of trusty tradespeople to suit all situations.
• How do I know what to charge? Let us guide you with our knowledge as we take into account location, proximity to amenities, condition and size of your property and what the current market will allow you to charge. Don’t under-price or over-price your property as both can lead to vacant periods.
• Worried about having to deal with difficult tenants? We can do that for you! We have a thorough working knowledge of tenancy laws and good mediation skills. Being neutral also allows us to deal with the issues quickly and without emotion. We can also screen prospective tenants for you and let you know if they have been problem tenants in the past.

A good landlord will listen to his/her tenants and act promptly when issues arise.


Strange story, but true...

We recently heard a rather funny story – well, it is not so funny for the people involved but it makes a great party story!

A tenant leased a property on acreage and was given permission by the landlord to keep horses on the property. Most people would expect that a horse would be securely housed in the fields but not this particular horse. The tenants had left the front door open to the house and the horse had decided to take a stickybeak INSIDE the house.

Not only did the horse have a look around but also by the time the tenants discovered it was in the house, it had decided to go to the toilet. And no, not actually in the toilet but rather on a brand-new cream carpet in the lounge! I kid you not. As hilarious as the visuals of this story are, it is a real situation with financial repercussions. So who is liable for the replacement/cleaning of the carpet?

Carolyn Majda, Manager, Terri Scheer Insurance advises that:
• Damage to a rental property caused by a domestic pet or an animal that is housed on the property is often not covered under landlord insurance policies.
• Landlords should check with their insurer to establish whether they are covered, and it is recommended that property managers and landlords closely monitor whether animals are present at the property by conducting regular property inspections.
• If an animal is not present at the time of the inspection but it is suspected that one may be housed at the property, look for fur on furniture and bedding, water bowls and urine stains on the carpet and outside.
• Neighbours are also usually more than happy to let you know if the tenant has a pet.

However, if a debate arises as to who is liable, it is best to contact your local tenancy tribunal.


Superannuation alert
 
Property investors should take care when using their superannuation funds to improve their investment property.

Although the Australian Taxation Office (ATO) has warned that some funds face big fines (up to $220,000) for breaches of the rules, some super experts say the rules are not clear enough. The SMSF Professional Association is urging the ATO to provide examples of the differences between repairs and improvements.

If you are considering using your superannuation to fund repairs in your investment property it is wise to get independent advice beforehand.]]> Thu, 01 Dec 2011 00:00:00 GMT <![CDATA[November 2011 Newsletter]]> Spa safety tips

Nothing quite beats a cool winter’s night and hopping into a warm spa, or a boiling hot day and a cool spa. Just like swimming pools, spas carry their own hazards, as proven by the number of fatalities and injuries linked to spas. This is particularly the case for children who get trapped in the suction outlet systems or get their hair caught in the jets and then drown.

If you have a spa at your rental property it would be prudent to leave safety instructions for the tenants and do a regular check of the spa to ensure it remains safe.

However, there are a number of steps you can follow to minimise any potential risk:
• If you own an old-style spa with a potty-style skimmer box ensure that it has a lid and is secured with either glue or screwed down in place.
• Ensure there are two outlets for each pump.
• Check that the covers of any spa suction outlets are secured firmly and not damaged in any way.
• Ensure the safety lid is on and locked at all times when not in use.
• Advise the tenants where the cut-off switch is in case of an emergency.

It is also a good idea to place a laminated sign near the spa (check with your local council re guidelines) advising the following safety measures:
• Never allow a child in the spa without adult supervision.
• Don’t allow anyone to put their heads under water as this increases the risk of entrapment.

The spa pool safety guide has been designed to help spa owners determine the safety of their spas and minimise any risk of injury. You can get further information from your local council.

A father’s nightmare...

A surprising decision handed down in a Queensland tribunal could have repercussions in other States with regard to a tenancy agreement between a father and a son.
This decision serves as a timely reminder that even if you are family you should set up a legal agreement outlining the terms of the tenancy.

Here, a father and son lived together in a unit owned by the father, who had tried unsuccessfully to get his son to vacate the unit. The son had been living in the unit rent free for over six years!

It was established that:
• the father owned the unit;
• his son had paid him rent for three years from 2002 to 2005 and he hasn’t paid any since;
• the father had served him with a notice to remedy the breach, which was ignored; and
• the father then served on him a notice to vacate the premises.

The tribunal agreed that a residential tenancy agreement does not have to be in writing but that they do need to be informed of the essential terms of the agreement. There was, however, in their opinion no evidence of the fact that the son was obligated to pay rent to his father. Therefore, the notice to remedy the breach was defective, as was the notice to vacate the premises.

The son remains in the unit, rent free! What a life!

Lock it in Eddie – or not?

According to figures released by the Australian Finance Group (AFG), fixed rate mortgages made up 16.6% of loans processed during the month of September, a rise of 7.2% on the previous month. The figures show that fixed rates are becoming more popular, pointing to April 2008 as the last time that fixed rates mortgages were this high (18.4%).
 
Once again, the jury is out on whether or not fixed home rate mortgages are a good thing, with some saying that it may be too early to lock into a fixed rate as interest rates are likely to fall even further.

Major banks cutting their interest rates on their three-year and five-year mortgages supports this argument. AFG also argue that the combination of lower property prices, competitive financing options and the lack of consumer confidence is a further catalyst for falling fixed rates. On the other side, there are still benefits to gain from locking it in: you have more control of your cash.

Whichever way you decide to go – it’s best to do your research!

One-stop property tax page

The Australian Taxation Office (ATO) has launched a new one-stop webpage for property-related information called Property.

"Our new webpage provides practical guidance and easy access to all the ATO's property-related tax information in the one location," Tax Commissioner, Mr Michael D'Ascenzo said.

The site consolidates all tax property related information together on one easy-to-use site and makes searching for property investment faster and easier. The aim is to guide people through the different tax implications of various scenarios of property investment, from buying to selling.

Topics on the site include:
• Income Tax.
• Capital Gains Tax (CGT).
• Goods and Services Tax (GST).
• Residential rental properties.
• Property used in running a business.
• Property development.
• Building and renovating.

For more information visit the ATO website at www.ato.gov.au/property or call them on 13 28 66.

Are you digital ready?

Households across Australia have either already been converted or are being advised to get ready for digital-only TV. Landlords need to keep on top of this and make sure that their tenanted property is digital-ready.

The Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, says, “For most households, conversion will be relatively straight- forward. Most analog TVs will be able to receive digital TV if connected to a set-top box or digital TV recorder.

” However, if you are having difficulty, try the following:
• Visit the Digital Ready website at www.digitalready.gov.au. This site offers information, instructional videos and the mySwitch tool. This tool enables householders to find information on how to access digital TV services. All you need to do is enter your street address and you will get information about what is happening in your local area and how to get the best digital TV reception at that address.
• Residents can also call the Digital Ready Information Line on 1800 20 10 13.

For those who find it difficult to make the switch, Digital Switchover Liaison Officers will be available to assist and subsidies will be available to eligible households in the form of the Household Assistance Scheme and Satellite Subsidy Scheme.]]> Tue, 01 Nov 2011 00:00:00 GMT <![CDATA[October 2011 Newsletter]]> Proactive investors ahead in the mortgage market
There’s good news for landlords who are looking to expand their current property portfolio: Australian investors are able to take advantage of higher rental yields, a large pool of potential tenants and relaxed buyer competition. Here are some tips to smooth the process.

1. Choosing the right property
Seeking professional advice about the type of property to buy will maximise the investment. Your experienced agent who knows the market better than most is a valuable resource for advice and for negotiating with the property sellers.

2. Using equity from existing property
Tapping into the available equity in the home or another investment property can be a great launching platform for buying additional property. If sufficient equity is available, it is possible to make the purchase without having to put in any additional funds.

3. Picking the loan product most suitable for the investment strategy
The ability to make payments to suit current and future investment plans is an important criterion when choosing a loan product. With hundreds of loan products available in the market, consulting a professional mortgage broker could save valuable time and money.

4. Positive vs negative gearing
Costs associated with purchasing and maintaining an investment property, over and above the rental income, are tax deductible. Whether an investment should be positively or negatively geared depends on the overall household income and tax position. Advice should be sought from a tax accountant to structure the finances properly.

5. Costs associated with purchasing
Property investment usually incurs costs in the form of fees and charges and unexpected expenses by way of improvements and/or maintenance. It is important to budget for these expenses because the rental income may not always be enough to cover them.

With careful planning and professional advice the creation of wealth by investing in real estate is a real possibility. However, it should be remembered that this form of wealth creation is a long-term process.
If you have been thinking about other investment opportunities, we may have properties listed at the moment that would be ideal for rental purposes. Please contact our sales department to discuss possible options for you.

How to attract the best possible tenants
Finding good tenants is not always easy, and when you have them you obviously want to hold onto them. Here are a few tips:
• If you are going to paint your new property, keep it neutral so that the tenant can visualise their furniture in it and not worry about colours clashing.
• Ensure your property is clean – especially the bathrooms and kitchen. The best prospective tenants are notoriously picky about cleanliness and will go through the property with a fine toothcomb. (I know of one tenant who actually looked on top of the kitchen cupboards to see if they were clean.)
• As bathrooms and kitchens are key selling points a few handy tricks can liven up an out-dated area. Paint over old tiles, sand and paint cabinets, replace old taps (especially leaking ones) and towel rails. These simple and fairly inexpensive improvements can breathe life back into any kitchen or bathroom and will certainly impress the prospective tenant.
• If families are your target market you should also focus on the condition of any carpets in the property.
• Letting light into your property can make a huge difference to the way the property feels and looks. Cleaning the windows can bring a flood of light into a room and make the area feel more spacious.
• Keep clutter to a minimum; don’t leave out cleaning materials or DIY products on display.
• Clean the garden area, mow the lawn and remove any rubbish.
• Don’t leave bins out when the house is open for viewing.
• Make sure that all outdoor/indoor light fittings are in working order.

The more attractive you make your property to potential tenants the more likely you are to receive quality applicants who will treat it as their home.

Landlord insurance
There are many types of landlord insurance available and although you don’t need all of them, it is essential that you know the ones you do need (and the ones you don’t need).

Standard building and contents insurance – more commonly used by owner occupiers than by landlords.

Strata insurance – held by the body corporate and paid for by the owner’s levies. The owner has legal liability for the common areas whilst the body corporate is responsible for the building. This doesn’t cover the landlord for damage caused to the interior of the property by the tenant or if the tenant defaults on rent payments.

Landlord insurance – this is a specific insurance designed to insure landlords against actions by their tenants. These risks include malicious damage, theft, accidental damage and loss of rental income.

Scam warning
Home buyers and sellers should be wary of scammers after another suspected Nigerian scam in Perth similar to last year. The property, which had been owned by absentee investors, apparently sold within six days of going on the market. Both the owners and the buyer have complained to the police.

Police have warned real estate agents to be extra vigilant. The scammers appear to phone the real estate agent, change the owner’s contact details (using fake ID) and then request a quick sale to fund a major project. Due to a legal loophole, fake authorisation documents claiming to be from the High Commissioner of Lagos are accepted as security. Although the agents who acted in this sale did so with due care and diligence, this serves as a timely reminder for everyone to be on their guard.

]]> Sat, 01 Oct 2011 00:00:00 GMT <![CDATA[September 2011 Newsletter]]> Extra dollars make a difference to the mortgage



Using extra money to reduce the home loan or employing refinancing strategies to increase mortgage payments can help to pay off the loan earlier and own the property sooner.

All mortgage holders, whether for owner occupied homes or investment properties, should revisit their personal finances to ascertain if they are in a position to make additional payments to their home loans. Increasing the repayment amount by just a few dollars can reduce the term of the loan and save on interest.

There are various ways to achieve this.
1. Increasing the frequency of mortgage payments. This is the easiest and the most painless way to make additional payments into a home mortgage.
2. Paying more than the required minimum. It need not be a whole lot of dollars. For instance, if the fortnightly minimum payment due is $489.00, just rounding it up to $500 can make a sizable dent in the capital.
3. Making a lump sum payment into the mortgage. There are many ways that an unexpected windfall can be spent but choosing to put the money into the mortgage can save thousands of dollars in future interest and reduce the term of the loan. An income tax refund, an annual bonus from an employer, extra commissions from sales or an inheritance are lump sum payments that could be used to pay off the home loan sooner.

Putting extra money into the home mortgage by using one or a combination of the above repayment strategies will result in reducing the term of the mortgage and saving thousands of dollars in payable interest.


Fixed or variable rate home loans – the pros and cons



There is little doubt a mortgage is a major financial commitment and a significant part of home ownership. At the same time, it’s important to understand there are broadly two categories of mortgages – fixed and variable rate home loans – and choosing the right option can save you money long term.
 
A fixed rate mortgage offers set loan repayments irrespective of interest rate fluctuations, which is comforting as world markets appear to fluctuate every other month these days. Fixed rate loans are for a set term, usually between six months and 10 years – with the majority one, three or five years.

However while fixed rate loans can provide security, they’re not exactly flexible. For example, many won’t allow you to make additional repayments which can be useful in shaving years off the term of the loan and interest repayments.

Variable rate home loans, on the other hand, are the most popular type of mortgages in Australia. This is because they are considered more flexible, and may include features such as the ability to make extra repayments and/or allow homeowners to redraw funds for emergencies. The downside of a variable loan is that, generally speaking, they are linked to official interest rates. So, when the Reserve Bank increases interest rates, your lender will usually follow suit – and in some cases will increase rates over and above the RBA’s increase.


Long-term investment strategy is a better option


If you are an astute investor, then you would know that the best way to maximise your profits is to look for long-term investments. It is harder to make money from the “buy, renovate, sell” short-term strategy than it is from the “buy, renovate, sell” long-term strategy.

So what do you do if you have the perfect property that fits the bill for a “renovation investment”?

Obviously, first things first – make sure you buy it for the right price and do not overspend. Remember, the reason you are buying is to renovate the property and sell it for a PROFIT. If you overspend to begin with it will be very hard to turn the renovation into a profitable exercise. The easiest way to work out whether you will make a profit is to do all of your research first.

Have a look around to see what houses/units are selling for with the renovations intact. Then decide exactly what it is you want to do and get some quotes and draw up a budget; it is also worth getting building and pest inspections at this stage (as the budget will blow out if there are any hidden problems that you have to deal with). Then deduct your total costs from the predicted future sale price and see what profit you come up with – in turn determining whether it is a sound investment or not!

There are a few handy tips to remember when buying and selling an investment property:
• Remember most renovations cost more than you budget for and take longer than you expected, (even getting a quote these days can take forever).
• Before you go ahead with any renovation think about what type of tenant you wish to attract, and plan your renovations with this in mind.
• Look at the property as an investment – it is unlikely that you will want to live there at any stage so be more practical in your approach to décor. It is not about putting your stamp on it – and it is far easier to get a tenant for a property that has been decorated in neutral tones thus allowing them to put their own personal stamp on it.

It is a tough job renovating and investing but if you get it right in the beginning it can be a good money-spinner.]]> Thu, 01 Sep 2011 17:28:15 GMT <![CDATA[August 2011 Newsletter ]]> What not to do when investing in property

According to Michael Yardney, author, property investor and wealth creator, there are eight “sure fire” ways of losing money in the property market, particularly in today’s economic climate.  He believes that both investors and potential investors are being bombarded with get rich stories and they are losing sight of what an investment really means.  

So let’s look at his top eight ways to lose money as an investor:

1. Purchasing off-the-plan one of the biggest hurdles is finance. Loans are generally only current for three months and so securing a formal pre-approval” for an off-the-plan purchase is often impossible. Coupled with this is the uncertainty of completion dates and you have a recipe for disaster. 

2. House and land packages these tend to be available in new or outer suburbs where there is less disposable income/less demand and a smaller choice of diverse tenants. The land is also worth less than half the purchase price. 

3. Buying, renovating and selling once stamp duty, buying and selling fees and tax are taken into account this is not a very attractive proposition in the short term. However, it is an excellent long term strategy.

4. Positive cash-flow properties not an easy way to become wealthy.

5. Options making a profit from property without ever owning it.

6. Rent guarantees the rent is guaranteed by the seller/developer for a certain period of time. These guarantees are actually built into the purchase price so what really happens is that the seller/developer gets the money upfront from you for the rent that you will be paid over the next few years.

7. Regional properties generally capital cities outperform regional areas and city properties tend to have a higher rental growth and more tenants vying for the same property (although this is not always the case, with some regional areas actually outperforming their city counterparts).

8. Investing in mining towns – what goes up has to come down and when the mining boom slows down it will be very difficult to find a buyer for that great investment you once had.

Our ideal home is?

Where we choose to live affects every aspect of our life whether it is where we work, where our children go to school or the types of friendship and family networks we develop. A recent report by the Grattan Institute has highlighted exactly what Australians want in a home, in other words their ideal property if there were no monetary/lifestyle restraints. 

The on-line survey of 706 participants asked the fundamental question “What matters most when you choose housing?” Participants were giving a list of eight variables at a time and asked to rank them in order of what mattered most and what mattered least to their housing choice.

The results are listed below from the top priority to the least:

  • The number of bedrooms.
  • Safety for people and property.
  • Near family and friends.
  • The number of living spaces.
  • Whether the house is detached.
  • Near local shops.
  • Near a shopping centre.
  • Near a bus, tram or ferry stop.
  • Has a garage.
  • Little traffic congestion in the local area.

This report makes for interesting reading and can be accessed at: www.grattan.edu.au.
 

Stress free investing

Buying an investment property does not have to be stressful if you know who to turn to for help.

Your first point of call should be a real estate agent who will find you a property and help you with the negotiating process and liaise with the vendor.

Your next port of call should be a Solicitor or Settlement Agent who will do all of the necessary searches on the title.

It may also pay to shop around for your mortgage and a mortgage broker can source the most up-to-date and suitable mortgage for your situation.

House prices on the decline

According to NAB’s Australian Residential Property Survey for the June quarter of 2011, residential property prices are expected to fall by about 1.4% over the next year (not increase as predicted in the March quarter of 2011). This survey takes into account the opinions of real estate agents, property managers and real estate asset and fund managers.

The survey points to Victoria and Queensland as being the weakest housing markets and NSW the strongest. Western Australia is the only state that has been forecast NOT to experience any negative growth. Overall, the survey indicates a 2% decline in house prices and it is believed that house prices will not recover until at least June 2013.

Consumers however, tell a different story with the latest Westpac/Melbourne Institute Consumer Confidence Index for July showing confidence in the housing market has increased and in fact consumers believe that house prices will still rise this year.

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