The Game of Life

This weeks Thought comes from a conversation from Michael and Sarah inside the Ultimate Real Estate Members Area which I belong to. So come take a sneak peak inside because this is a very quick game that I want you to play. It will take you about two minutes.

game time

It’s thought provoking, so when you’re done I want you to leave me a comment and tell me what you think.

Imagine playing a game with these rules:

1) Each morning your generous bank would deposit $86,400 into your personal account, provided you adhere to the following competition rules.
2) Everything that you didn’t spend during each day would be taken from you.
3) You can’t transfer money into another account – you can only spend it.
4) Each day, the magic bank account is refilled with another $86,400 for spending.
5) The bank can revoke the prize and end the game without warning by simply closing the account.
6) If that happens, you can never win another prize – that’s it, game over.

Now would you consider playing this game?  Would you try to spend every dollar, and use it all, because you knew it would be replenished the next morning?

We all know that no bank would ever do this but just consider that there may be a game which is similar to this but does not involve money but does involve TIME.clock-198x300

1. Each day you receive 86,400 seconds as a life gift.
2. When you go to sleep at night, any remaining time for that day is gone.
3. What you haven’t used up that day is forever lost.
4. Yesterday is forever gone.
5. Each morning the account is refilled, but the your account can be terminated at any time, without any prior warning………
6. ………..

Are you using your time usefully?

Make every moment count.

Start now, don’t wait, not even a minute. TAKE ACTION NOW!

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LEAVE YOUR THOUGHTS BELOW AND FEEL FREE TO SHARE THIS WITH YOUR FRIENDS!

Even Affordable Property Management Fees Don’t Guarantee Tenants!

Affordable Property Management Gets New Tenants

Eek!!! We are without a tenant!

The property managers of our townhouse in Carina Heights have very affordable property management fees, and this past week, although we have been without a tenant – we are very grateful to have them on our team.

More about our empty townhouse shortly…..

Our intention is to make the most money we can from our investment properties. This includes keeping rents as high as possible and outgoings to a minimum. I’m sure you want the same thing from your properties too.

Paying a professional to manage your rental property is one of those questions I get people asking all the time – “Do I do it, or not?”

What Are Affordable Property Management Fees?

Property management fees are the amount of monies a property manager will charge for their time and resources to take care of your investment property on your behalf.

You should expect to pay anywhere from around 8% to 10% of your gross rental income for this service.

I can forgive you for thinking if you manage your investment property themself you’ll save money and increase your overall profits. Good thinking – but it’s rarely the true!

I know, I know – to see a statement each month where a good chunk of your rental income is gobbled up by property management fees can seem a little disheartening at times.

Property management nightmareBut consider the flip side. If you are not engaging a professional manager to do this job for you, you can end up spending hours and hours running around after all sorts of tasks related to the management of your rental property.

… calling plumbers, engaging garden maintenance, fixing door handles, chasing up rental payments. What a nightmare – especially when you already probably have an extremely busy life.

Just last week we got this email from our property manager:

[quote]“…. Just a courtesy email, we had an open home last week and have another Open this Saturday. The enquiry has been very low on the townhouse, which is an indication of this time of the year. I have seen townhouses reduce in price to attract more interest and applications. I would suggest a price reduction down to $430 per week to attract more interest and more people through this Saturdays Open Home. Please let me know your instructions on this.”[/quote]

Thank goodness we haven’t had to spend hours of our precious time trying to locate new tenants! Instead, the work is being done by the property manager. The only thing we need to do here is decide what our course of action will be in response to her suggestion. I’ve wrote this post all about how to get good tenants for your property. We advised the agents to follow though with an incentive just as I described in the post. Within a couple of days we had an application to consider icon_smile

Next email….

[quote]“I have a lady who is interested in renting your townhouse although she has a cat? Would you consider a cat at the property? “[/quote]

So, in order to get our property tenanted, we have reduced the rent AND taken a pet bond for a tenant who will have a cat!

In an ideal world, neither of these options are great – but it’s not always an ideal world. The reality is – we have a tenant moving in and money going into the bank account once more.

All being well, the new tenant will be moving in very soon.

The fees charged by your property manager will cover lots of time spent on your behalf in addition to the regular maintenance checks done on site.

Their time is also spent seeking new tenants for you, representing you in court if a violation of lease agreement is made, calling maintenance services, handling tenant complaints and loads of other incidental tasks.  Based on this, in most cases the fees charged are reasonable.

And, don’t forget that in most instances, fees paid to your property manager can be claimed as a tax deduction against the income you receive from your rental property.

How Do I Choose A Good Property Manager?

Not all services are equal and the fees a property manager charges may not be a reflection of the level of their services. Fees that seem more affordable at first may end up costing you more money if the service provided is sub-standard.

When you are selecting a property manger to take care of your investment, there are some things you should consider and discuss before making your final selection.

  1. Property management fees ARE negotiable! You don’t have to accept the fees provided as final. Good negotiation skills can often see you get a discounted rate on your management fees, especially if you have a couple of properties in a similar location that need managing.
  2. Discuss thoroughly what your expectations are for management, and find out exactly what your managing agent provides in the way of services.
  3. Request that photographs accompany all of your management reports. This helps to keep you up to date with the condition of certain areas and also helps you to make maintenance decisions.
  4. Ask other investors for referrals. These are people who have already used property managers in your area. You can leverage their experiences and make an informed selection.
  5. Stay in constant contact with your property manger. Be proactive in contacting them as your know your lease agreement is coming up for renewal and ask about the likelihood of increasing the rent.

What Happens If My Property Manager Is Not Doing A Good Job

You don’t have to stick with a property manger you are not happy with! Firing your property  manager

While a good property manager is worth their weight in gold, it’s important to take responsibility for your investment and stay pro-active when it comes to decision making.

Remember, these are business decisions and you must think with your head and not your heart.  

Even if you’ve been with a PM for many years, if you have good grounds to believe your appointed PM is not maintaining your investment or acting in your best interests, you can provide ‘Notice of Termination’ to them. Refer to your original management agreement to see what terms of notice you need to give as they can vary.

Provide them with written notice of termination and seek out someone who is going to work harder for your interests.

This is exactly what we did just three months into our managing agreement when we were very unhappy with the property manager who was taking care of our Wilson property. That was back in 2003 and we’ve been very happy with the new property manager ever sinceicon_smile

To Pay Or Not To Pay?

In my opinion, hiring a good property manager with affordable property management fees can make sense and actually save you money.

I know that not everything goes smoothly when it comes to managing your investment properties and I hope you do too.

Thanks again for your support, and if you enjoyed this article, please help me out by sharing it for me.

Here’s to your success!

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Sage Point and Claim App: Never Lose A Receipt Again!

point and claim appI wanted to let you know about a fabulous new app that is available for download called Sage Point & Claim. Recommended to me by a property-savvy accountant, I thought I’d do a review for you.

Review Sage Point and Claim App

Sage Point and Claim is a comprehensive and easy to use free receipt capture app that can make life much less stressful when it comes to recording property investing or business receipts and claiming deductions. In fact, there is no need for you to ever lose a receipt again!

You simply use the camera on your device to take pictures of any receipts you have. The app will automatically categorize the receipts. If for some reason it can’t complete the process, it will ask you to manually check and complete a form. You tell the app if your purchase is tax deductible, then save your entry. The filters provided will allow you to quickly find receipts you need to refer back to at any time.

The best thing I love about this app is that it’s perfect for recording receipts for purchases relating to warranties. You know, the ones you can never find when you need them! One quick pic and Sage Point and Claim will store all the details for warranties for whenever you need to refer to them again.

This app saves loads of time sorting, categorizing or looking for receipts you’ve lost when it comes to tax time. Many accountants will have the HandiTax or other facilities so you can simply upload your receipts to them for preparation of your end of financial year accounts.

Sage Point and Claim App is available for iOS and android devices. The developers have also added the benefit of password protecting the software and syncing your information for storage to the cloud. This gives YOU the ability to access your receipts anywhere, anytime while also protecting it from getting into the hands of others. pointandclaim

Considering the large number of receipts I process it would be handy to have the facility to archive receipts after the year end.

This app is a great time saver for those who enjoy the modern technology. I’m still a little old fashioned and love to feel and see the paper in my fingers. I will run this app alongside my manual bookkeeping for a little while before making the switch completely. I could definitely find other fun things to do with the time it takes to maintain the current bookkeeping recordsicon_smile

There is no doubt that we are moving to a paperless society and that’s something I’ll have to personally get used to.  Apps like Sage Point and Claim certainly make that transition easier!

Overall it’s an easy to use, time saving app with a great interface.

Tax Tip

I would warn small business owners not to make  ridiculous claims, particularly given that the Australian Tax Office’s hit list includes excessive or incorrect work-related claims this year. Remember the golden rule: you can’t claim what you can’t prove.icon_smile

You can download the Sage Point and Claim app here: http://sage-handisoft.blogspot.com.au/2014/06/free-app-expense-claims-made-easy.html

LEAVE ME A COMMENT AND SHARE ANY OTHER GREAT APPS YOU USE

FEEL FREE TO SHARE THIS INFO WITH YOUR  FRIENDS

Here’s to your success!

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Tax Time!! What Do I Need To Take To My Accountant?

tax timeTax Time!!

If you are on top of your game you’ll already be asking yourself what do I need to take to my accountant to maximize tax deductions for rental properties. If you’re part of the majority – you’ll be quaking in your boots at the thought that it’s tax time once again!

end of financial year salesI spent last weekend swooning around the city shops spending up big in the end of financial year sales. This weekend was struck with reality and the need to finalize my own book keeping before it’s time to visit my accountant.

My dear old father in law never used anything except the good old ‘spike’ to keep his receipts on – bless him. I prefer something I little more comprehensive  icon_smile

This financial year we had 10 properties in our portfolio. Whether you’ve got one, ten or more investment properties, you’ve got to have an organized way to keep track of all your paperwork and finances.

I’ve developed rock solid systems for our investments and business and I have the tools and reports I need to keep track of them.

For years now I’ve used Quicken to keep all our financial records. I love this system. It’s a simple and user friendly way to keep track of income and expenses so you stay on top of your book keeping for tax time. The system also allows for plenty of reporting and budgeting if you want those sort of features too, but I like to keep things as simple as possible.

Getting your tax done by a professional accountant who is familiar with property investing will maximize tax deductions for rental properties and help give you a stress free experience.

There are some fundamental documents and pieces of information you can make sure you have before you visit the accountant. Being prepared will help to keep the cost of your visit down as most accountants will charge you by every minute they spend working on your tax.

Here’s a list to help you get organized and gather the things you need.

Figures and Documents Your Accountant Needs

Asset Register

If you don’t have one of these already, I suggest you make a fresh start on one of these for the new financial year. It’s a register that lists ALL of your assets, including your properties.

In this register you will list the name of every asset you buy, the date of purchase and cost.

You can claim depreciation on your investment properties (and perhaps some of your other assets). Having a register will give you a handy reference for your accountant, and whenever you are required to list your assets, such as on loan applications. Having this register was a blessing when I had a recent telephone call with a broker who wanted all our assets and liabilities.

An asset register is not an essential item for your accountant, but believe me when I say it will make your life a lot easier.

Do the work once and use it over and over again.

Settlement Statements

If you have sold any of your investment properties during the last financial year you will need to take along your Settlement Statement. This will have been sent to you by your solicitor or conveyancer who acted on your behalf at settlement. It will list all the amounts of sale, stamp duty, charges and other important information your accountant will need.

Loan Interest

You’ll want to list all the interest payments you have made on any of your investment property loans.

If you are in the unfortunate position of having some of your properties cross-collateralized, then be sure to divide up the interest payments and allocate the right proportion to each individual property.

Accuracy here helps you determine the true yield or return on investment of each individual property.

Expenses: Travel, Maintenance, Repairs

Some minor expenses for your investment properties may have been paid by your property manager directly. In this case, they will show up on the Property Management Report. You may also have some invoices and receipts for expenses you have paid directly. List these expenses against the correct property.

If you have travelled to see your property at any time (after settlement) it’s likely that you can make a claim against your out of pocket expenses for the trip. Keep and document all fuel, accommodation, meal and other incidental dockets in relation to the trip. Your accountant will determine which of these costs can be claimed.

With properties in our portfolio all across Australia, we can offset some of the expenses on most of our travel against one or another of our properties. Have a good discussion with your accountant on this matter so you know in advance what is claimable and what is not. Often you need to know before you travel so you can be sure you have the correct records to verify your claims, like emails to managing agents or tenants to arrange the visit etc.

Property Management Statements

Most real estate companies are fairly prompt with sending through the end of year Property Managing Statement. This will list all the rent received, any expenses they have paid on your behalf. It will also list their managing fees. Your accountant will need all these figures to complete your taxation return.

Depreciation Report

After you settle on a property, you should order a Quantity Surveyor to complete a depreciation report. The report takes into consideration two main elements:

  • Capital works allowance; and
  • Plant and equipment.

From this report, your accountant can make a calculation for an ongoing tax deduction year after year for a limited time.

The first time you include a newly acquired investment property in your taxation claims, your accountant will need the Depreciation Report to refer to. From that point onwards, calculations can generally be made based on the previous years taxation records.

I love to maximize tax deductions for rental property. Our property portfolio has helped us legally reduce our tax by thousands of dollars over the years. This is a good checklist I use every year as I gather what I need to take to my accountant at tax time. I hope you find it useful too icon_smile

I’m happy to pay tax, but see no point in tipping the tax man! What about you?

Leave a comment below, and feel free to share this information with others who may find it useful.

Here’s to your success!

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P.S.   Find this helpful? Subscribe by email to get notification of new free tutorials and detailed case studies. Just click on the box below then enter your first name and email address in the form. You’ll also receive my latest FREE report “The 10 Biggest Mistakes Property Investors Make And How You Can Avoid Them”.

 

The Best Place To Buy Investment Property – A Trip To The Coffee Shop Confirms It!

coffee_artI’d love for you to join me for my cup of coffee and I’ll share how to locate the best place to buy investment property.

I’m not going to give you a long formal list of ‘must haves’. I’ll give that to you in another post. Instead, these are my recent thoughts I had over a cup of coffee the other morning icon_smile

We spent the weekend in the city visiting our 7 week old grandson. We don’t like too much time passing by without a visit, so trips to the city these days are frequent. Apart from spending time with the family, the change of scenery, coffee shops and restaurants are always nice. (I’m a big fan of coffee shops and eating out!)

Our son and his family rent one of our properties from us. It’s a 3×2 very spacious apartment we bought in 2004 for $265,000 and is now valued in the high $500,000’s. This is where we often stay for our city visits.townhouse in the best place to buy investment property

It’s just across the road from a gorgeous parkland area called Herdsman Lake. The Lake has great walking tracks all around it. You may not know, but I love to get out most mornings for a run or cycle and when we’re away from home for the weekend it’s no different. These tracks around the lake are so close and just perfect for a run or walk.

I’d had a tip recently about a great little coffee shop called The Ingredient Tree that was only a few minutes off the walk tracks. So on Sunday Murray and I took off for our run with the intention of taking a little detour at the end of our run to stop in there for a morning coffee.

We weren’t disappointed and I couldn’t believe I had not come across this little gem before. The coffee and atmosphere was great. While we were sipping our hot coffee and hot chocolate, what struck me was how busy this little place was, even though it was not on any major traffic strip.

Then it dawned on me – this little café might have been tucked away from the main stream of traffic, but it was in fact, located right smack bang in the middle of several blocks of high rise apartments that would be home to thousands of potential customers all in one spot.

This is an example of a few of the ideal facilities that are attractive to renters when you are considering the location of an investment property. The types of nearby facilities renters want when they are considering a property to rent are parks, shops, café’s, transport stations, bus services, schools and hospitals.

Too often buyers will purchase a property they like, fall in love with, can afford, but is not in a high density population area, nor very close to any or many of these types of facilities.

The Ingredient TreeThe Ingredient Tree made a smart move in setting up right in the middle of thousands of potential customers. You need to be just as smart and make your investment property purchase right in the middle of where your potential tenants or buyers are too!

This is why I prefer to purchase within a reasonable distance of a major CBD. Good deals can be found in regional areas, although generally capital growth will be slower and rental demand less.

The “West Australian” reported on June 22, that properties available for rent in the Perth area rose from just over 4,000 this time last year, to over 5,700 this year. This means the more attractive the area and the more facilities that surround an area you have your eye on, are all great indicators to start with when you’re looking for the best place to buy investment property!

The way I turn my ‘coffee shop’ thoughts into proven research is to open up my Investar program so I know I’m getting location selections right for the best place to buy investment property. Try it out for yourself and see if it helps (I’m sure it will!). Enjoy!

5 Top Suburbs Reports - FREE

Here’s to your success (and the next cup of coffee!)

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P.S. :  If you’d like to follow along my property investing journey and accelerate your own at the same time, be sure to join our mailing community by clicking the box below to get notification of new free tutorials and detailed case studies. icon_smile

Why Invest in Property? My Top 3 Reasons

Why invest in property?

There are a lot of ways for you to spend your hard earned money, so the question is often asked “Why invest in property?”

Just like we have, most people looking to invest their money will generally consider shares and/or property. Where you decide to invest your money will often be a result of the level or risk you are comfortable with, the amount of money you want to invest, and the short and long term goals you expect from your investment.

I’m not going to discuss here the comparison of shares versus property. I might do another post on that topic alone another day.

Today I want to highlight the 3 key reasons property is such a great investment.

To Invest In Property Is Low Risk

Despite what many people think, property is still a relatively low risk investment. Investing in bricks and mortar always has been solid.

One of the reasons the risk factor is low with property is that Australia has an ever increasing population growth. This graph taken from http://www.abs.gov.au shows continued growth for Australia as at 30th September, 2013 from both natural increase and migration.  Populationgrowth

Everyone needs somewhere to live. Property is not something everyone can suddenly decide to do without. And Australia simply does not have enough houses to meet its population demands. There is a lively discussion on the topic of housing demands here, with ABC’s Alan Kohler.

The Urban Development Institute of Australia have also stated that Australia does not build enough new housing to support its growing population. You can read their article here:  http://abode2.com.au/enough-new-housing-support-growing-population/

While housing prices do fluctuate over time, the market is still much less volatile than other forms of investment such as the share market. Yet, I’ve never quite understood why, for some reason, some people see it as being far more acceptable to lose money in the share market than they do if prices in the area of their investment property fall slightly. I’ll keep working on figuring that one out icon_smile

Even when housing prices fall slightly, you still have possession of your asset! It still has the ability to produce an income for you and to increase in value.

High Capital Growth

Many new investors become concerned with the outcome if the value of their investment property falls. Well, it has to be said….

the prices of property does fall, but it also rises again.

This is why property investing is best considered over the long term.

To remind you of this, I’m sure you’ve been in a situation where your jaw has dropped when you’ve heard what seems like a ridiculously low price an older generation family member purchased a now highly valued property for, many years earlier.

In Australia, through boom and bust times, property has historically continued to rise in value.

When your investment property is selected in the right location you have the ability to gain significant capital growth over time. In general terms historical statistics show that well selected properties can double in value every 7-10 years.

An example of one of the properties in our portfolio:

Purchased 1999, 3×1 Unit

Purchase price: $108,000

Current value: $420,000

So, after 15 years, this property has come close to doubling every 7.5 years.

Our equity growth has been $312,000 in that time.

With the initial investment of our own money of only around $20,000 that’s a great return on our investment icon_smile

When you do this on a couple of properties, you can soon have a nice accumulation of capital growth within your portfolio.

Ongoing Income

Why invest in property? Passive income of course!Each property you purchase can return you a significant income from your tenants, whether it’s commercial or residential.

You’ll be in a great position when your investment properties replace your J.O.B. income and allows you real freedom and lifestyle choices. icon_smile

There are loads of properties and deals out there that will return you a positive cash flow from day one and these are the ones you should have your eye on.

Many of our initial properties were purchased using a negative gearing strategy, but as our knowledge of investment strategies has increased, we’ve made changes to our portfolio (and continue to), to reach a point where every property returns positive cash flow.

Still asking the question Why invest in property?

Building Wealth Through Investment PropertyJan Somers has written a fabulous book Building Wealth Through Investment Property which was one of the best selling business books of the year when it was released and is still a great read, especially for newer investors. In fact, copies can be hard to get hold of, so if you can get your hands on one I highly recommend you grab a copy to read on these cooler winter evenings.

Here’s to your success!

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P.S. :  I would love to hear how YOU feel about property investing. Leave a comment below and share your “what” and “why” with us.

Yay!! Our new property development project settled today!

Today is a very exciting one!  It marks the start of yet another new journey for us as investors. Up until now, most of our property portfolio has been accumulated using a buy and hold strategy along with cosmetic renovations to maintain and improve property values and equity on revaluation.  But this…. is our first major property development project.

Property Development Project: 20 Lawson Street South HedlandI wanted to post today to make the milestone of our settlement date.  But it’s only fair to give you some of the facts that have lead to this point.

Objectives For This Property Development

This site has been purchased with the intent of building a second house at the rear of the property.  Demolishing the original house and replacing it with a new one.  Applying for a DA approval to sub-divide the land.  And at least one of the titles, if not two, will also have a granny flat constructed.  This will give us at least three (possibly four) avenues of income from this one existing piece of land.

This is a project we are doing with a joint venture partner.  You can read all about how we set up the joint venture agreement here in case it’s a strategy that would suit your investing goals.

Negotiating The Deal

You can see the listing price of this property was $825,000.  With some smart negotiation skills,  the property was finally secured for more than $175,000 LESS than the listed price.   In addition to the originally signed offer, a further $11,000 was taken off the purchase price after we sent in a building inspector prior to settlement.

Quite a bit of maintenance will be required before we can put a tenant into the property.

There were a few last minute glitches with the settlement process today (which can sometimes happen unexpectedly).  But in the end the bank now has the money it requires for the purchase and we start the next phase icon_smile

Getting the Original Building Rented

The builder will go in tomorrow to start the maintenance and repairs.

The managing agent will also go in to take photos and details so the property can be listed as available for rent.  We obviously want to get a tenant into the property quickly, and will most likely put them on a six month lease.  This time frame will see us over the the time required to get building permits, approvals, architect plans finalized.  If more time is required, we can always put the tenant onto a periodic lease after the six months.

Project Insurance

Quotes for insurance required on the project have been received.  Although it will be necessary for any builders or contractors on site to have their own risk insurance cover, we take out Public Liability Insurance for not less than ten million dollars.   There was several thousand dollars difference between companies for the insurance we require.  So it’s a good reminder to be sure to get at least three quotes for what you need wherever insurance is required (or anything for that matter!).

Well, I just wanted this post to be a ‘quickie’ to bring you up to speed on our latest project.

Feel free to share this post if you know this could help others.

Up to the minute updates on this project and others, get sent to our community mailing list, so if you’re not part of that yet, I’d love you to join us today!

Here’s to your success!

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P.S.  Since everyone has a different comfort zone when it comes to choosing an investment strategy, I would love to hear YOUR thoughts on doing a development like this.

What is your preferred property investment strategy and why?

 

How To Find Good Tenants For Rental Property

how to rent property quickly

Finding and buying a rental property is the exciting part. It’s often not until after settlement that the hard work begins. And the thing investors want to know is how to find good tenants for rental property.

Dealing with a vacant unit and the prospect of missed rental income can be terrifying.

Owning and managing rental properties can be very profitable. (From our rental properties, my husband and I receive over $100,000 income each year). While there are never any guarantees, sound business choices will help you to find good tenants who will take care of your property and keep money coming into your bank account

Use The Professionals

My first recommendation is to engage the services of a professional property manager. These people are experienced in their field. A property manager will put your prospective tenants through a full screening process. This will check things like their rental history and employment stability. These affect the applicant’s ability to maintain rental payments on time and you want to have as much going in your favour as possible.

I was having this very same conversation with Chris Snell from Rental Success who I met on Twitter recently.

Given the fact that you are paying your managing agent, then take notice of your Property Management Report!

If your rental property is new then hopefully everything should be in good working order. If it’s a property you’ve bought secondhand, make sure you keep everything well maintained. This will serve your tenants well, maintain the value of your property and reduce calls from frustrated tenants to constantly fix things.

Take action from the management report and see to any repairs promptly to reduce the likelihood of small problems turning into big tasks.

Rent Property Quickly By Using Incentives

Offering incentives can be a great way to rent property quickly and get good tenants.

Your first instinct might be that you will lose money by doing this. But let’s look at the figures quickly.

Let’s say your asking rent is $415/week. Let’s compare getting a tenant straight away by offering a week free rent versus the property sitting empty for three weeks:

Rented 52 weeks @ 415/wk =   $21 580

less one weeks free rent $415 = $21 165

Rented 49 weeks @ 415/wk =   $20 335

You get more money by offering the incentive to get a tenant quickly.

If you have gone a few weeks without a tenant, it can be disheartening if your property manager recommends you reduce the rent. But let’s take a look again at how the numbers work if you choose this as an option.

Property empty for 4 weeks.

Recommended rent decrease from $415 to $400 to secure a tenant.

Rented 48 weeks @ 400/wk =     $19 200

OR

Standing firm on your rent rate of $415/week

Property remains empty for a total of 8 weeks.

Rented 44 weeks @ $415/wk =   $18 260

You are worse off by almost $1000 because you didn’t want to drop the rent rate to initially get a tenant.

Once your property is tenanted, you should ensure there are rent reviews and increases wherever possible, every 6 months. So any incentive or reduction of rent to initially get a tenant into your property quickly, can be caught up on the first rent review.

Finding A Good Tenant Quickly Can Be In The Timing

If you have a property come become available for rent in the week before Christmas it’s probably not going to be an ideal time for you to find good tenants for rental property quickly.

You could easily find yourself with a vacant property for several weeks.

At this time of the year, most people have so much going on in their personal life, the last thing they want to do is move house 7 days before Christmas.

However, just after Christmas or the beginning of the new year, there are lots of people looking to make their next move. This is a time when a lot of professionals, consultants or government workers are making a transfer move and need a new place to call home for a while.

Families are looking to get established before children start the new school year.   Don’t leave it too late into the year or these groups of people have already snapped up someone else’s property and are already well settled.

Consider the timing of the lease agreement renewal even from the moment you are signing your offer to buy a property and deciding on a settlement or takeover date.   This is being strategic in your investment decisions and squeezing every dollar you can from your investment.

Be Nice To Your Tenants!

Sounds simple, but it’s a simple act that is generally overlooked. Yes, your tenants are doing you a favour by paying you rent week after week. But they are also human beings with feelings just like you. Treat your tenants how you would like to be treated and you will find good tenants that will stay longer and are more likely to take care of your rental property.

The very first property we bought in 1999 is a nice 3×1 unit in Belmont. We purchased it for $108,000 and it is valued at around $420,000 last check. (A nice rise in capital growth.)

Since we purchased it 15 years ago, can you believe it – we’ve had the SAME lady renting it the whole time! She is single, no car and lives a simple life (and has been a great tenant!).

Each year we send her a special note at Christmas time thanking her for taking care of our property. That’s certainly not the only reason she has stayed with us for 15 years, but I’m sure it’s a consideration if thoughts of moving ever cross her mind – Mmmm, what kind of landlord might she get next time???

Make Things Easy For Your Tenants To Rent Your Property

Ensure your rental property is easy to maintain and care for. This will reduce the amount of frustration you will experience over gardens, decks or interiors that may not get taken care of as well as a home owner might.

If you’ve had the ability to influence garden design, building design and interior fit out – be sure to choose designs and colours that require minimum maintenance. Wherever possible, keep the demographic of your prospective tenant in mind and make any changes you see necessary to ensure their ability to maintain your property as easy as possible.

Lots of tenants prefer to pay an increased rent that includes someone coming in and doing the lawn and garden maintenance. This is a great option for you to discuss with your managing agent. If you include this cost as part of the rent, you’ll know these areas are being maintained regularly.

Storage facilities help to find good tenants for rental propertiesAfter spending this last weekend cleaning out one of my linen cupboards, it reminded me also that storage is something else that makes it easier for your tenants to be good. Plenty of cupboards inside and/or a small storage shed in the garden means there are places for them to put things away and be tidy. If there is a lack of storage, the place is going to look messy regardless.

Remember, no matter how good your tenants are, there will be wear and tear from general living.

Don’t Rent To Friends And Family

Some of the worst tenants you could have in your property might be friends or family! This might be an exception if you have adhered to my first recommendation and use a property manager to oversee your rental property.   By using a managing agent there will be regular inspections and a level of cleanliness to be kept up. It also allows a clear channel for any complaints or maintenance issues to be dealt with.

People come most unstuck when they privately rent to friends or family. Don’t worry – we’ve made THIS mistake too!! Not only will you be down on the rent you receive by offering ‘mates rates’, it’s also likely there will be more maintenance for you to do once they vacate. By being ‘softies’, we were under-renting one of our properties by around $5,000 each year while we had family members in it. Ouch!

I’m sure you’ve seen plenty of stories on TV about ‘tenants from hell’. Unfortunately they are around, but rest assured, there are also lots of great tenants who will want to rent your property.

When it comes to how to rent property quickly, and how to find good tenants for rental property – start with the list of suggestions above and you will be well on your way!

LEAVE A COMMENT BELOW AND TELL ME ABOUT YOUR RENTAL STORY ….. AS A LANDLORD OR A TENANT.

Here’s to your success!

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Watching House Rules Episodes: The BEST Way To Spend Your Time….

house rules episodes teamI really don’t watch much television at all, but every now and then I get sucked into watching one of these reality Australian renovation shows. (Damn it!) At the moment I’ve been watching the House Rules episodes. I justify my actions by claiming it’s research for my businesses (my blog here and our property investing). And that’s why I just had to write this post.

In fact, that’s exactly what I want to encourage you to do – use the show as research.

It’s no secret that these Australian renovation shows are scripted and edited to maximize a captive viewing audience. While there are a lot of tears and tantrums to wade through during the House Rules episodes, if you look deeper, you can find some golden nuggets that will keep you on track with renovations for your own home or investment property.

The House Rules Episodes – Lessons You Can Learn

These are the things I see as the major points to learn from this show:

Budget: I’d like to say there is something to be learned about how to budget your renovation. But unfortunately as we are never told what the teams have to use as a budget, I’ll have to pass on that.

Styling: The teams usually do a total demolition on each House Rules episode. Not every renovation you do will need that. What is nice, is seeing the completed rooms and the ideas teams have for styling. (Not all of them are great though!).

If you listen to the judges comments you can pick up small tips and tricks that work well in different areas.

Functionality: Look for things that make an area functional (or not). Small things can make a huge difference, such as oven or patio doors being able to open properly; the level of lights or shower heads.

I know it sounds like it’s too simple, so here’s a real life example. Last week I went to visit a girlfriend who had just moved into the dream home she and her husband had just finished building. My heart sank as she explained her disappointment in one particular area…. it was not until she went to put her new furniture into the lounge area, she realized it was not even big enough to fit a set of sofas, let alone the TV cabinet or coffee table. So now, it’s a small sitting area for two – not at all what they had planned.

Colours: Take notice of how different colours create different moods. People get told this all the time but seeing it in action always has more impact. Not all the colour choices on the House Rules episodes have been great.

I did love the colour Antique White that was used on this weeks’ episode, and have used a very similar colour myself called Hogs Bristle Quarter Strength in a cosmetic renovation. These are great colours for creating a crisp, clean and bright atmosphere.

Theme: It’s interesting to see how a theme, or in the case of this renovation show, the ‘5 House Rules’ can affect the whole outcome of the renovation. The ‘themes’ for the home renovations have varied from ‘farmhouse’ to ‘junky chic’, to ‘Bahamas’.

The completed rooms in each house have not always flowed as well as they could because of the nature of the competition. You however, have the chance to choose the theme or style for your property. Run it through the entire home to increase the impact of your whole renovation.

Renovate For The Owner: Every renovation on the House Rules show has been purposefully done with the owners in mind. This is a really important thing to remember.

It’s so easy to renovate for what YOU want. But if you are renovating for profit (and you should be), lots of thought needs to go into WHO will be living in or renting the finished property.

Are you renovating in an area where families are living? Is it likely to be young professional couples who tenant your property? The demographics of the suburb you buy in will have a huge impact on how and what you do during a renovation.

Be sure to do your homework first!!

House Rules – Final Thoughts

Sitting back at night with my cup of tea and feet up has been a fun way to reinforce some of these fundamental rules of renovating. It’s been great to see how much value has been added to each teams’ home and I’m sure you would agree, that despite faults, bad colour or design choices here and there – all teams have ended up with a home that is more functional and nicer to live in than what they started out with.

Although I’ve only done minor cosmetic renovations, I know several people that have had great success with renovating for profit. And I know some people prefer having a structured process that takes them from property selection through to working with their tradies etc.

I’d actually love to do a larger renovation at some stage in the future if it fits into investing strategies. I’m currently working on our buy and hold strategy and starting a property development joint venture, but at some point I may include a structural renovation. The way we’ve been investing up to this point as been super easy, so I’m interested to see if a renovation can be just as easy – or more complicated.

Here’s to your success!

Fay McLean

 

 

P.S. I would love to hear your thoughts on the House Rules episodes, and on your renovation project in general. Do you find them complicated? Do they work for you?

Home Renovations – Renovating for Profit On A Budget

home renovations - renovate for a profitIf you are considering doing some home renovations, renovating for profit doesn’t have to mean you spend a fortune. In fact, some of the most simple and cosmetic renovations can achieve the biggest impressions and improvements to the look and feel of your property.
Renovating a home is an investment strategy that appeals to lots of people. Spending some money, time and energy on doing a place up and selling it off for a profit is a great way to boost your profits from property when done correctly.

Renovating For Long Term Equity Gain

You can also improve your profits by doing cosmetic renovations and upkeep on a property that you keep long term. Smart renovating can lead to capital growth and strategic improvements can be a good precautionary measure against maintenance issues on a property you intend to keep for a while and rent out.

If you have a buy and hold type property, unless there are major issues, it can be easy to ignore some ongoing maintenance tasks. Regular contact with your property manager should keep you informed of larger maintenance issues as they arise. But let me tell you that your property manager and you don’t always have the same standards when it comes to what is acceptable. We’ve certainly experienced this ourselves!

We were receiving our property inspection reports which seemed to be getting progressively worse. We decided to personally visit the property and found the dirt and state of the walls and paint work was disgusting. After studying Jane Slack-Smith’s Ultimate Guide To Renovations, we decided the next time the property was in-between tenants, we would go in and give the place a quick cosmetic reno.

You can watch the video to see our fabulous results.

Home Renovations - Renovating for Profit in Mandurah

Beware!! Renovating for Profit On A Budget Does Not Work……

Unless….. you follow these three guidelines:

1.  Stay to Budget By HAVING a Budget!

Remember that renovating strategically isn’t about painting a wall and calling it a day. It’s about a careful consideration of adding real value to a property in the market, and that takes some homework as well as sweat equity.

Take a checklist around the entire project and mark where you intend to spend money.  You can start today by downloading this Sample Renovation Checklist and Renovation Summary Guide  immediately. You can see how detailed your costings need to be. Divide your list into ‘wants’ and ‘needs’. Every likely cost should to be added to a spreadsheet plus an amount for ‘variance’.

You should then consider how much you think your improvements will add to the market value of your property to determine if the whole exercise will actually result in a profit. Additional fees and expenses such as agents fees, marketing and stamp duty all need to be taken into account.

Plenty of people have an appetite for doing a place up and selling for a profit. But not doing enough prior planning or keeping track of the numbers is one of the reasons why renovation costs can blow out and a disappointing profit margin can be the result.
Any time you are spending money on a property you want to be sure you’ve done a good feasibility on the entire project!

2.  DIY Home Renovations

There is a saying ‘money makes the world go around’. I will be the first one to suggest you save money on your home renovation wherever you can. But unless you are a skilled tradesperson, it’s likely there will be at least some tasks required that don’t fall within your expertise. The best thing you could do is to employ a tradesperson to do the work for you.

DIY renovating can certainly save you dollars. It can also cost you big time if things don’t go to plan. You might take weeks to complete a task that a tradesperson can get done in a matter of hours or days. A task completed quickly and done to expert standards will mean you can move forward quickly. This can become extremely important if your objective is to get the property tenanted or sold.

Every week the project goes uncompleted, you could be paying additional interest if you are borrowing money to do the renovation in the first place. As you create your feasibility, you may be surprised to find DIY renovation costs are higher than you expect.

3.  Renovate for Profit – Where To Start

The key lies in understanding which improvements will return you the highest possible profits. As you can see in our recent renovation, paint is inexpensive and can instantly create a fresh, new look. Despite my earlier suggestion to avoid DIY, painting is relatively easy to do yourself and you can save lots of money. Even if you do need to pay someone to do more difficult areas or outside work you will most likely get back more than you spend.

The other big money spinners are kitchen renovations and bathroom renovations. These rooms will definitely start to chew up your budget though. So again, lots of planning and cost analysis is important before you even begin. Carefully consider the demographics of potential buyers or renters to be sure you meet their needs. Get several quotes before you commit to the task. https://www.hgquickquote.com.au/ is a great place for finding qualified service professionals to quote on your home renovations.

If you buy a property and plan to renovate for a profit, it might be in a cash chunk from a sale or from a rise in equity in your buy and hold property. Either way, check your tax obligations and entitlements here.

Any More Home Renovations?

We have a townhouse in a suburb just 6kms from Perth City that our children currently rent from us (that’s another story!). When they re-locate in six months time, we plan to use the process within The Ultimate Guide to Renovations (TUGR) again to create a more extensive cosmetic renovation. This renovating course has been incredibly comprehensive and so motivating. Following TUGR guidelines will mean we can significantly raise the rent and increase our equity. That’s what I call renovating for a profit! I can’t wait to get started!…

Jane Slack-Smith has a FREE chapter of her new book available at the moment. It’s all about renovating for the investor and home owner. Grab it today. I’m confident you’ll LOVE it as much as I do!

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