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Landlord
Exciting news!
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2014 property advice from the stars…literally!
Happy new year everyone! For a lot of us the start of a new year brings us the opportunity to evaluate what we’ve been doing and kick off with a few New Year’s resolutions. For some it’s giving up cigarettes or losing weight, for others it might be to do with family or financial matters. If you’re thinking about taking the first steps to getting onto the property ladder or making further progress from what you have already done then it’s a great time to set some goals and think about how you are going to get there. Whilst I always suggest that you evaluate advice very carefully and make sure there is some good evidence to back it up, I just couldn’t resist re-posting the following that I discovered online today – Your Property Star Guide to 2014! Keep in mind that this is not rigorous evidence-based research…but who knows, if the stars and planets align…
FIND out what the stars have in store for buyers, renters, sellers and landlords in 2014. You probably noticed the record number of auctions and house prices during 2013. Was it written in the stars? Yes, Jupiter rules expansion, hope, confidence, and optimism, while Cancer rules home, family, real estate and ancestry. Jupiter, in Cancer since June 27, 2013, will remain until July 17, 2014, creating another property market boom. From mid-2013, our property market went gangbusters and peaked around December 12, 2013 when Jupiter trained Saturn in Scorpio, a powerful astrological aspect for maximising your return on investment. Jupiter will be retrograde until March 6, 2014. This typically delays settlements, encourages gazumping, withdraws properties from sale and creates problems with “finance subject to approval” agreements. Jupiter inflates expectations; vendors can get greedy holding out for the highest price. Until 17 July 2014 while Jupiter remains in Cancer, buyers will seek bigger homes, particularly with three or more bedrooms to meet the current baby boom, but also to accommodate older family members. On July 17, 2014, Jupiter enters Leo which rules love, fun, leisure, sports and children. Homes near parks, beaches, sports facilities, entertainment, shopping and coffee precincts will appeal enormously as will nearby childcare centres and schools. Apartments near these areas, with pools, BBQ areas, stately lobbies (mirror and glass), fashionable addresses, impressive views and large balconies or courtyards for entertaining will dominate demand.
ARIES
You could make a fortune buying, selling, leasing, developing, renovating, or investing in property on April 30, May 6, 24 and June 8. However, an ultimatum from your boss or tough business conditions may force you to move, sell, lease or relocate on July 4, 22 and 28. An impulsive home purchase or DIY project is a bad idea on July 9, 25 and August 1 however on those same days, an older family member may provide your first home deposit, suggest property-related tax offsets or leave you real estate in their will. Your partner may disagree with your property plans on July 19. While Mercury is retrograde from June 8-July 16, you may experience delays or reversals with your paperwork. A property expert may give you a fantastic insider’s tip on house or land yet to be advertised on June 29, July 19 and 24.
TAURUS
Jupiter in your solar fourth house of home and family from July 17, 2014 ushers in a 12-month window for you to expand your property portfolio, your physical home and perhaps your family, too. On July 25, August 19 and September 26, you may find the home of your dreams, finish renovating, or plan a party at home. Saturn in your solar seventh house of relationships suggests your past or present partner may disagree with you about buying, selling, renovating, decorating or investing in property on August 3, 9, and 27. The Full Moon of August 10 points to crunch time around career choices vs. domestic obligations. You will adore spending time with your family, entertaining guests or househunting for the home of your dreams on July 25 and August 19, with a big change due in your domestic environment from the New Moon of July 26.
GEMINI
An extra source of income may dry to a trickle until March 7, 2014 while Jupiter is retrograde in your solar second house of income, putting projects and investment plans on hold. You might want to get your property refinanced, valued, insured or left in a will to a loved one on August 22, September 4 and 15. In other cases, a wealthy family member may help you with your home deposit or mortgage or can introduce you to an architect who can help you maximise your home value with a subdivision, for example. On August 25, 26, September 10 and 22, you may decide to spruce up your home office, look for a house that’s closer to your workplace, do domestic repairs for yourself or tenants, or consider getting a pet for the kids, companionship or daily exercise.
CANCER
Your and your partner could disagree regarding a home purchase, sale, renovation, extension, repair, or investment on January 1, April 23, June 15, September 10, October 5 and 9. You may upset your landlord, tenants, flatmates, real estate agent, architects, tradies or council official if you’re arrogant on January 8 and April 23. You may have to find new business premises without much warning on April 23, June 25, July 1, September 13, October 8 and 11. Invest in real estate, buy high-end fittings for your renovation or splurge on homewares on September 11, October 11, 14, 17, 18, 21, 23 and November 1. You may move, sell, renovate, decorate, extend, renew your lease, invest or improve your property following the New Moon of September 24. Schedule DIY jobs on October 10, 17 and 20. When Mercury goes retrograde from October 11-26 you could play phone, email, contract and meeting tag with property industry people.
LEO
An insider tip could net you a bargain on May 24. Take care you don’t overextend yourself buying a bigger house, apartment, holiday house, investment property, or renovation on August 1, November 10, 14 and 23. You may refinance your home loan, team up to buy real estate, get a house as part of a settlement, receive a tax refund to put towards your home deposit, or be left property in a will on August 7, October 28, and November 12. Undertake domestic chores from DIY repairs to cleaning out the garage on August 15, 26, November 2, 4, 17, 18 and 22. You may find a gorgeous home or decide to redecorate on October 27. Mercury goes retrograde on October 5-November 11 pointing to delays in property matters and unresolved family issues. You could move, sell, renovate, invest in property or revise your household arrangements following the New Moon of October 23.
VIRGO
Don’t let your partner make domestic repairs nor buy property on September 22, November 20, 27 and December 1 as it’ll be Mr Bean-quality without the comedy. Invest in property, apply for your first mortgage, refinance it, or check how you can claim tax expenses on your home/s on October 5, November 27, December 5 and 6. You may get some amazing insider info that helps you snap up a property on October 9, December 5, 12 and 15. From the New Moon of November 22, you’ll be action stations at home, probably getting everything ready for the holiday season with your house ready to receive guests by the Full Moon of December 6. You could be ultra-busy on December 8, phoning, negotiating, emailing or meeting with real estate industry people regarding a house purchase, sale, lease, renovation or investment.
LIBRA
You could decide to buy, sell, lease, invest, renovate, develop, get pregnant, ask your adult child to return or move out and/or to insist your (grand) parent/s need nursing care as soon as New Year’s Day, with more news likely on January 7, 11, November 11, December 21, 22 and 25. You may make long-term financial commitments about your home or an older family member on January 6, 11, February 25, and December 2. Your (grand) parents may need your help on November 2, December 14 and 27. You may have to cut working hours or make your office into their new bedroom to take care of them. You could be very upset about domestic issues on January 16 and March 3, while you and your partner could disagree about your family, housework, or whether to relocate or buy a property together on November 13 and December 21.
SCORPIO
You may feel burdened by domestic issues, caring for elderly (grand) parents, or property commitments on 26 January, February 12, 19, March 11 and 30. When Mercury goes retrograde from February 14-March 1, you could experience delays in dealings with tenants, landlords, real estate agents, tradies or council officials. Take a creative approach to balancing work and family commitments on January 16, 29, February 19, March 19 and December 21. After the New Moon of January 30 you may make the leap to freelance or consulting work, launching your own home or property-based business, or joining the family company, especially if you get “an offer you can’t refuse” around the Full Moon of February 14. Listen to your intuition and look for helpful clues regarding a property you’ve got your eye on January 25, February 15, 16, March 15 and 30.
SAGITTARIUS
Domestic bliss, from finding the house of your dreams, enjoying a family reunion, moving in with a lover to welcoming a child or puppy, is yours on February 24, March 23 and April 11. You may find, buy, sell, lease, relocate, restore, renovate, decorate or invest in property on March 1, 4, 27, 28, April 18 and May 24. You may receive a no-strings-attached gift of money from a family member, a tax refund, inheritance, divorce settlement or grant then. You may need to make alternative accommodation arrangements for an ageing (grand) parent on March 14, April 3 and 25. When Mercury goes retrograde from February 7, not fully operational until March 21, a building project may suffer delays or you may rethink a particular domestic arrangement. You could also experience further property confusion when Neptune goes retrograde from June 10-November 17.
CAPRICORN
The New Moon of March 30 suggests you may move, sell, buy, lease, renovate or invest, or involve yourself more heavily with your parents, but your partner seems disenchanted with the idea (or your family) on April 1, 15, and May 19. Don’t give your household members ultimatums on April 3, 15, 22, and May 15 unless you can bear the consequences! A company relocation (whether it’s a longer commute or you have to sell or rent your house) could sour domestic happiness on April 9, 15, 16 and May 11. Great property or family news is likely on April 2 and May 18. You may discover you’re pregnant which could thrill – or shock – your family accordingly. When Uranus goes retrograde from July 22-December 22, your twenty-somethings may boomerang home for a while. Some of you may have to rethink your parents’ home care arrangements.
AQUARIUS
You may discuss, read, email or sign documents about moving, selling, buying, leasing, renovating or investing in property on April 27, 28, and June 4. Some of you may buy beautiful furniture, homewares or artworks. The New Moon of April 29 suggests a new domestic chapter is likely soon. You may have to take care of an elderly or ill family member while other Aquarians could discover they’re pregnant on April 30, May 4 and June 9. You may start a new job which requires childcare arrangements or organise a cleaner to do regular housework tasks on April 30, May 6 and June 18. Business demands could intrude upon your family or alternatively, your boss may harshly question your dedication if your house purchase, renovation or development is interrupting you at the office too much on May 3, 11, and June 13. Trying to juggle family members and your superiors will requite delicate handling.
PISCES
Don’t make hard and fast decisions about property transactions on May 11, 29 and June 30 because you won’t be thinking straight. That so-called “renovator’s dream” could end up The Nightmare on Elm Street. You may join the family firm, work (more) from home, set up your office in your house, hire home-based employees, or organise a household roster on May 13, 31 and July 13. You could buy, sell, lease, design, renovate or invest in property on May 15, 18, June 6 and July 7. The New Moon of May 28 suggests you could be moving, changing flatmates or welcoming the pitter-patter of little (furry) feet but you might find your plans get delayed from June 18-July 2 while Mercury is retrograde. You may play email, phone call, text message or meeting tag with vendors, buyers, landlords, tenants, real estate agents, tradies or council officials then.
You can access the original article here
Festive Finances!
The article below appeared today in the news.com.au real estate section and is a timely reminder of the financial drain that some people can find themselves in over the Christmas period. When it comes to weighing up between the many costs of surviving Christmas or paying rent on time the landlord can often be the loser ending up with a nasty new year surprise! The key lesson mentioned in the article and one that I fully support is to ensure that you utilise the services of a professional property manager, they are are worth every cent when something goes wrong and they know exactly what to do about it, after all, that’s their specialty. Read on below or click here to go to the original article –
THE festive season is a danger period for property investors, and real estate experts are warning landlords to make sure they don’t suffer a financial hit from tardy tenants.
The general manager of Harris Property Management, Suzie Hamilton-Flanagan, says rental arrears can jump by more than 20 per cent over Christmas as tenants find other areas to spend money. ‘Sometimes rent is the last thing on their list,” she says. ‘Landlords managing their own properties need to make sure they are on top of this from the start, or they risk paying for their tenant’s good cheer.” Some landlord insurance policies provide cover for tenants who fail to pay, but Hamilton-Flanagan says if a landlord fails to go through the correct processes when dealing with late-paying tenants, ‘an insurance payout for a late rental claim can be impacted”. She says one suggestion during December may be to send the tenants a card, perhaps with a small gift, gently reminding them of payment dates during the busy Christmas season. ‘Create a relationship with the tenant and treat people as you would want to be treated. The mentality of a tenant is they are paying you this money and they want bang for their buck – they want the property maintained, repaired and the landlord to be respectful.” The first step in preventing late payment is to select the right tenant from the start, Hamilton-Flanagan says, which involves checking a tenant’s payment history by contacting previous agents and landlords.
Carolyn Majda, executive manager at landlord insurer Terri Scheer Insurance, says one of the best ways to protect yourself is to use a professional property manager. ‘That way you have someone who is looking after the rent religiously,” she says. Majda says a lot of property managers send out pre-Christmas newsletters with rental payment dates included. ‘It’s nice to send a Christmas card – we all lose track of dates around this time of the year.” She says investors who manage a property themselves need to be on top of any late payments immediately. ‘Don’t let it start accruing. The longer time goes, the bigger the problem for both landlord and tenant,” Majda says.’Even if it is a day late, be on top of it.’It’s also really important that you take out insurance at the start of a tenancy, before you have people in there, because if they are behind in their rent it can create some issues – it’s almost like having a car accident and then insuring your car.”
The original version of this article appears here
Horrifié! A landlord’s worst nightmare
In the news this week we’ve seen a report about a French tenant who decided to let loose in his landlord’s apartment after his landlord refused to return his $2,500 deposit. Not only did he do some major damage wielding a sledgehammer but cleverly (read: not clever at all) recorded himself doing the damage and then posted it on YouTube. The video is titled “vengeance d’un locataire” (revenge of a tenant) and shows him doing his finest work to the bathroom toilet, mirror and shower before moving into the living area to do a bit more impromptu demolition. Whilst we don’t know the background story to this situation, the response by the tenant might be seen by some to be a touch extreme. I think we can also safely guess that not only will he now not be getting his deposit back, but with video evidence plastered all over the internet this outburst is likely to end up costing him a whole lot more than $2,500.
Some lessons to learn from this example –
- Get a professional property manager to take care of all things to do with rent and bond payment.
- Make sure you always have current landlord’s insurance with a good amount of cover.
- Don’t leave sledgehammers around near a disgruntled tenant.
Doing the sums #2
I had some great responses to my post on October 13th about doing the sums when looking at investment properties and how important (and sometimes surprising) it is to get an idea of how much it will cost you to start and also to maintain. I’m always keeping an eye out for great examples so will post them when I come across something which shows a simple and affordable approach.
This property is a simple one bedroom unit in a complex of 12 units. It’s in a well established suburban area which is well regarded and in the same city as my first example. The area again demonstrates good infrastructure and is close to necessary facilities (shops, hospitals, schools etc).
On face value the unit appears to be well maintained but of course you would want to inspect not only the property itself but also look around the complex and the units around it. It is for sale for $142,500 and is returning a healthy $190/week. Let’s say that it ticks the boxes as far as the quality and standard of the complex and we manage to get a realistic offer of $140k accepted. What do the figures look like and is it affordable?
| How Much Will It Cost Me? | ||
| Property Price – $140,000 | Deposit (10%) – $14000 | Mortgage – $126,000 |
| Stamp Duty – $3470 | Interest Rate – 4.69% | |
| Conveyancing – $800 | ||
| Mortgage Insurance – $1800 | ||
| Total Costs (estimated) | $20070 |
Once again, these are the main costs with a deposit of 10%, if you can get to 20% for a deposit the mortgage insurance disappears and the total estimated cost would then be $32,270. So you could get this property for an initial outlay of between $20,070 and $32,270. This is all great but let’s once again look at how you maintain this. Rather than being overly conservative, this time I’ve gone with one of the better interest rates that I can find at the moment of 4.69%
| How Much Will It Cost To Service? | ||
| Loan Amount – $126,000/$112,000 |
Council Rates – $900 | Rent Income – $190/wk |
| Interest Rate – 4.69% | Water Rates – $900 | |
| Repayments/Wk (10% deposit) – $150.50 |
Body Corp – $800 | |
| Repayments/Wk (20% deposit) – $134.00 |
Property Mgmt. – $700 | |
| Yearly Repayments – $7826/6968 | Yearly Costs – $3300 | Rent/Yr – $9880 |
For a 1 bedroom unit the rent is very good and in a tight rental market this is becoming increasingly realistic. If you started with the 10% deposit you would find yourself out of pocket $1246 a year (or $24 a week). If you managed to pull together the 20% deposit you would be out of pocket $388 a year or less than $7.50 a week! A dollar a day really is loose change! Come tax time and factoring in some depreciation I’d think it could even be likely to end up being cost neutral.
Again remember this is a ‘one moment in time’ scenario and things can change, but even with some unforeseen expenses and the odd maintenance request a property like this has the potential to be a great starter for an investment portfolio!
Renovating Housing Policy
The Grattan Institute was formed in 2008 as an ‘independent think tank’ intended to develop public policy for Australia. This week there has been a lot of media commentary about a publication by the institute addressing housing policy in Australia. Renovating Housing Policy was published on October 20th and states:
This report looks at our complex housing system as a whole. By quantifying the major government outlays on the private housing system, it reveals the cumulative impact of housing policies both on individual choices of where and how to live, and on productivity and inequality in our cities.
The initial part of the report examines some fascinating trends and demographics related to home ownership in Australia, there is interesting data presented on the change in home ownership rates over the last 100 years as well as examination of current ownership rates by age as well as earnings. It then continues on to look at renting in Australia and it is from here that the information presented starts to become increasingly relevant to property investors. There is also significant focus within the report looking at the different government support provided to property owners versus those who rent a home. The report states that support for residential property investors costs $6.8 billion a year,or about $4,500 per year for each investor household. If you want to skip to the really interesting part though I’d suggest heading straight to page 36 where the recommendations commence. There are three main recommendations looking at stamp duty and property tax, reform of tax incentives for property investment and also reform of the private rental sector.
Whilst I certainly don’t agree with all of the proposals there appears to be some strong evidence available to support the statements being put forward. What I have found interesting is the way that it has been portrayed in a range of media and particularly the comments that have been posted by readers. I’d be eager to hear people’s thoughts on this as it would have a significant impact on property investors should these recommendations be put into practice. Don’t be afraid to comment below! Click here to read the article.
You can also check out some of the following media articles, don’t forget to check the reader’s comments, it’s certainly stirred up some debate!
The value of Landlord’s Insurance
One thing that property investors can sometimes discover the hard way is the importance of ensuring that they have adequate landlord’s insurance on their investment properties. When things are going well and you have a great tenant who looks after the property and pays their rent on time it can be an easy thing to overlook and can often be avoided because of additional cost. I’ve discovered through personal experience and listening to the experiences of others that it is an essential component in every investor’s bag of tricks.
Yes it is an additional expense (although if you do your research you can get some good deals) but it is worth its weight in gold if things go pear-shaped (and it’s tax deductible). One of the other traps that property investors can fall into is assuming that the building insurance on the property automatically covers them for landlord and tenant associated issues, this is not always (and often rarely) the case. Make sure that you are familiar with what your building policy does and does not cover. The benefits of landlord’s insurance come into their own if there are issues with rental payment defaults and malicious damage to the premises. Give it some thought, what expenses would I have if a tenant doesn’t pay their rent, intentionally damages the property or even if they move out and leave the house full of their unwanted junk? It could really add up. Then consider, what happens if there ends up being a couch on the roof, old mattresses up a tree and old underwear in the garden…the mind boggles but it does happen! To see an example of when you would definitely want to ensure your landlord’s insurance policy was up to date (although somewhat extreme) check out the recent example below from Melbourne.
Video via 7 news
Landlordism 