If you own an investment property, you’ll probably agree that, in the long-term, two things are likely to happen. One, if you stick with it and use your common sense you’ll end up reasonably wealthy. And two, there are times when the whole thing can drive you to the brink of insanity, when you feel like holding your hands up and wishing the whole thing would just go away. Here at Prudential Real Estate Sydney we know how you feel. Most of our staff have been or are currently landlords, and we know how annoying, how upset you can get when things go wrong. We hope these sanity-saving tips will provide a few insights which will help…
1. Insure against Loss or Damage
Many landlords are not aware of the fact they cannot insure against things such as defaulting on their obligations to pay rent or malicious damage caused by tenants. This type of insurance is generally referred to as Landlord Insurance. There are only two companies in Australia which carry this policy and the costs can vary. If peace of mind only costs $6.00 a week then most of us would want to apply.
2. We do more than you think
When you employ Prudential Real Estate to manage your rental property in Sydney, we do much more than just find you a tenant. We pay all your outgoings for you, inspect the property at regular intervals, check tenancy databases to ensure a great tenant and keep you informed about the status of your property at all times.
3. Know where your money goes
Every month Prudential Real Estate sends an itemized summary of transactions relating to your rental property. Smart property investors make it their business to carefully scrutinize their monthly summary. They should understand every line and dollar amount. If you have any questions, you can call us and speak with a member of our Property Management department whom would love to explain any aspect of the summary.
4. What is the value of Professional Advice?
Sometimes tenants fail to pay the rent – this is a fact of life. When a tenant fails to pay rent, it is the agents’ job to ensure things are corrected as quickly as possible. Smart investors know their agents are the best in this circumstances and issuing a termination notice if required may be necessary. Your agent will let you know the best course of action.
5. Maintain your own privacy
One of the most common mistakes made by first-time property investors is giving their home phone number to their new tenant and saying “call me if anything goes wrong”. Your employed your real estate agent for a reason – let us do our job – we do it well and it will prevent you from receiving repair requests late at night.
6. Think ahead
A property manager’s job is to manage investment properties for their clients. This means a great deal of their day is spent out of the office inspecting properties. They are rarely in the office. Smart property investors in Sydney are aware of this and know the best way to see their property officer or manager is to make an appointment in advance rather than simply turn up at the office.
7. New technology means instant cash
We all know how banking has changed in recent years. These changes have radically effected how high-volume banking users like real estate agents conduct their business. Today, we bank our landlord’s money prior to 3:00pm one day and by 6:00am the following morning the money is cleared funds in our Landlord’s bank account. Smart investors understand the value of new technology and appreciate having their money as cash within one day.
8. Let the tax man pay off your bad debts
Every investment has its risks and property is no different. If you own an investment property there will probably come a time when your tenant leaves owing you money. If you have Landlord Insurance, this type of circumstance would be covered under your policy. If you don’t have Landlord Insurance, you will be stuck with a debt. Some Landlords, despite their agent’s best advice, insist on chasing the tenant and the debt to the ends of the earth – including the use of debt-collectors and appearances in District Court to secure a judgement against the tenant.
Sometimes a large debt is worth chasing. But generally, chasing a debt that amounts to the equivalent of a couple of week’s rent is a waste of time and effort. You’re right, it doesn’t feel right to let the tenant “get away with it”, but in the end it’s often the wise choice. Remember that a loss such as this is a tax deduction. And sometimes it’s wiser to let the tax man pick up this debt rather than waste time and effort chasing money you have little chance of recovering.
9. Play smart with regular maintenance
Every couple of months your property officer will conduct an inspection of your rental property. After the inspection thry will usually phone or write to you reporting on their findings. Sometimes they will report on an item that needs repairs. Smart property investors look after these items immediately. In the short term, if a repair becomes a problem, the tenant may refuse to pay rent until the repair is fixed. In the medium term, little repairs often develop into major problems and the cost escalates well beyond what it might have cost if you had acted as soon as the problem arose. In the long-term failing to correct repair and maintenance issues quickly causes your weekly rent level to decrease and the overall value of your property to decline. And suddenly your investment property is not such a great investment.
10. Get Expert Advice
Right now our federal Tax Act is literally hundreds and hundreds of pages long. And every year there are dozens of amendments to the Act. And more importantly to us is the fact that some parts of the Tax Act relate to rental properties. Smart property investors employ a good accountant – preferably an accountant with an interest in investment properties. A good accountant will ensure you obtain every possible advantage from owning a rental property. A good accountant can also assist you in legally reducing your weekly tax instalment (if you are a PAYG tax payer) by the correct use of a 221(d) deduction. If you are a property investor and your accountant has not discussed with you the idea of reducing your weekly tax by using a 221(d) deduction then be sure to call him or her tomorrow. Smart property investors rely on the advice of a good accountant to legally reduce their tax each year.
