SECRETS OF MILLION - D O L L A R -
PROPERTY INVESTORS A S S E TAG E N T S , A U S T R A L I A www.assetagents.com.au
DEAR FELLOW PROPERTY INVESTOR, I want to start with saying congratulations!
Congratulations on requesting your FREE “Property Investors Report: How To Protect Your Most Precious Asset While Growing It In This Current Unpredictable Economy”.
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Landlord Report Reveals...
“SMART INSIDER SECRETS THAT HELP KEEP MONEY IN YOUR POCKET WHILE PROTECTING YOUR MOST PRECIOUS ASSET!”
This resource is going to be invaluable to your success over the next 12 months, as it will leave you with advice that will last a lifetime. Its contents have been pulled from years of solid industry experience. And its sole purpose is to help you make, and keep, as much money as you can from your property investments. This handbook has been broken down into 3 main sections... Section 1: Protecting your precious investment - here you will discover 5 ways to minimize the risk of your investment. Section 2: Growing your investment - this section is all about easy, effective and simple things that you must know to grow your investment.
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Section 3: Hot Questions - In this last section I’ll cover the most commonly asked questions I get from property investors. As you can see, there is a goldmine of information here. If at any time while reading this handbook you have any questions, simply send me an email to byron.miller@assetagents.com.au and I’ll be happy to help out.
To your investment success, Byron Miller
PS: Now, just to make things very clear. I am not a lawyer. And I am not allowed to give legal advice. All that I am sharing on the pages that follow is my understanding of the law. Before you make any decisions, please seek professional legal advice.
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Section 1:
PROTECTING YOUR INVESTMENT You spent months researching the right area to invest in. Spent weeks searching for the right property. And you have invested tens of thousands, if not hundreds of thousands of your hard earned money into the deal. So the last thing you want is to get the stomach sinking phone call that your property has been trashed, and that insurance won’t cover it... And that is exactly what this first section of the Property Investors Handbook is all about. Protecting your investment. In this section you will learn about 5 key ways to safeguard your property. These are... •• Understanding basic rental law •• The importance insurance
of
correct
•• Why keeping zero vacancy’s is vital •• How regular inspections will save you thousands So turn to the next page, and let’s get straight into it. UNDERSTANDING BASIC RENTAL LAW It doesn’t matter if you are a brand new property investor or if you have been investing for years. It is essential that you understand the basics of the
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rental law. So here is a quick overview of the law. Both your rights as a landlord and also the tenants’ rights. The tenants have certain rights and responsibilities during a tenancy agreement which include: •• Paying rent on time •• Keeping the property clean, tidy and undamaged •• Keeping to the terms of your tenancy agreement •• Respecting your neighbours right to peace and quiet While these might seem quite simple it is essential that they be met at all times. If a tenant falls behind in their rent or if they damage your property it can cause a major upset to the long-term value of your investment. Now your turn. Below are your rights and obligations as a landlord: •• You must respect tenants privacy - If you need to enter the property for any reason, make sure you follow the correct procedure and lodge the right paper work. If you’re
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not sure what this entails, ask your property manager. •• Carry out repairs and maintenance - It is your responsibility to keep the property well maintained. •• Meet all health and safety laws - This is essential. Whether it is rusty nails sticking up from the floorboard. Or possibly faulty wiring. It is your responsibility to make the property safe. •• Lodge the bond with the RTA This helps with any disputes that may occur, and it is a legal requirement. If you have any more in-depth questions about the rental law, then simply give us a call on 07 5315 5411 and we will happily clarify any concerns you may have. THE IMPORTANCE OF CORRECT INSURANCE Owning your own investment property can be as nerve racking as it is rewarding. What if the tenants damage your property? What if they pay rent late? What if you can’t get tenants for months on end?
building insurance. The best policies will eliminate almost all of your risk as a landlord, and they will ensure you sleep easy at night. Here are some pointers to help you choose a good policy. Look for the ones that can protect against: •• Accidental damage to your building and contents caused by tenants •• Malicious damage to your building and contents caused by tenants •• Theft of building and contents items by your tenant •• Damage to contents from events including flood, storm and water damage. •• Damage caused by pets Plus, you also want to have a look over how they protect you in the case of lost rent. Make sure your policy covers... •• Absconding tenants •• Evicted tenants •• Property becoming untenantable due to an insured event •• Prevention of access
Well that is why Landlord insurance is so important.
•• Hardship
There are many insurance products out there that have been specifically designed to protect you. They protect you from risks caused by having tenants in your property, which mightn’t be covered by your ordinary
Lastly, make sure that you have building, home and contents insurance as well.
•• Re-letting expenses that exceed the tenant’s bond.
This will protect you against major
structural issues such as fire or flood damage. If you pay body corporate fees, then this is usually included. WHY KEEPING ZERO VACANCIES IS VITAL For the long-term success of your investment property, it is vital that your vacancies are kept as low as possible. And ideally that you don’t have vacancies. There are 2 main reasons for this. The first and most obvious reason is lost rental income. For every week that your property stay’s un-rented, it is a large chunk of your yearly income lost. The second reason is to ensure you get quality tenants. When your property is vacant for extended periods of time it is quite tempting to compromise on the quality of your tenants. It gets very tempting to just “Get someone to pay the rent” in order to cover your costs, but the long term effects can be huge. By being on the back foot, and accepting someone whose not your ideal tenant you can end up with all sorts of problems. From late rent payments right through to damage to the property. Choosing the wrong tenants can be very costly. Our property manager have been
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trained on how to keep your vacancies as low as possible. Through a combination of early advertising and well-built systems, using an Asset Agents property manager can save you countless headaches and dollars. To find out more, simply call us on 07 5315 5411. HOW REGULAR INSPECTIONS WILL SAVE YOU THOUSANDS. It is quite common for a property manager to only inspect your property once or twice a year. To most, it’s just “Busy work”.They don’t get paid extra for doing it, so most simply won’t. But the thing is. If you let your property go for 6-12 months without inspecting it you might be in for a few nasty surprises. In fact, there are 3 reasons why you need to inspect your property regularly. 1. To keep the tenants on their toes - Most people keep a property just clean enough to live in. But very few will go over and above to ensure that it is clean enough to prevent premature aging. By doing regular inspections your tenants will get in the habit of doing the extra cleaning jobs that will keep your property in good condition for years to come. 2. Detect and damage before it gets bad - Has the tenant put a small hole in the wall? Or perhaps they
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have stained the carpet? If you catch these while they are small damages they are a lot easier to get fixed rather than having to get the carpet replaced. 3. You can keep an eye on aintenance - Over time there will be things that will simply wear out that you will need to replace. It could be leaky tap seals, loose doorknobs or fading paint. By inspecting regularly you can get these odd jobs done before they pile up.
We recommend that you get your property inspected every 3 months. This will give the tenant enough time to feel like you aren’t intruding. And it will be regularly enough for you to keep an eye on your investment. All of our property managers keep to a strict inspection routine which ensures that your property stays in good repair. To find out more simply give us a call n 07 5315 5411.
Section 2:
GROWING YOUR INVESTMENT When you first got into property investment the goal was to make money right? Well did you know that there are many small things that you can do in regards to how you manage your property that can help boost your results quickly? In this section of your handbook, we are going to explore what these options are. As well as how you can get them under way quickly. So let’s get straight into it. WHY YOU NEED A QUANTITY SURVEYOR: Is part of your investing strategy to claim property expenses against your tax? If so, then what you’re about to discover will excite you. If you have not yet had your property surveyed you would be missing out on a substantial tax deduction on the depreciation. You see, the job of a quantity surveyor is to go through your investment property, and create a depreciation schedule. This is essentially a list of every item in the house that will lose value over time. For example, each year you can
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claim a percentage of the value of all of the light switches, fans, aircon, carpets, ovens etc as deprecation. If you’re not too familiar, depreciation is a “Noncash” expense. Which means that it really only exists in your books, it’s not money out of your pocket each year. Plus the cost to have a property quantity surveyed will vary however it is a tax deduction too. And whatever the charge for the survey, you will probably get that back plus more on the first years tax deductions. THE BENEFITS OF THE RIGHT ACCOUNTANT: Many investors will get the same accountant who does their income tax to also look after their property. It’s easy. You don’t need to find anyone new. And besides, they do a good job right? Wrong. Not all accountants are equal. And not every accountant specialises in property. It’s actually surprising how much money a property accountant can save you on additional tax deductions. Their knowledge on the correct structure and what deductions you should claim will easily cover their expense.
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If you’re not sure which accountant is suited to investment property, then simply give us a call and we will put you in touch with one in your local area. USING INTEREST RATES TO BOOST YOUR INCOME Interest payments are the single biggest expense you have as a property investor. So it makes sense to get them as low as possible. Let me ask you a question. When was the last time you called your bank and asked for a decrease in the interest rate you are paying? Even the smallest decrease could save you hundreds of dollars a year. But in order to get the best deal, it might be worth shopping around. The loan market is always changing, and you might be surprised how much of a better deal you can get if you look around. The easiest way to do this is to get in touch with a local mortgage broker. They will do all the research and shopping around for you. And the best part, you don’t pay them a cent. Another option is locking in a fixed rate for 3 to 5 years. Today interest rates are at an all time low, and it’s very possible that they might start going up again in the near future. So there has
never been a better time to lock in a fixed rate. Currently fixed rate are: 3 year fixed- 5.09% 5 year fixed - 5.69% And if you even want to lock in a great rate for 10 years, there are companies that are doing this for only 6.69%! HOW TO ADD AN EXTRA $780 A YEAR TO YOUR POCKET EACH YEAR. How often does your property manager increase the weekly rent on your property? Ideally they need to be doing it every time the lease is renewed. Rent is constantly rising around the country, so it is only fair that you take your share of these increases. How much to increase your rent by will depend on the demand in your area as well as other considerations such as the condition of the property. It is much smarter for you to increase your rent by $10-$15 dollars each new lease, rather than wait a few years and get an $80 hike. Plus, by increasing your rent by just $15 a week you will get an easy extra $780 in your pocket. To find out if the market in your local area is strong enough to handle frequent rent increases, simply give me a call on 07 5315 5411.
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RULES OF GARDEN MAINTENANCE The first impression that your property has is one of the most important factors determining its value. So it is essential that you fully understand garden maintenance.
•• If you have got large gardens - Consider having a regular gardener come and take care of them. You can even include this in the rent. HOW MAINTAINING YOUR PROPERTY CAN BE WORTH THOUSANDS TO YOU.
Now by law your tenants are responsible for maintaining your gardens. But if they are also paying for water, it’s very unlikely that they will water it and give it the attention that it needs.
The quickest way to devalue your property is to let it get in bad repair. By simply missing a few small repair jobs every few months, you will soon end up with a bill of thousands. So it certainly pays to stay on top of things.
A scruffy, dry, un-maintained garden will dramatically affect the appeal of your property. And as a result it will devalue and also affect your potential rent.
Plus, if your tenants see that you are happy to leave damage sit for months on end, they will assume that you don’t care much. And as a result, they too will take less care of your property.
Have a chat with your property manager about what you expect and what is realistic.
So when things break, get them fixed straight away.
HERE ARE SOME HANDY HINTS TO HELP WITH YOUR GARDEN MAINTENANCE: •• Supply basic tools - Most tenants won’t have a lawn mower, garden hose, or sprinklers. So invest a few hundred at Bunning’s to make sure they are equipped. •• Invest in an annual make over - It is smart to invest in a gardener once a year to go through and trim plants and re-mulch. This will give your gardens the best chance they have.
The tenants will expect it, and it will encourage them to stay longer if you look after the property. And by doing small regular repairs you will also be able to keep an eye on the condition of the carpets, and when it will need a new lick of paint. HOW TO CHOOSE THE RIGHT TENANTS. Choosing the right tenants is one of the toughest jobs as a landlord. But it is essential that you get it right. The right tenants will look after your
property like it is their own. And the wrong ones can ruin it, wearing things much sooner than they should. Although your property manager will handle most of the tenant screening, here is a short list of things to look for... •• Can they pay the rent? - Ask for copies of their pay stubs and call the employer directly to confirm their employment •• Run a credit check - See if they have a history of paying bills on time. •• Perform a rental background check - Use a reputable service such as TICA.com.au to find out if they have been blacklisted as a “Bad Tenant” •• Check out their rental history Talk to at least 2 previous landlords. This will help you discover if they were problem tenants. If you just talk to their current landlord, they might hide the truth to get them off their hands. •• Do they have a consistent lifestyle? - You want tenants who will stay in one place, and one job for a long time. If they swap things up frequently, this might be bad news. •• Look for a maximum of two people per bedroom - Overcrowding your property can lead to increased wear and tear. By following these few tips, and by communicating with your property manager you will dramatically increase
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your chances of finding good, reliable and trustworthy tenants. WHY YEARLY VALUATIONS WILL FAST TRACK YOUR SUCCESS. When was the last time you got your property re-valued? If it was more than 12 months ago, then you should get it done soon here’s why... By knowing what your property is worth, and by tracking its increases in value, you can more accurately plan for your future. You can see when you have new equity available which you could use to buy another investment property. By rolling your equity into new properties, you will create a snowball effect. And in only a few years you could turn your single property, into a powerful portfolio. Also ask your manager to supply you with a Comparative Market Analysis once a month. This will let you see what other property’s similar to yours are actually selling for at any point in time. HOW SMALL IMPROVEMENTS CAN BOOST YOUR RETURN. Every little improvement that you make on your property can add up to a nice boost in your return.
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Small things like adding an air conditioner can be affordable and they will attract a better quality tenant. In fact, you can even contact your existing tenants and see if they will pay an extra $10-20 a week if you install air con. This can cover up to 40% of the cost within the first year. Even adding ceiling fans can help. Extra bedrooms are like gold if you can add them. And everyone loves an
Section 3:
additional carport. All of these small improvements will increase your rent as well as the value of your property. Just make sure whatever you get done gets added to your quantity survey so you can claim the right deductions. If you want further advice on what improvements are best suited to your home, then give us a call on 07 5315 5411.
HOT QUESTIONS: In this section you will find the questions that we get asked the most from property investors. So have a read through, you might be surprised how much you learn.
•• The rental premises are individually metered (or water is delivered by vehicle), and
Q: What are the rules around pets?
•• The tenancy agreement states that the tenant must pay for water consumption.
A: A tenant may only keep pets n the premises if the tenancy agreement states that pets are allowed. •• It may also state the number and type of pets that may be kept and whether the pet can be kept inside or outside the house. •• You should think about whether the property has enough room, fencing etc for a pet and whether the pet could cause damage to the property e.g. screens or lawn damage. •• Flea spraying is required if pets are allowed. This should be stated on the tenancy agreement. •• A separate pet bond cannot be charged. Q: Can i charge tenants for water? A: You are allowed to pass on the full water consumption charges (including bulk water charges) to the tenants provided all the minimum criteria have been met. Lessors can pass on full charges to tenants of: A S S E TAG E N T S 1 4 I AU S T R A L I A
•• The rental premises are water efficient, and
For more information, contact your property manager. Q: What happens if my tenant pays rent late? A: It should be your property manager’s policy to check rental arrears on a daily basis. In accordance with the Residential Tenancies & Rooming Accommodation Act 2008, all tenants over 3 days in arrears, should be issued with a reminder letter. This notice allows 7 days for payment and you should be notified in writing that this has occurred. Should the tenant fail to rectify the outstanding money, court proceedings should then commence with your approval. Q: Once my tenant has paid, how quickly can i receive the funds? A: It’s common for most property managers to pay you monthly either on the 15th or 30th.
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Q: Who is maintenance?
responsible
for
A: Under the Residential Tenancies & Rooming Accommodation Act 2008, the owner is responsible to ensure that the property is in a good and habitable condition and to keep all appliances
in good working order (e.g. hot water systems, stoves, air-conditioners etc) The tenant is responsible to maintain the property as it was at the commencement of this agreement and in accordance with the property condition report (fair wear and tear excepted).
FINAL WORD. I hope that you have found this Handbook useful. If for any reason you have any questions about anything property investing related, please feel free to give one of our helpful Property Managers a call. They have all got stacks of industry experience, so they can help you out. Q: How long will it take to find a tenant for my property? A: This really depends on the property manager. What you do need to do is start to market for a tenant before you need one. Once someone suitable is found it’s not practical for him or her to move in that very day. Q: What if i want to sell my property? A: You may list your property for sale at any time, keeping in mind a fixed term lease is ongoing with the property. Should you require any assistance or would like to have a current market appraisal carried out please contact your property manager. Q: Will the GST component of tax deductible expenses be allowed as a deduction?
A: Owners should seek qualified advice. Generally, however, the entire cost (including GST) will be allowed as a deduction for income tax purposes where you are not entitled to claim input tax credits.
Lastly. Thank for you the opportunity to help be a part of your property investing success. I look forward to hearing from you soon, All the best, Byron Miller
Q: Do i have to insure the property or does the tenant do that? A: As the owner, you are required to insure the building, contents (fixtures & fittings) and public liability. If the property is a Strata unit, the building insurance may be covered by the Body Corporate however, you should have contents insurance for the carpets, blinds, curtains, light fittings and any appliances inside the unit. Tenants are responsible for their own personal belongings but not for the landlord’s.
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THE SECURITY OF A GUARANTEE A management guarantee means that choosing your property manager involves no risk. Performance Minimum Standard Answer emails By end of business day or if received late in day, at the beginning of the next day Answer return phone calls By end of business day or if received late in day, at the beginning of the next day Processing Applications for Tenancy Within 48 hours Tenant Selection Personal interview with applicants to ensure suitability Handling non urgent maintenance requests By end of business day or at beginning of next day Handling emergency maintenance Immediately or within 1 hour (depending on priority). Client to be contacted immediately verbally or written
Bond Inspection after keys handed in Within 48 business hours Refund of Rental Bond 3 business days unless there are outstanding issues to be resolved with the Tenant Written rental appraisals Completed within 24 hours of request Routine Inspections Minimum 3 per annum including documented suggestions for capital growth and income improvement (one page Property Improvement Report) Inspection Report sent to Client Within 48 hours of inspection Maintenance from Routine inspection Contractors arranged within 48 hours of instructions received Rent Disbursement into Client account Within 3 business days of period end date
Account Statement Availability Online within 24 hours of Rent Disbursement Annual Portfolio Review Within 10 business days of settlement anniversary date
If the minimum performance standards outlined above are not being met by our property management team, you will receive one month free management service in the calendar month following the date of the written complaint. All complaints and disputes are to be in writing.
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If you you’re not convinced that we provided a superior level of service in the first 6 months we will return our service fees from that period back to you.
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PREPARED ON 11/03/2014 BY ASSET AGENTS. © PROPERTY DATA SOLUTIONS PTY LTD 2014 (PRICEFINDER.COM.AU) The materials provided are distributed as an information source only. © The State of Queensland (Dept. of Environment and Resource Management) November/2014. Based on data provided with the permission of the Dept. of Environment and Resource Management: (QVAS) November/2014. The Dept. of Environment and Resource Management makes no representations or warranties about accuracy, reliability, completeness or suitability of the data for any particular purpose and disclaims all responsibility and all liability (including without limitation, liability in negligence) for all expenses, losses, damages (including indirect or consequential damage) and costs which might be incurred as a result of the data being inaccurate or incomplete in any way and for any reason. © Asset Agents, All Rights Reserved