PROPERTY MANAGEMENT NEWSLETTER THE SERVICE OF A TERMINATION NOTICE The recommendation by your property manager to serve a termination notice upon your tenant for a breach of the lease agreement such as rent arrears should be taken as a business
BETTER BUDGETING FOR YOUR INVESTMENT PROPERTY Like any form investment there is an element of risk and investing in property is no different. Whilst historically markets always show capital appreciation, property investors often don’t view their property as an investment through not paying enough attention to detailed budgeting and allowing for various contingencies that can arise during the course of owning an investment property.
decision by each property investor.
The first step in this process is to appoint a quantity surveyor to undertake a tax depreciation
Despite our best efforts, sometimes tenants
inspection on your property. Step two is realising that your property doesn’t have to be new in order
fail to pay rent for a variety of reasons.
to gain the maximum advantage of having a tax depreciation schedule done.
There are minimum statutory time frames that
Not only will the tax depreciation schedule enable you to determine the additional tax deductions
your property manager must abide by before
that you can make on your property, thus saving you real tax dollars, the tax depreciation schedule
serving a termination notice upon a tenant.
will give you a guide as to the value and life span of tax deductible items within your property.
In the case of rent arrears, we strongly
This will then assist you in creating a budget for your investment property. Follow the guide provided
urge you to follow your property manager’s
in the schedule and put aside funds for the replacement of all the items listed in the schedule.
recommendation to serve the termination notice as the recommendation is being made to protect your interests in the event that the tenant fails to pay rent. All too often investors instruct us not to serve the termination notice in the hope that the tenant pays rent and negating the chance
For example an allowance should be made for the replacement of a hot water system over five years, floor and window coverings over 7 years, kitchen appliances such as dishwasher over 5 years, stove/ oven over 8 years plus an allowance for painting and kitchen and bathroom refurbishment. In addition to the physical attributes of your property it is wise to factor in a loss of rental income of about 2.5 weeks per year during vacancy and an increase in strata levy contributions and insurance premiums each year by CPI.
that the tenant may vacate. Some tenants
By following the above and creating a budgeting plan you will be well placed to ensure that your
are appreciative of the opportunity, however
investment property will not be a drain on your personal funds when the need arises.
we recommend that the notice be served as a business decision. Upon the service of the termination notice
CHECK YOUR INVESTMENT PROPERTY INSURANCE
we will inform the tenant why the notice has been served and let them know if the rent is
We have found that a number of our clients have effected insurance on their investment property
paid in full then the notice will not be effective,
via their bank’s insurance arm on the understanding that this policy is a landlord protection policy.
however if payment is not received we will
If you have such insurance, please check the policy wording as it may not cover you for loss of rent,
enforce the notice
legal liability and malicious damage. Whilst doing so check the excess in the event of a claim as a large volume of insurers have separate excesses for loss of rent, cleaning and malicious damage. By reviewing your policy you could be saving money and anxiety in the event of a claim.
January 2016
Investment properties for sale
Engadine
FOR SALE
1/1084 Old Princes Highway $630,000 - $660,000
Oyster Bay
FOR SALE
1/12 Lenna Place $750,000 - $790,000
McGrath Sutherland Shire 8536 3444 | mcgrath.com.au
$885,000
SOLD
$1,005,000
11/4 Madeira Street Sylvania
FOR SALE
24/81 Bath Road $735,000 - $765,000
Jannali
SOLD 18/38 Hume Road Cronulla
23/124 Oyster Bay Road $640,000 - $670,000
Kirrawee
Recent Sales
SOLD
$800,050
5/21 Arthur Avenue Cronulla
FOR SALE
SOLD 3/168 The Boulevarde Miranda
$788,000