Solutions For The Nervous Property Investor

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If you have just purchased your first investment property, the chances are that you may be daydreaming about your second or third and imagining yourself ten years down the track as a multi-millionaire property magnate. Before you get too far ahead of yourself, however, there are still some important decisions to be made if you wish to get the most value out of this new venture of yours.

Get This Wrong and it Costs you a Bundle

One decision you will be confronted with almost immediately is where to find a reliable tenant, and if you get this decision wrong, you could find yourself thousands of dollars out of pocket. The media is filled with stories of tenants wilfully causing property damage and not paying the rent. Delays in the legal process can allow lawfully evicted tenants to remain in the property for weeks or even months, placing an enormous financial burden on the owners, who must still pay the mortgage even though there is no income to offset it.

Professional Property Management is the Solution

Investors should not despair, however, as there is a solution. Professional property management by a reputable agency is not expensive, and their experienced team takes all possible steps to ensure that only reliable tenants are placed in client properties.

Take our agency, Bunbury Real Estate, as a typical example. We have been finding tenants for our clients’ properties for some time, and now have a reputation in the industry for delivering a “hassle free” service. If you are unsure if the rent you are expecting for your property is market value, we offer a free appraisal, giving you a realistic figure by comparing your property with others like yours in the target area.

Proven Management Systems

Once we become your property manager, we go to work using our proven management systems to select the best tenant. Typical steps are to check our database of already qualified prospective tenants for those that suit your property. If the best prospect is someone new to our agency, we then follow our selection process to ensure that the person meets our criteria.

Reference, Credit and ID Checks Essential

We always check references given by previous landlords, ask for identification and evidence of employment, as well as perform a routine credit check to ensure there are no outstanding credit issues. Once the tenant has passed our selection process, we make sure that all the required legal documents are correctly completed and lodged with the appropriate authorities.

If you want your property investment to keep earning with minimal involvement by you, getting a professional agency like ours to do the work for you is the obvious choice.

A Smooth Tenancy Starts With The Right Tenants

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Ownership of residential rental properties is a method favoured by many Australians, especially those with self-managed superannuation funds, to build investment portfolios. The secret to keeping these properties earning income is to keep them occupied by tenants who look after their rentals and pay the rent on time, every time.

 

Good Tenants Prevent Income and Property Loss for Owners

 

Owners whose properties are unoccupied for extended periods of time lose rental income, and their assets are at an increased risk of being vandalised. If this happens, they must pay for the repairs and face increased insurance premiums, which add to the cost of holding the property.

 

The best way to prevent this is to choose tenants carefully, and at Bunbury Real Estate, our rigorous process enables us to put forward quality tenants for the properties we manage on behalf of our owner clients. When a property is advertised for tenancy, we certainly don’t take the first applicant who comes along. There are several checks we do first before any decisions are made.

 

Background Checks of all Rental Applicants are Standard Practice

 

The most obvious check is that the tenant has the capacity to pay the rent. This is a similar process to taking out a loan in that we check their employment and credit status to identify any areas where there could be financial stress. We also ask for references from former rental agents or owners where the tenant has already established a relationship.

 

Some of our rental property owners accept the presence of pets, and it is becoming more popular for tenants who have pets to also present references on behalf of their furry family members. Well-trained pets are often better behaved than some humans, and we have owners who acknowledge and accept that.

 

Diligent Property Managers Identify Issues Early

 

Our property managers also like to establish a personal relationship with our tenants, where possible. Regular property inspections are an opportunity to identify issues that could become problems if they are not dealt with quickly. It could be something as simple as asking for the yard to be tidied if it looks a little unruly, to working with a good tenant who may be temporarily in arrears.

 

Matching Tenants with Their Ideal Dwelling is Important

 

Choosing the right tenant also involves matching an applicant with the type of dwelling that suits their needs. A good tenant is more likely to stay long term when they are living in their ideal location, in the type of property they were seeking. There will always be management problems if the tenant and the dwelling are not suited to each other.

 

Our professional property managers have many years of experience at keeping our properties tenanted with good people who turn a vacant dwelling into a home.

Helpful Hints To Getting The Right Agent For Your Property

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When you are looking for an agent to sell your property, or to find you a suitable place to buy or rent, choosing the right agent for your needs can be a bit like buying a lottery ticket. There is usually more than one real estate agency with an office in the local area, as well as multiple agencies dipping their toes in the market via the internet. How can you possibly sort through all the possibilities and choose the right one for you?

 

Professional Industry Body Generates Confidence

 

Fortunately, there is a solution. The Real Estate Institute of Western Australia (REIWA) is the peak body for all real estate professionals in the state. This member-owned organisation was established in 1918 and today it represents over 90% of the agencies operating in Western Australia. When you choose a member agency, there are protections and benefits that come with that choice.

 

As a member organisation of REIWA, we offer our clients a superlative level of service, specialist employees who work together as a team and in-depth knowledge of the local market. When you choose Bunbury Real Estate, you get the benefit of our membership and all that it entails.

 

Member Benefits – Access to Latest Market Information

 

Firstly, we have access to the latest market information and sales statistics. You can be confident that when we do an appraisal of your property and suggest a pricing structure, we are using up-to-date figures. This allows you to get the best possible price for your property relative to its style, condition and location.

 

Standardised Contract and Settlement Documentation

 

Secondly, the contracts and other documentation we use when we act for a client are all owned and controlled by the REIWA. This means your transaction is being conducted using industry-standard documents that have been thoroughly checked by legal experts, so there should be no complications during the sales process.

 

Ongoing Staff Training Keeps Agents Up-to-Date

 

Further benefits to clients are that our staff members are required to update their education continually through various training programs, so that we can provide you with better advice and service. For example, our agents would be expected to ask questions about things such as easements, access to private lanes, the existence of resumption notices and other issues. They are also up-to-date with legislative changes.

 

Maximum Exposure on the Web

 

We also list properties on the REIWA website as well as our own, giving our clients maximum exposure to interested buyers. To get the best possible result for your property, choose an agent that is an REIWA member and also who also has a presence in your area of interest. The combination of professional knowledge and ethics, as well as local detail, gives you the best chance for a top result.

Confused About What Is Important When Inspecting Property?

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If you are getting serious about buying property, you will be checking the internet for something in your price range, and considering the locations that best suit your needs. You may even have attended a few open homes and with many of them now staged to sell by professionals, you have come away confused about what is more important, the styling or the structure itself.

Don’t Be Fooled by Clever Styling

While styling will show a prospective buyer how to place their own furniture and accessories for maximum impact, it will not alert you to some of the more important and expensive issues you could overlook. A clever stylist knows how to draw the eye away from the least attractive parts of the property, so it is important to be aware of some of the potential pitfalls.

ID May Be Needed to Access an Open Home

Be prepared when attending an open home to provide identification. This is a security measure and many of our sellers ask us to do this. When we advertise open home inspections, we have a responsibility to the owners to take care of their property and possessions. At Bunbury Real Estate we take this seriously.

Be Practical – Look for Faults

If the property’s street appeal, overall size, number of rooms, amenities and car accommodation are what you are looking for, now is the time to be practical and look for obvious faults. Water leaks, for example, can be hard to spot, so check the cabinets in the wet areas for the smell of damp, or any signs of mould.

Unexpected Repairs Spoil the Enjoyment of the New Property

Bathroom and bedroom walls are another area where mould can build up, and often this just looks like a smudge on the paint work. Excessive mould should be cleaned professionally and the original cause investigated. It could be something that will need expensive repairs you were not expecting.

Check for sloping or bouncy floors that may mean stumps need replacing, and blisters or bubbles on paintwork that could indicate the presence of termites. Cracked walls may be evidence of subsidence. Building and pest inspections by experts will usually reveal the full extent of any rectification needed.

We sometimes have circumstances where a buyer is still keen on the property, and the seller is willing to adjust the price down to take account of repair costs.

Check the Location for Flood or Fire Risk

Be aware that even though the property and the location may look perfect now, it could be in a major flood area or even be a bushfire risk in the right climatic conditions. Buying property is a major financial commitment, so it is worth taking the time to check everything before deciding.

Real Estate Stories – Fact or Fiction

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Whether you are a buyer, seller or renter, it seems that everyone has an opinion about real estate. As a result, there are more myths attached to the real estate industry than Stonehenge or the Great Pyramid of Giza. Are they doorways to an alternative universe or evidence of alien visitations? We can’t answer those questions, but we do know that many real estate myths are easily busted with some reliable information.

I Don’t Need an Agent – I Have the Internet

One myth created by the internet is that you don’t need an agent to sell your home. Listing your property on the internet is easy, but the agent’s role is more complex than uploading a photo of your house. The agent is the property market expert for your location. Agents know which properties have changed hands for what price, how long each property was on the market before it sold, and what buyers are looking for in the area.

This information is critical for the seller, especially one who has an inflated price expectation. At Bunbury Real Estate, our agents advise clients on realistic prices that will attract buyers so their properties will sell in the average time for that location. We also supervise inspections, keep contact details of who attended and they negotiate the best price and settlement terms for our client, the seller.

Why Pay for Print Advertising? It’s all Online These Days

Online advertising costs little and reaches a huge audience, but in real estate, this is not as effective as it first seems. Firstly, online searches are very specific, so if buyers don’t filter searches correctly, your property will be competing against thousands of irrelevant searches. Secondly, in most housing markets, the majority of buyers are locals. Advertising in the local newspaper is worth the cost. In fact, only 27% of buyers look exclusively online, while 59% of buyers use both print and online to find their perfect property.

Before-sale Renovations Will Make our Property More Valuable

This is a very common misconception. Renovations may increase the value, but only if the seller does some research first. Get a realistic value of the property as it is, then work out what renovations will cost. Add the two together and then ask your agent if the new price is within market expectations.

Things like tidying, rubbish removal and maintenance will not usually get you any more money but they improve the presentation. Electrical, plumbing and structural changes must be done by experts and many buyers will expect to see the paperwork, so do-it-yourself could cost you a sale.

These are just a few of the common myths we regularly face as selling agents. There are many more, so if you are unsure about anything you have heard, just ask us.

How to Avoid Landlord Hassles

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We have all heard “bad tenant” horror stories of unpaid rent, wanton property damage, civil disturbance and a legal system that appears to favour tenants, however badly they behave. The due process needed to legally evict such tenants takes so long that by the time they have left, many rental properties are unliveable and their owners are thousands of dollars out of pocket.

Rogue Landlords Just as Much a Problem as Irresponsible Tenants

Not as well publicised but still a problem for genuine tenants, who abide by the terms of their rental agreements, are rogue landlords. Not content to allow their tenants “quiet enjoyment” of their dwelling, the busy-body landlord is constantly interfering in their lives. Unscheduled inspections, illegal entry, banning visitors and refusing to carry out repairs are just some of the problems experienced with difficult landlords.

No Concept of Quiet Enjoyment

These types of landlords cannot distance themselves from their rental property even though they have good tenants. Obsessive behaviour traits include parking outside the property at all hours, driving past several times a week or dropping in unannounced on a pretext. They are unwilling or unable to leave their tenants in reasonable peace, comfort and privacy, which are key aspects of quiet enjoyment, a legal term referred to in the Residential Tenancies Act.

Making Life Difficult for Good Tenants

Equally difficult are the landlords who don’t provide receipts for rental payments, or break an agreed term of the tenancy agreement. The most common example of this is giving permission for the tenant to keep a cat or dog at the premises, and then subsequently objecting once the tenant has moved in. Another example is fencing off part of the yard so the tenant cannot use it, even though they are paying for the use of the whole property.

Self-Managing can be Trouble for Tenants

For anyone looking for a rental property, these stories must seem frightening. To be fair, we must point out that these things are more likely to happen to tenants renting from owners who are self-managing their properties. Many of these owners do not have the full understanding or knowledge of the tenancy laws, or they choose to ignore them.

Use a Property Management Agency and Avoid all the Hassles

The best way to find a good landlord and a rental property that meets your needs is to use a property management agency like ours. The staff members at Bunbury Real Estate are experienced at looking after the interests of both our property owners and prospective tenants. Our rental systems address all the legal requirements, so when you sign a tenancy agreement with us, you can be assured that your rights are protected.

Housing Market Recovery Attracts Buyers

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As we are now halfway through 2017, the real estate picture in Western Australia is becoming much clearer. The experts are touting this as a transition year for the state, with most of the past reductions in housing prices now behind us. From an overall point of view, investors priced out of the market in the eastern states are looking here for opportunities. At the same time, local buyers are returning as confidence in the general economy also returns.

Low Prices Will Not Be Around Forever

If you have been sitting back looking at the market and wondering if you should step in or stay out, those who know the market well are advising to buy now, as prices will not stay at these levels for much longer. Whether you are a looking for a home to live in or for an investment property, the advice is to look for areas close to schools, transport, shopping and employment to get the best value for money.

Take Advantage of Incentives – They Won’t Be Around Forever

Prices are still low so housing is more affordable and interest rates remain at record lows. The First Home Owners Grant has been increased until the end of the year, and the income threshold for low deposit home loans has also increased, making it easier for first time buyers to enter the market.

Our Advice for First Home Buyers

This is all good news from our point of view as real estate agents. Here at Bunbury Real Estate we have done our best to assist our clients during the difficult times, and we are looking forward to doing the same in what we hope is a long-running, rising market. However, we do have some words of advice for new players, especially those looking for their first home to occupy.

While you are right to study the market in order to understand how it works, it is not the only thing you should be considering. If you were priced out of buying your dream home, but now it is within reach, there will be a certain amount of emotion involved in this search.

Be Clear About Why You Are Buying

Buying a home and buying an investment property are two different types of decisions. The investment property is a considered, calculated move to build wealth, while buying a home is putting down roots, establishing yourself in stable employment and perhaps preparing to start a family. It has a permanence about it that will most likely influence the type of property you are looking for.

Most people in the real estate industry believe that this is the right time to buy. With this opinion supported by market data, you should be asking, not about the market, but why are you buying? Once this is clear to you, we can help you find the right property for your needs.

Don’t Let Your Unoccupied Property Drain Your Finances

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If you have one or more investment properties, it is vital that you keep the vacancy rates as low as possible, given the locations and local market conditions. An unoccupied property is a drain on the financial resources of the owner, is more likely to be vandalised and becomes an insurance issue after a specified period.

Getting a Property Leased Quickly Needs Several Approaches

Finding quality tenants quickly in any kind of market is not something that can be achieved with only one strategy. It takes a concerted effort using several different approaches that, when combined, gives the owner the best possible chance of securing a long-term lease.

When we manage a property on behalf of a client, this is the approach we take. At Bunbury Real Estate we use current rental data to keep in touch with the local market and the latest marketing techniques to advertise our properties. We also keep our property owners up to date so their rental price expectations match the market conditions.

Use Accurate Data and Set Firm Targets

This means rental appraisals must be accurate. Data that is months old is not a true reflection of what is happening now. If, for example, the market is slowing down, we need to be advising our clients on current data, or they will be expecting a rental price that was achievable six months ago, but not now.

Getting a property occupied quickly also means setting targets and acting on them. The number of enquiries within the first couple of days the property is advertised is a reliable indicator of how much work will be required to get it leased. If there is little or no interest and we know the property is overpriced, we request a rent reduction from the owner. This usually brings in enough tenants for us to reference check and recommend.

Advertise Any Changes

This brings us to the next important change. There is little advantage in reducing the rent if we don’t advertise it. People who are watching the property but have not enquired may respond to this drop, so featuring it in our major advertising is critical.

Long Gaps Between Leases is a Cost

Our most important strategy is the relationship we have with the property owner. This includes giving good advice and finding reputable tenants. When an owner is reluctant to reduce the rental price, we remind them that every day the property is vacant is a cost to them. An extra $10 or $20 a week will be eaten up in costs if the property is not quickly leased.

If you are self-managing your investment property and losing money between leases, give us a call. We will use our knowledge to get your property leased quickly for the best price in any kind of market.

Serious Buyers Are Like Gold – Make Their Decision An Easy One

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Deciding to sell your property is always difficult, but if you are serious about attracting buyers, you must do several things to keep them interested in what you are offering. A serious seller must view everything from a buyer’s point of view and identify what is most likely to put them off a property and go elsewhere. This requires sellers to treat the event as a business transaction and keep their emotions in check.

We Know What Will Turn Buyers off an Inspection

Fortunately, we can help with this. After years of experience in handling property transactions, our staff members at Bunbury Real Estate have seen and heard almost everything to do with buying and selling real estate. We can spot what buyers will not like almost immediately, so we offer a few suggestions for sellers who are having trouble with the process.

Exterior Appearance Must be Attractive

The first thing that will keep buyers away is the overall appearance of the property. Everything must be clean and tidy, so make sure the lawns and gardens are well maintained. Wash the outside of the dwelling and paint anything that looks shabby. Remove any rubbish and clean out garages and sheds.

Clean and Tidy Inside with Everything Working

The inside must also be clean and tidy, and everything should be in working order. That means that air-conditioning units, ceiling fans, heaters, kitchen fixtures such as cooktops, ovens, range hoods, dishwashers, et cetera, must work if a curious buyer turns them on. There must be no leaking taps, toilets that don’t flush properly or other annoyances a seller may ignore that a buyer will not accept.

Get Rid of Those Awful Smells

Are there any unpleasant smells inside the dwelling? A seller who is also the occupant may not notice pet smells in the carpets or cigarette smoke in the curtains, but buyers will. Get them professionally cleaned, and make sure your pets are not present during an inspection.

Buyers Dislike Clutter – Clean it Out

It’s alright to be untidy and clutter up a dwelling when you are living there, but buyers want to see how much space is available and this is impossible to show if rooms are filled with your stuff. De-clutter down to the essentials, and if you don’t know how to do this, find someone to help you. It will be worth the effort.

Buyers Have a Budget – Don’t Annoy Them by Keeping the Price a Secret

Finally, listen to the advice of your agent about pricing the property. It is our job to know the market in the area, and we will recommend either a fixed price or a range to attract the right buyer. Properties that are listed on line without a price will be quickly scrolled through to get to the next desirable property.

Our role is to get you the best possible price for your property in the current market. Help us to help you by following these few simple instructions.

Looking To Share Your Rental? This Could Be Helpful

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Accommodation is a major cost that puts pressure on most household budgets, and the most common way of spreading that cost around is to share space in your home with other people. If you are offering to share with a relative or long-term friend, you already know a lot about them, their ability to pay the rent and to be a responsible housemate.

House Sharing with Strangers can be Rewarding

Often though, sharing arrangements involve rental properties and total strangers. The fact that these arrangements usually work out well for everyone is testimony to the inherent goodwill in most people. Lifetime friendships and many romantic relationships are often forged in these circumstances. However, there are other times when things begin well but deteriorate quickly.

Check the Legal Issues First

If you are already renting a property and need some help with the rent, there are a few things to know before you invite someone else to share. You have already signed an agreement that sets out the terms and conditions of the tenancy. If you sublet without first securing the approval of the lessor, you may be in breach of that agreement.

Tenant is Responsible for any Nuisance or Illegal Activity

We cannot give any guarantees here that approval would or would not be given as every case is different. If Bunbury Real Estate was managing the property, we would contact our lessor for approval. If that was given, we would advise our tenants that they are responsible for anyone they allow onto the premises. They must make sure that anyone there does not create a nuisance for neighbours, or use the premises for anything illegal.

Select Housemates Carefully

We would also suggest that they treat the search for a housemate like a job interview. For security, arrange to meet applicants somewhere public like a park or café. Spend some time with the different applicants, as you are assessing if they will fit into your home environment.

Get some background information by asking specific questions. Do they smoke, for example, or play their music loud? Do they have any pets who need to be included, how much space do they need for their possessions; do they cook or entertain friends?

Very Important – Check References for a Positive Sharing Experience

Our most important requirement would be to get references from other tenancies or share houses they have occupied. These documents are easy to fake, so take that next step and make personal contact with the referees. This could prevent all sorts of problems.

What you want is a reliable, easy-going person to help with expenses, not a lazy troublemaker. When the people who share your rental are compatible, you will have no trouble with your property manager, and there will be more money in your pocket at the end of the month.