Does your large property portfolio give you headache?

10 IPs and some of the debt is PPOR as well. Unfortunately the IPs combined value isn't anywhere near $4M (not even all that close if you include the PPOR).
Gross rental is a little bit above $150k with one vacancy.

 

Not so much a headache, just a little frustrating at times having to little bits and pieces here and there, 13 IP's for us.
If we could easily trade them for substantial commercial properties I'd do it right away, but unfortunately, the accumulation process didn't work that way.
Might slowly cash out of resi in the coming years and convert to commercial.
A couple of 10 mil commercial props should be pretty low maintenance with good yields.

 

That's what we are currently doing.

I must admit though with most of my properties in USA now and with the right management in place its pretty much easy street. Also another consideration if properties generate cash flow the bumps along the road are insignificant in the scheme of things.

 

What is the vacancy as a % of the total ?
Still cf+

 

Office ?
Warehouse?
Retail?
Carparks?
Land?

 

I generally have around 1-1.5% buffer of the value of the property. In some instances it is a little conservative but I'd rather err on the side of caution when managing a large portfolio.

 

Owning investment properties is a business.

One part of the business is maintenance issues and another is the paperwork.

Over a portfolio of 70 odd properties these were the issues this month.

USA Properties 15 tenants
-Snakes at a property Seems it breeding season for snakes in Atlanta right now.
-Tenant abandoned property reno will cost $4k without re-carpeting which would have added another $3500. Property rents for $1350pm. Costs don't include vacancy factor.
- Trees over house. Through this interaction found out that heavy undergrowth was within 6' of the side of the house. Want them to Roundup everything within 12' of the house. Undergrowth is so thick you can even identify the problem trees. Trying to get them to understand seems to be an issue.
- Roof sagging in 2 places Repair will cost $925 plus there is and AC problem.
- Toilet broken handle and leaking. Another toilet running slow.
- Lease renewal.
- Rekey locks at abandoned property seperate job
- Dishwasher replaced. $400 couple of other small issues.

Aust Properties 65

- Leaking tap in shower and kitchen sink
- Leaking Basin Tap
- Tenant fighting with others in block (we don't control block) with a court case next week which may mean he will move out real quick.
- leaking roof tile had broken and moved below a vent pipe
- Short in main fuse for a unit on a Friday afternoon

Aust Stratas (we own properties in stratas and am on the executive of some of the stratas)
- Leaking roof
- Leaking sewer pipe or slow HP leak still to be investigated further. Cost quoted at $2k a problem if it's not actually the solution.
- Year old issue which has forced me to be involved in the industrial strata. Last year strata was ripped off approx $8k. Strata manager paid but minimal work was done.

We have quieter months and we have busier months but it's all swings and round-a-bouts. All the USA properties are done remotely but we do just about all the Aust maintenance ourselves.

Across the whole portfolio we employ 3 property managers to manage the tenant side but all issues are referred to us to ascertain suitable action.

Also this month I have been planning a 7 week round the world tour commencing in July, will include a 2 1/2 week stop in Atlanta to check up on our USA properties, 6 of which we still haven't physically seen.

Oh and we went on a 3 day cruise lol

 

So you employ a dedicated PM/s or you mean you have a bunch of places with PM 1, 2 & 3 ?

Can I ask if you also mean you are running as an actual business ?

So many seem to want to have nothing much to do with the property, I have found that is not practical, I suppose it all depends on what results etc are acceptable & possibly income from elsewhere, but I cringe when I hear "set and forget".

Well, this is where you are def going wrong Should be a 2.5 week or month cruise and 3 days in Atlanta....

 

Try that with a few cheapies !

 

Vacancy rate is a little under 10% in terms of $. The average portfolio interest rate is currently a low 4.3%, however my fixed rates are running out pretty soon. I would say that it's certainly a cash flow neutral portfolio at worst (PM fees, council rates, insurance, maintenance, etc), it's just not going to be a nice side income anymore.

 

Cheapie?....whats a cheapie...

 

Some great advice in this interesting thread. Managing a buffer against interest rate rises is another important factor with a large portfolio and large relative debt, even with low lvrs. An increase in the cost of money is a consideration when you are carrying a larger debt and working out an appropriate buffer.

 

All thise

The more properties (and tenants) you have the less focus you have on individual issues. ...you look more on the global issues ...focusing on the PnL (profit and loss) , cash flows , taxation etc.
Leaky roofs , blocked gutters are just a number in the income statement!

 

Your comments are all so true
The larger the portfolio the less stress you have , the more time you have to enjoy life.
Ps I will be up your way at xmas . Will you be in ?
Sutherland Scotland (from your profile)

 

In total we engage, as in use, 3 PM's 1 in particular has the bulk of the properties and we pay him about $38k pa for that. The other have 15 properties (in the US) and the other has all of 1 property.

Yes we run our investments like a business. Our son is employed by one of our companies and he is solely dedicated to both the maintenance and renovations (or just stuffing around) We do tend to have long term tenants due to the socioeconomics of the tenants and have an average occupancy of our Oz portfolio of about 7-8 years. Our longer term tenants have been in place for 16-18 years. Even the tenant with the court issues was in one of our units after taking it over from his brother for 6 years. We then moved him to the current location where he has remained for 2 years.

Absolutely agree there is no such thing as set and forget. Any properties that are treated as set and forget will deteriorate dramatically over a very short time.

Originally we were only going to Atlanta for 4 weeks with some time spent on business and then touring around the USA in the vicinity of Georgia for the rest of the time. This blew out to a world tour taking in a cruise from Vancouver to Alaska tour around Alaska then flying to Atlanta. From there to Switzerland for a week to visit family and sightsee. Then to South Africa and the Kruger national park for safaris.

I am in Sutherland a suburb of Sydney, don't know where Scotland came from. I would love to catch up and was thinking of trying to catch up with you when we finally get to visit Brisbane again.

Cheers

 

I saw your location as Sutherland
Sutherland is a county in Scotland. .your suburb is probably named after it
I spend about 9 months a year overseas
Travel overseas twice a month (bit like you)

 

I see, but your not running it as a business from the ATO perspective ?

I am asking as I am trying to work out at what point running as an actual business may be better way to do things, it does have tax implications, but I probably spend similar hrs on property as a full time job and am away from home a lot as I fill your sons role, albeit with nowhere near the property you have.

Sounds quite good ! The Alaskan cruise should be nice, looked at a few, they look very attractive.

Beano should come to a Wenty meet up, I think you were at a couple I was at, but never made it round to meet everyone.

 

How do you feel about your USA properties now that you cant write off travel expenses to visit them under the new ATO rules?

Or do you have a company structure here in the USA and they pay the travel expenses?

 

I think that, when you get to the point that the total rental income is large enough and the running costs are low enough (because you know your cash buffer is big enough to weather any storm, and the mortgages on the properties aren't such a huge chunk of the balancing act), then maybe it isn't too bad.

But, when trying to build up the all-important buffer, and it is constantly being eaten away at by maintenance and tenant issues, it can become stressful (and exhausting) to deal with.

 

We used to have 5..all had PM's.

Only headache was when tenants did stuff.

But; let email be your friend and stay out of the PM's way.

Pay down all debt and build up cash reserves, and get good LL insurance for "tenant stuff".

No headaches.