NSW Tips for a buyer who is putting property for rent.

Bought my first IP. Big thanks to this forum, very useful info and amazing users here who have guided and shared their inputs. Thanks everyone .

The IP (townhouse) we bought is currently rented at $525 and their 6month lease contract ends in last week of April. Our settlement completion is due on first week of April. Tenants are happy to continue living there and we are ok with it. We are thinking to continue using same RE agent who has been managing that property and sold it to us. They are offering recurring fee of 5% of the monthly rent.

So given this timeline and above information, my questions are:

1) Before we sign the property management agreement, what all things we should pay attention at? Anything in specific we should ask RE agent?

2) With this transfer of house ownership to me, do I have to pay anything to the agent to continue the existing contract of current tenant?

3) Should I buy some landlord insurance to start from next day of settlement? What's the recommendations?

4) Can I ask for tenant profile / application details, their rental history, salary slips, residency status or specific status report etc which they provided at time of filling the rental agreement at time of moving in in last year?

Thanks and appriciate your inputs

 

1) No advice on this even though I use a ton of agents. You'll find no matter how good your agent is, the turnover is so rapid in this industry you'll have a new one in 6 months anyway. I'm pretty pessimistic when it comes to this.

2) I wouldn't think so but I'm not sure. Maybe a new contract would need to be signed with your name as the landlord but I'm not sure. Agent would be able to advise.

3) I think there's two main types of insurance (other than strata which you don't need to worry about) the interior stuff, which I never bother with, and rent protection which some insurers stopped offering about 9 months ago. I'm not sure if it's still the case.

4) I don't see why not.

 

Firstly
Congrats on your purchase!!
You need to do a new set of due diligence!
Start off by interviewing other Managing agents.
1.Why should I give you my business?
How long have you been doing this for?
Who does the actual management? etc etc.

Request a copy of your management agency agreement and read it through before signing it.
Usually it's quite long, but if you read a bit of it each evening you should have a list of questions to ask them back.
(it always helps to ask questions even if you are new!)

3) Landlord insurance
Get some quotes and activate the one you want to go with on the day of settlement.

4) Can I ask for tenant profile / application details, their rental history, salary slips, residency status or specific status report etc which they provided at time of filling the rental agreement at time of moving in in last year?
Yes you are entitled to this info. Also insist on a copy of the ingoing inspection report.
I would ask the tenant if there was anything 'wrong or broken'.
Also ask if there has been any repairs/ maintanance completed if so, was any warranty?


You should have them 'paid up in full' for settlement ( your insurer should be able to check your finer points)
Check everything!
keep asking questions, and let us know how you go?
I hope this helps

 

Whether or not you keep the existing PM, I'd be asking them some questions regarding the tenants. Are they paid up to date? Do they have issues with payment? Do they look after the place well (might have just made nice for inspections)? Do they report maintenance in a timely manner? Are there any issues with the tenants?

Speak to the agent in regards to LL insurance. While it's true that many of the providers aren't offering the same policies of the past, they ARE still covering existing clients AND may take on new clients under old rules in special cases, which is not widely known. If the previous owner of the property has a policy, and it's not been problematic, they MAY extend the same cover to you, but they will need the Agency to speak to them in regards to this.

Case in point, we've got multiple properties, all with LL insurance. Last property we bought for some reason Hubby arranged the wrong insurance & we needed to get a new LL policy for it. I thought we didn't have any hope of getting decent cover, but he got the Agent to do the sweet talking & bam! LL insurance arranged. The same cover as all our other properties.

 

Congrats on your purchase.

1) Read through your agreement, more than happy to help you go through it if you want to PM me. Ask to speak to the actual PM who looks after this property, ask them whether there's been ongoing maintenance, how are the tenants with rent payments, whether the routine inspections have had any issues, if any breaches have been issued. I would be concerned if the PM can't answer these questions clearly. Also ask them how long they have looked after this property to get an idea of turnover, and how many others they manage to get an idea of workload.

2) You should have nothing at all to pay. Look out for a renewal fee when a lease renewal is signed and see if you can negotiate out of paying this fee.

3) Landlord insurance is worth considering, the main insurers I'd recommend, Terri Scheer and EBM are back to offering rent default. I have been moving all our client policies from during covid onto new policies with better coverage.

4) Ask for a copy of the original rental application from the tenants, this should give you most of the information you're after. More important is to get a copy of the ledger from the start of the tenancy to get a good financial picture.

5% plus GST fee is standard but look out for additional fees that add to this.

Feel free to reach out if I can provide more assistance.

 

Congratulations!

1) My suggestion is to speak to at least another property manager even though you are thinking of staying with the vendor's property manager. I've found that when I'm new to something, I really don't know what I don't know despite doing lots of research. So when I go get quotes and talk to them about the work, I often pick up little snippets of info.

This thread has gives quite a few pointers on some curly questions you could ask the property manager Best questions to ask a potential new property manager

 

Thanks
Couple of questions...

I was told by property manager that landlord insurance is only useful if the property is under some rental contract (eg 6m,12m etc) Is it true? It sounds bit weird but would like to get your opinion on it.

Secondly, when choosing landlord insurance eg EBM what things we should ask or check in the cover? Btw, bad news is EBM are unable to offer our whole suite of products. However, there are still some options available... Plz check COVID-19 update
Generally which cover in EBM you recommend to clients and how much they pay per month/year?

Thanks

 

It depends on who you go with for insurance, but generally as long as there is a tenancy agreement agreement in place (even if the fixed period has passed and it is monthly) then you should be covered.

EBM have returned to their original products for us and the property managers that work with them and have done the training. Rentcover Ultra is for when you have strata covering the building and Platinum is when they also include building insurance (probably not needed in your case since you are in a townhouse).

 

There are four insurance (a, b, c, d) issues a property owner may need to consider

1. Strata Property
a. Ensure that the strata has a suitable buildings cover. The premium will be within the strata fees paid. A warning. Some strata's poorly managed and review policies and merely renew. Its important that the insured value be appraised regularly for total loss.
b. Consider and strongly recommend CONTENTS cover. Landlord contents are not covered by a tenant policy, a bond or the strata policy. Insured items include curtains and window coverings, LL property inc fixtures and fittings such as appliances, aircon, HWS, cabinets in kitchen and flooring. In the event of a tenant fire, smoke or water damage the loss may be significant.
c. Consider LL cover. This may (or may not) include contents as most LL policies offer landlord contents. It is cost effective to have included contents rather than a seperate policy. It may cover loss of rent and even some cover for legals etc. Refer to each policy for cover. LL cover wont cover arrears that were evident at the time the policy commenced.

2. Freestanding Property
a. Building policy covering the building fencing, structures and out buildings incl some landscape etc. This should also address rebuilding, demo and like costs.
b. Contents as add on to the building policy. Again this covers landlord contents. Landlord contents are not covered by a tenant policy, a bond or the strata policy. Insuraed items include curtains and window coverings, LL property inc fixtures and fittings such as appliances, air con, HWS, cabinets in kitchen and flooring. In the event of a tenant fire, smoke or water damage the loss may be significant.
c. Consider LL cover. This will NOT include contents !! It may cover loss of rent etc. Refre to each policy for cover

d. In addition anyone using short stay platforms should consider a short stay specific LL policy in place of a conventional LL policy. Most LL policies refer to a "lease" and a shortstay isnt a lease and may enhance insurance risks and be declined in the event of a claim. EBM and TS offer a short stay optional LL policy as an example. Having the right cover will avoid a lot of drama at the time of a claim.

Flood cover ? This varies by state. Flood cover may or may not be included. Flood occurs with rising bodies of water and policy terms vary. Some areas that are flood prone may have a policy exlusion or may add on a extra cover at very significant cost. Read, ask and recheck if changing insurers. Many budget insurers have harsh flood terms. Overflow of gutters or roof leaks is usually not insured unless aimpact event occurs (tree, hail etc) but the subsequent interior water damage may be.
Accidental damage ? Usually optional. Policy terms vary but occurs when a occupant unintentionally damages property eg drops a perfume bottle onto basin that breaks. A guest who damages property may not be covered
Replacement cover ?. Read your policy. Some policies are reinstatement / replacement and others will depreciate the value. Sometimes replacement is a option much like agreed value v market value for a car. Replacement cover would replace 8 year old carpet with all new carpet without depreciting its value (less excess) if it was damaged. However if damaged by a tenant a specific event may be required rather than ongoing lack of care.
Fusion ? Option cover for motors owned by the insurer. May only apply toa AC unit that fails duer to the compressor or fan. LL policy wont cover tenant items eg fridge.. A tennat policy wont cover LL items eg AirCon.
Glass ? Excess free cover for glass breakage ie shower screens, windows etc Most insurers contract with OBriens for 24/7 immediate fix. AGlass is a part of the building in most cases.

Generally a mortagee will require building cover be maintained at all times with the lender noted on the policy as having an interest

 

Hi Mel,
I heard from PM that usually EBM annual fees are $372 however because they are partnered business discounted rate for first year is $311 for Rentcover Ultra. Is this right price?
Anything else or more I should confirm from EBM or PM before I proceed with Rentcover Ultra?

 

I just did a RentCover Ultra quote today in Sydney and the premium is now $445 and discounted down to $371 for the first year. Just double check if the price is still $311?

 

This is incorrect - that was the old price, and the pricing has now increased. A new policy, placed via a property manager, will cost approx $370-ish for the first year, and $450-ish for the second and subsequent years.