Tips for first time property investor?

Hello,
I just recently joined this site and I am a first time property investor.
I'm seeking some tips on being a landlord for the first time. There seems to be a wealth of collective information and learned people on here so I have some questions, such as:

1. Recommendations for a good property manager in Canberra area
2. Recommendations for good landlord insurance company (one who includes pet insurance)
3. What to look for in the lease and other contracts
4. Tips on how to get the best tenant! I will be going through a PM, but any advice is welcome.

I'd be very grateful for any advice on the above or any other things I should know about, or be wary of, as a first time landlord.

Thanks so much!

 

Congratulations on your first investment! I am Brisbane based so I cant give any tips on a good PM in the Canberra area sorry however I can share some knowledge regarding your other questions!

Re Insurance - Terri Scheer is very popular nationwide and they do cover pet damage.

Re other contracts - Obviously the standard terms differ from state to state and your PM should be able to guide you on all of this, however, in terms of the contract you will be signing for the PM to look after your investment, I guess the most important thing to check is the fees and charges. They will no doubt advise you of a set management fee which will be a weekly percentage of the weekly rent however also check any other fees - as often agents may charge fees such as a monthly admin fee, lease renewal fee, tribunal fees and costs for signs, photos, advertising etc. So I would certainly be sure to check those!

Re the lease - Once again your PM will have a standard set lease that their office uses, the standard terms and conditions are generally pages long and often quoted direct from the relevant legislation. Extra terms or conditions cannot easily be added into these agreements as there is a risk of contracting outside of the legislation in doing so. If you want to check the lease before it is presented to a tenant for signing then obviously the main things to check would be that the rent is the correct amount, the term is correct (6 months, 12 months etc) if the tenant is to pay water for example then this is ticked yes, if pets are approved then there is a clause stating that tenants are liable for damage (important to note that the number of pets permitted and breed is stated also on the lease- for example, if you approve 1 Maltese dog and all that the lease states is that "yes pets are approved" then the PM may turn up to inspect and find that there are 7 Rottweilers!) I guess they are some of the main things I would be checking as a landlord.

Re finding the best tenant - Again, it should be part of your PMs process to conduct very detailed searches for any applicants. Obviously rental history, employment, personal and pet references and checking to see if they are on a defaulting tenant database or not. Your PM should present you with all of this information so that you can make an informed decision as to decide if you wish to approve or decline the application. In saying that however, you can never truly tell how a tenancy will proceed, we all just hope it turns out great and this also comes down to having faith in your PM and knowing that they will do the best to control situations if they for whatever reason do not go as planned!

Hope that helps somewhat! All the best with your investing journey.

Jodi

 

I'm a strong believer in letting your tenants have pets - naturally as long as the property is suitable for pets (don't want a German Shepherd in an apartment) and doesn't have any major reasons why it would be impractical (renting your PPOR with a 250k landscaped garden which you don't want damaged). Almost every one of my properties has dogs and or cats in them - I find they're longer term tenants as they know that quite a few other landlords will not allow pets.

Likewise, pets are a strong part of a lot of peoples family - so that helps them become sticky long term tenants. (the most profitable type)

Have a read of this article 4 Ways to retain great tenants - Latest News and Advice – blog.homesales.com.au - Adelaide property manager David Traeger from this forum is interviewed in it, it contains some good tips.

Respect your tenants and they'll generally respect you back.

 

Regarding a PM in Canberra, I believe @D.T. gave a recommendation in your intro thread. That's a good place to start.

 

Thanks so much for the helpful replies so far. Much appreciated
Any other property manager recommendations for Canberra?

 

Hey @Cbrgirl , welcome aboard.
Might be worthwhile asking here:
ACT - canberra general

 

Hi, I did not vote, and am not opposed to responsible pet owners or reasonable pets, problem is you will get some twits with Cujo (who is more of a half lion or something) and let them do anything and live anywhere etc in the house.

On the other hand, I have seen many times when people have no pets allowed, and they sneak the pets.

I say allow them with rules/conditions, and make sure PM does inspections.

 

Thanks very much for the advice guys.
I used to live in the property and I now own it outright (mortgage fee - yay!) It was hard to decide between selling it or renting it out. But I decided that I want it as a source of income so I don't have to work. Ha Thanks so much for all the tips. I'll probably get a PM for the first year or so and then once I learn the ropes, I hope to manage it myself.

Cool bananas

 

Hello! While it's nice to have enough money to have no debt on an ip, unfortunately it's not much use as an investment tax wise as it has no debt on it. Reason being, you have little deductions and an normal income with it (being rent) so that it's not tax efficient, whatever income you make on it will more or less be added to your income (assuming you have some sort of income) and you'll be paying tax at your marginal rate.

My suggestion is to refinance it, pull out equity to say 80% and buy a few more properties or other investments. You'll benefit from having a lot of leverage if you buy a few more properties. But avoid areas of no growth. Also the use of any additional loans should hopefully be investments and not of a PPOR because you can't tax deduct a PPOR. (Edit: its ok to buy a PPOR with that money, only issue is you lose the tax deductibility of it. Maybe refinance and spilt a portion off into a separate loan so its easy to work out what is and isn't tax deductible)

Talk to an Accountant who understands property investment for advice....

Btw, you must only do what you are comfortable with and with that in mind if I were you I would get a largish loan on the property (say 80%), don't be in too much of a rush to buy but keep learning (read the forum, keep asking questions!).

Keep the borrowed money in an offset account then once you are ready start buying using that borrowed money, perhaps using 80% loans. You could use borrowings for shares, but whatever you do, you need to be comfortable with it. If you do buy property please buy something that will always be in demand, location is very important.

Ps. If you don't have any other PPOR you might be able to sell it CGT free if you have last lived in it in the last 6 years. If you have no PPOR, you can keep moving back into it every 6 years to maintain the CGT free status.

Good luck.... oh yeah get a depreciation schedule done on it too. A big part of the attraction of property investment is the tax benefits (assuming you have some sort of income), alongside the ability to leverage and grow the portfolio. Lots of people will have loans nearer to 90% rather than 80%, and buying a lot more using LMI. That's coming into the territory of doing what you are comfortable with, the sleep at night factor comes into play. I personally have over 3 mill of debt at the current moment (unfortunately the majority of it is PPOR related!!) and i'm ok with that for now but I will reduce it to bring the PPOR debt to a figure that's very easy to manage.

Note I am not a broker, tax expert or accountant and this is my general opinion only. Please seek more advice for yourself before taking the plunge into buying more properties or other investments. Leverage is a powerful tool to make a person of average wealth into someone wealthy well above average but used incorrectly can leave you in deep **** too.
Eg. Buying in mining towns or other non diversified economies or doing a development in the wrong place and time... also look up the HTW property clocks to see what might work, there's no point buying something that will have no growth soon. And have a think about NRAS, commercial property investment, property development and renos etc. Lots of property strategies. Please keep reading and learning from others!

 

Canberra Property Managers

The Canberra pm question is asked fairly regularly. Do a search there are a few threads.

 

I'm in the Woden area. Thanks for all this useful info. Gosh, there is no way I could sleep at night being in debt! I live very frugally and pay in cash whenever I can. I'm just that sort of person and I'm also a worrier. AND I used to work at the ATO. I've had many dealings with 'investors' who suddenly had major financial issues....and a few of them suicided. I don't need the stress. But I do see there are possible potential financial benefits in refinancing and using the money to reinvest. It just removes the safety and security I have build up for myself; so not for me at this stage of my life. I'm playing it very safe (boring I know). Cheers!

 

Nothing wrong with having it debt free and living off the income. A lot of people would be envious of this position.

We are all different with different goals and strategies and stages of life.

Good for you.

 

I'm in Woden Valley too, but not planning on the next IP being in Canberra.