What do you hate most about Property Investment?

Now her lunch is on you
Your sanity seems to be holding well so far

 

Read my 'self delusion' thread'

 

What do you hate most about Property Investment?

That properties are so expensive to hold:

- land tax
- council rates
- water rates
- insurance
- maintenance
- interest
- borrowing costs
- gardening and lawnmowing
- insurance
- fees to find a new tenant
- marketing fees
- property management fees

It seems to go on and on.

 

Nasty surprises.

• Pre-approved loan got denied a few weeks before settlement.
• Lender's useless lawyer lost mortgage documents 3 days before settlement when I was overseas.
• Dodgy builder took 5 months to complete a bathroom reno.
• Delayed land title release.

C'est la vie I guess.

 

I have a little trick I used which worked really well for some tenants which is to incentivise them to do a decent job with maintaining MY properties. The PM (and the lease) tells them they dont get the bond back and may need to pay for poor maintenance and damage as well. The second trick to this system is to have LL insurance...There are just some horror stories and photos I have seen.

I do agree that tenants who do go beyond the norm are a pleasure and a thank you pays it forward. I gave one a glowing written reference with mobile number when they moved interstate. She was world best tenant. Always paid ahead, clean as a surgical theatre and never demanding. I deliberately held her rent increase back to keep her a while. Whats $20-$30 ?

 

I've done the same for an equally excellent tenant. Only problem was her son was getting bullied at school and the bullies followed him home. They had to move as the kids kept showing up at the house and hurting the poor kid

 

This is a great point. I actually do this will all my good-great tenants. I keep the rents just below market rents because like you, I don't care about the extra $15 a week. Would much prefer happy tenants who look after my assets and bother my life as little as possible as the value in the assets grow.

Also of course LL insurance as you've said. A must have.

 

I just remembered a few more... hates, we should also start a thread on WHAT DO YOU LOVE ABOUT PROPERTY INVESTING? I may do this...LOL

I hate competition when buying

I hate markets that start to correct and you need to exit before the sh$rt hits the fan.

I hate real estate agents that work against you when selling property.

I hate property statistics that are too broad and are meaningless, but continually get used as gospel.

I hate property managers who work for the tenants not the landlords

 

Being a slave to the bank. In most books/property seminars they will talk about using OPM (other people’s money) but the fact is you’re still going into huge amounts of debt and its debt that needs to be repaid. As a highly leveraged investor >80% LVR I’m at the mercy of banks if they want to raise interest rates because they know that if I switch banks I’m up for refinancing fees, LMI etc. Plus there’s always the anxiety when you have a high LVR if you are purchasing a house at auction whether the finance will be approved so you can settle etc. or if you purchase a house through the vendor whether the finance will be approved in time to meet the contract conditions. 99% of the time the purchase price meets the valuation price but sometimes you always have doubts especially in hot markets where the valuation is reliant upon outdated sales or properties with different conditions, features but still compare via desktop valuation.

Being susceptible to changing Government policies that could have adverse impacts on capital growth. E.g. there is a lot of media attention currently around immigration, negative gearing, capital gains and growing wealth inequality. Residential property investors don’t garner much sympathy so the Government could easily change policies for populism in order to appear to be doing something about housing affordability. E.g. APRA.

Tenants. I’ve been fortunate that I’ve had good tenants up to this point but even good tenants can go astray if they find themselves in financial difficulty. Considering that much of the population literally lives pay cheque to pay cheque you can never get complacent.

Repairs and maintenance. Once again I have been fortunate with this but there are dozens of potential problems that can range from minor to major issues e.g. termites, hot water systems, plumbing, foundation problems, faulty wiring etc.

The high transaction costs involved with property e.g. stamp duty, REA fees etc. Stamp duty can be up to 5% of the purchase price in some states and REA fees can be up to 2-3% of selling price. Liquidity is also another negative factor as you can’t sell a bedroom if you suddenly need some cash. However, the liquidity can also be a positive as it lessens volatility within the market especially coincided with the high transaction costs.

 

According to ATO only one third of investors will be positively geared. No surprises here

 

Problem child tenants with an over inflated sense of entitlement.

 

maintenance bills, and problematic tenants.

 

+ infinity

 

My current pet gripe:- Government/APRA interference.

We are looking to buy another IP and are seeking an IO loan with a linked offset.

The banks (because of the Government/APRA) are trying to push us down the P&I path.

Anyone with half a brain knows IO with offset is so much better for increasing our net worth and reaching financial independence earlier, especially those of us who are financially educated and have strong controls over our spending.

And on top of that, they are penalising those of us who still go IO with offset by charging higher interest rates.

Really gets my goat.

 

It sure does go on and on, and can I add special levies to your list Special levies can sometimes feel like a holding cost too, unfortunately

 

I hate it when you have an hour between opens and there is nobody around who makes decent coffee

 

Gee, 'hate' word is a too strong for me, I prefer dislike.
So my dislikes, I could go on and on, so maintenance, managing agents, paperwork, land tax, bills, illiquidity, varying rents, etc. BUT, ALL these little challenges (that's what I call them) are WORTH IT, it you realise how much your asset base has grown!!!!!
Hence for me, I have a BIG enough WHY, so I don't mind the small challenges that come with it, You can call them issues or the cost of running your property wealth business!
As Jim Rohn would say, we cannot change the circumstances, we have to set our own sail and that means we constantly need to learn, adapt to change and continually keep solving those challenges we will face. Governments, policies, taxes, etc... are all those circumstances that are really without our control.