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Our settlement is in less than 2 weeks on our investment property and I am starting to freak out because there is so much we don't know!!
So I need your help!
Should we get landlord insurance for loss of rent or malicious damage? Seems to increase the premium by a HUGE amount so I am not sure on this one??
What is the going rate for agent fees??
What else do we need to know!!??
TIA! :)
We have it for loss of rent and malicious damage. For me, these are the main things that I would want covered. Our investment property is a strata so there is a strata policy in place to cover the "home" portion so we only needed to cover the contents portion + loss of rent/malicious damage.
PM me if you want me to let you know the insurer we went with as they were really inexpensive and are a well known insurer.
To be honest we are relatively new at this also. Do you have a good property manager in place or are you doing it yourself?
Have you had a surveyor through to do your depreciation schedule for your accountant?
Do you have tenants lined up?
If you pm me I will let you know what we managed to get for our property manager, but I believe the standard rate is around 7.7%, but we have a better rate than this. That is just for the monthly management fee, there are ore fees involved that I can go through with you.
I'll try and answer any questions if I can.
Janie xxx
Thanks hun if you could pm me that would be awesome.
Had NO idea about the surveyor, the house is in the country, 1 1/2 hours from here so we are getting agents to property manage for us. Being a small town we are hoping they will get someone in who is on their books already and is reliable - so scary really that someone could go in there, not pay rent and trash the place. :O
I've not had an investment property for a while but from memory:
Full landlords insurance was worth it.
Agents fees was 7.5%
Depreciation schedule for property & fittings, also schedule for replacement of fittings.
Also talk to your accountant as to what can and cannot be claimed come tax time & keep a spreadsheet of that info, your property manager should give you a full profit and loss statement. I had the agents pay for all the bills out of the rent (rates, water etc) which made it easier come tax time.
i dont think we got cover for loss of rent, but have it for damage and all that stuff. we have building insurance as well, but home contents we left up to the tenants as its their contents, (if you are renting a furnished residence you will want this as well though). the cheapest landlord insurance i found through allianz, the next quote i got was $400 more than them! Not all insurers will insure all properties either, it will depend on the location, size, land size and value of the residence, the major insurance companies wouldnt give us landlord insurance saying our house was in a high flood risk area, there hasnt been a flood near our house for over 100 years... but they were happy to offer building insurance so how that makes sense i dont know.
the management fee varies from agent to agent in our area anywhere from 7.7% through to 8.8%, the higher ones dont necessarily mean they will do a better job or extra inspections.
Make sure you get a copy of the entry condition report to compare it to the exit report to make sure they havent missed anything. You can also elect to go to inspections with them, as well as check out the property from the road now and again to make sure the gardens are being well kept and mowing done if you really want to. some agencies do take advantage of owners living away, this has recently been done to a friend of mine by our own agency, so i made sure they know i do drive by the house and that i want to come to inspections with them. if you dont feel right or comfortable about the agency find another one, follow your gut.
you will need a water efficiency test done (is it in nsw im not sure this is law in other states) so you can then charge water rates to the tenants. any licenced plumber can do this and your agency can usually arrange it for you.
You will be given a list (or have a conversation with the agency) of the applicants who have been short listed, it will include their employer, income, pets, children, tenancy history etc etc and you get to choose the person who actually goes into your house from this short list of applicants. (im shocked at this breach of privacy, but it keeps happening everytime so must be the general done thing, and i assume they are given a form to sign to say their private details will be discussed with the owners)
you can request that the maximum 4 inspections a year be done, otherwise a lot of agencies only do the minimum 2.
if i think of anything else ill come back and post again. goodluck
We have an investment property and have landlord insurance - it is absolutely worthwhile, although luckily we've never had to use it :). We use an agent, but DH knows all the ins and outs so I'll ask him your questions when he gets home. Feel free to PM me any questions, my DH seems to know everything there is to know about investment properties and I'll pick his brain for you!
Definitely get landlord insurance. We rented our first house for around 18months and the tenants were wonderful for the first year but then they ran into financial trouble and stopped paying rent. They moved out after 3 months of not paying and then we kept the bond and claimed on our insurance for the balance of rent outstanding. We used an agent and I think the commission was around 5/5.5%? but that was 8 or so years ago so no doubt its changed. I wouldn't be without insurance, you just never know and much better to be covered for peace of mind. From memory I think you can also claim it on tax (don't quote me on that though?). Good luck, how exciting that settlement is so soon!!
Yep.... Landlord insurance!
We also used an agent to source a tenant for us, paid them a letting fee and now manage the property on our own. I keep detailed spreadsheet, and haven't had any trouble. We are onto our second lot of tenants. The first agents were more trouble.... Paid them for a whole load of nothing!!
Ours isn't investment property as such, but our home, but renting it out while we are away.
Good luck! Hope you get some nice tenants in :)
I started doing this with our rental property but they started slipping up which cost us money as the council gives a discount if rates are paid on time & charges interest if it's paid late. I pay all our rates & body corp myself now. It was so annoying because the reason they didn't pay was because the tenant hadn't paid enough rent to cover it that month (she was in advance the prior month & it had been paid out to us) but instead of contacting us, they just held it over. It might of only cost $15 more but that $15 is better in my pocket than the councils IMO.:
Totally agree that the landlord's insurance is worth it. We've never had to claim but for the peace of mind, it is cheap. We are with AAMI.
Try not to worry too much about the possibility of bad tenants. Most people will pay their rent & maintain the property as it is their home. While horror stories do happen, they are the minority & that is why you get insurance. Also, the agent's "should" do their homework too.
Thanks so much everyone!! So much to think about - DH is thinking that we stick to building insurance but not landlord insurance which makes me MEGA nervous - gotta do some convincing and find a really good quote to sell to him I think. :o
Thanks again and if anyone else has any advice keep bringing it on!
ETA: Janie71 - Tried to pm you back to say thanks for all your help!! Your PM box is full lovely! Thanks so much!
One more question for ya'll!?
What sort of things other than % should I look for when getting an agent to property manage? Am going to call around on Friday but other than %commission Im not sure what other questions to ask.
TIA!
You might like to ask to see a copy of the rental agreement and condition form (though they will probably give it to you without asking).
Ask if they take photos for advertising, how much they charge for advertising and where they advertise.
Ask about their process for selecting and what your options are for discrimination (ie no pets or specify pets)
Ask about how often they have had to go to the tribunal (i think that is the right term...where disputes are heard) and how that usually goes.
Do they take photos at inspections?
ask about the landlords insurance. (for advice)
Ask about any extra costs beyond the % fee.
In talking with them, use your gut.
You want this property to be someones home, but it is still your house. So the agent needs to respect the tentant, but be your advocate. A though inspection is important.
And ask about maintance...if you want to you can opt to do handy-person stuff, but you have to be prepared to do it quickly.
So ask about the rights of tenants, and what your obligations are by law in regards to maintance. Who changes/supplies light globes, who mows. prunes, what happens if the hotwater fail, or the dishwasher breaks. That sort of thing.
all the best
Catherine
I don't think landlord insurance is much more expensive than regular building insurance from memory. I'd get the landlords insurance to be safe. You might never need it..... But you might! I did :)
Thanks again! Making some calls today!
Yules I am finding it is around $20 a month more than basic building insurance, that it for rent default and malicious damage. Also finding HUGE discrepancies in the insurance quotes - one place was $90 a month compared to Alianz for the same cover at $63 :o needless to say I have been shopping around a lot!!!
My landlords insurance isn't much hun, couple of hundred dollars maybe? With RACV.
With agents, you need to ask about the "management" fee versus the "letting" fee. Management is what they charge you annually for looking after the property, for inspections, chasing the rent, etc.
Letting fee is different, it is what it costs you to actually rent it out - advertising, contracts, screening tenants etc.
So management fee is generally an annual fee (the percent that everyone has been quoting) whereas the letting fee is different - might be a flat amount or another percent for e every time the property changes hands.
So if you are changing tenants frequently, letting fee can
I have to say that most the agents in my area were all around the same - I'd hazard a guess that a country town might be similar - but also, they were willing to negotiate on most things ;)
HTH!
Thanks OP - my MIL is with RACV as well and what she pays is HALF of what the quotes are that I am getting, there property is in Meeniyan though so it's an ever smaller town than where ours is so that may be a factor. Will be calling them today. Most of the places I am calling for insurance, have basic building insurance, then on top of that as an extra rent default and malicious damage which isn't covered with the building cover. I had no idea, plus the cheapest I have found just for building cover is $40 a mth for $200,000 cover. Ugh will keep searching but need to decide and lock it in today!!
When looking for someone to manage YOU"RE property always go with you're gut....there are some lazy buggers out there.
When it coems to water,electric and gas....it is the tenants repsoniblity to pay those unless stated otherwise.
light globes again the tenants responibility. its up to you about garden matiniance you can leave it to the tenant or have someone come and do it.
most things are the landlords responsibility.....in regards to fixing things....ie if hot water dies,dishwasher dies etc
make sure you do a condition report before any tenant moves in. this comes in handy if any disputes arise.
you can take pictures BUT if you go to a tribunrial pictures cant be you're only evidance.