Fraud on the rise!

Phishing scams and internet fraud is nothing new. We’ve probably all seen the reports on the news about the more vulnerable members of our society being duped out of their hard earned money by international gangsters who have used the old lottery win line or have catfished poor lonely people only to get them to transfer away their life savings.

But, what you might not have realised is how clever these thieves are becoming, how this can turn into Real Estate Fraud and how you need to be aware on how to protect yourself.

One of our related offices recently avoided a significant financial loss due to a simple email fraud set up. How did it work?

1. the sales agent received a genuine looking inquiry on one of the properties he was selling that had a pdf file to some offer documents.
2. Sales agent opened the documents thinking nothing of it, and noticed nothing at the time when the document failed to work, contacted the owner of the email to resend but never got a response, not realizing the hacker was already in.
3. The hacker had gained access to the computer and the sales agents emails. Going through them, they found the information of a recent sale and proceeded to email the purchaser to change the bank details for the transfer of the remaining house deposit.

The sales agent, following strict office procedure, had contacted the purchaser as a matter of course to confirm the deposit prior to it being due and it was through this action, that the transfer to the hackers account was avoided!  But had the sales agent not been providing the high contact service to the purchaser (As some do once the property is sold and contract unconditional), then the purchaser would have transferred the funds and they would have been lost!

Working in the world of property management, this is a little less common on our side of the real estate game but it’s not unheard of.  There have been cases in the industry where owner’s emails have been hacked (like your home hotmail account) and emails have been sent to real estate agents requesting bank account changes for the rent to be paid into.  That one is easily preventable by ensuring that such requests are double checked by direct contact with owners, but it just goes to show that you have to be careful at home as well as in business.

Ways to prevent potential fraud (direct from one of our awesome IT Boffins in the Eview group);

  1. Never open an email that is not authentic and if you do or are told it was infected and you opened it, immediately change all your security passwords from another clean device.

PC/MAC Security.

  1. Anti-virus

Use a reputable paid anti-virus solution to protect your system (Norton, Bitdefender, Kaspersky…). After all it is the lifeline of your business and you should not compromise on security.

  1. Anti-Malware

Use a dedicated paid malware solution. I personal use Malwarebytes and find it to be the most successful in protecting against malware and cryptolocker

  1. Backup

Backup! Backup! Backup!. The Cryptolocker attack will damage your cloud backup so it is importantr that you use a removable device to backup your most important data. Eg. USB flash drive or USB external Hard Disk drive. Not just one drive use multiple devices just in case it gets damaged or attacked if you leave it plugged in your computer during an attack. Don’t rely on cloud backup.

Remember you can have the best security in place, all the right backup procedures but the biggest risk of security is yourself, the user. Most attacks are because a user clicked on the wrong link, email, or went to a dodgy web site. So be vigilant and notify your IT support staff (or if it’s your personal email, contact a reputable it consultant in your area – if you need one, let me know and I can try to help) ASAP if you have clicked on something you shouldn’t have.

 

Free Safety Cord Kit from Consumer Affairs – Vic

Understanding the potential danger of blind cords, in particular for landlords, is quite important.

Young children can strangle themselves with looped curtain and blind cords. At least 12 young children have died as a result in Australia since the year 2000, including two in Victoria in August and September 2009.

Why are loose cords dangerous?

A child can place the loop over their head and/or get tangled in loose cords when they are:

  • in a cot or bed where cords are hanging
  • playing near cords, or
  • standing on a chair, sofa or bed to look out of a window.

To assist in preventing this, anyone can order a free safety kit to make looped curtain and blind cords safer in your home. Order through our online order form or call 1300 55 81 81. Stocks are limited though so if you do miss out on the free kit, we would still recommend arranging them to be installed yourself (it’s not complicated and all the equipment is available easy and cheaply from Bunnings or any hardware store). Or, get in touch with your property manager as our handymen can complete the job at a reasonable price- remember, there is no price on piece of mind!

Review of the Residential Tenancy Act

As some of you may or may not be aware, the residential tenancy act is being reviewed and the general public is being asked to make submissions to be considered.  This can be done via the government website Review of the Residential Tenancy Act.

Why is this important?  If you don’t have your say, and things get changed in a way you don’t want them to, you don’t have a right to complain!  So everyone needs to get out there, have a think about what you feel is fair, reasonable and should be a part of the legislation, and put a submission in!

Some of the key points they are looking at changing are;

  • Security of tenure – the option of 5 year + leases and protection for tenants.
  • Balancing bargaining power between the parties (as the various lobbying parties such as the Tenants Union feel that landlords have too much power)
  • Clarification on rights and responsibilities for both Tenants and Landlords
  • Making it an offence to include a term in a tenancy agreement that is prohibited under the blacklist (which is to be created)
  • Clarifying the extent to which a landlord can prohibit a tenant from having a pet (which includes making a ‘no pets’ clause unreasonable and unenforceable.
  • Providing compensation to tenants for open for inspections when showing prospective buyers through if the property is for sale.
  • Clarifying subleasing and what can be charged for new tenancies. (this will likely cover Air B n B issues.)
  • Greater clarity about lease break fees and the potential to cap a lease break fee and rental compensation to a landlord at 2 weeks only.
  • Limiting rent increases to once per year instead of the option for every 6 months.
  • Clarifying ‘reasonably clean’ to reduce disputes.
  • Termination and security of tenure – they’re thinking of removing the 120 day notice to vacate for no reason.

Based on my own experience as a tenant, landlord and licenced estate agent, I will be submitting a proposal to try and protect our landlords from changes that I think are unfair and in the same way, I’ll be raising issues for clarification such as ‘reasonably clean’ and the minimum requirements for a property to be leased clearly defined so as a property manager, I can show those very small percentage of owners who think it’s okay to have holes in walls / mould and so on and lease the property that it clearly is not.

If you don’t have the time to create your own submission, let me know what you would like included so I can add it to my paper!

Investing with Super

Now, please don’t take this as super investing advice, I just want to give you a window into my own experience arranging a SMSF and buying an investment property myself!

If you’re not all aware, if you have a superannuation fund (everyone that works nowadays has to have one), you can arrange that to be taken out of your chosen fund (for me I had been with host plus for years) put it into a special bank account under your own superfund name, and, arrange to buy an investment property (outright, or with borrowings).

I’m in the process of doing this as I type.  I started in September… and here we are in January more than 3 months later and I’m still working on it, but I can see the finish line!  For me, this is how it worked out;

  1. Signed up with esuper and created an account.
  2. Created a super fund under our names (me and hubby)
  3. Opened bank accounts and trading share accounts (all included with esuper)
  4. Started looking at properties in November.  Now here is where the challenge comes.  Liked some properties, but can’t put in an offer until you set up the super bare trust (the business that the house will be purchased under, it’s usually a pty ltd).
  5. Submitted a pre-approval application for a loan (borrowing approximately 60% paying the rest with super)
  6. Sorted out our pty ltd and negotiated prices on properties that we looked at and finally in December, signed for one subject to finance and building inspection. Paid the initial $1000 deposit from our own pocket as you can’t just access your super so easy!
  7. Arranged for the transfer of my super funds to our self managed super fund (beware, this can take 30days!!!)
  8. Identified ourselves at the bank (finally) – this took 8 trips between myself and hubby to fill out the stupid bank forms and have the stupid bank people sign in the stupid right place on their own stupid forms… Needless to say this was not fun.
  9. January comes around, had to ask for an extension on the finance clause as even though you think that when your super is putting up 40% + and it’s an asset, it would be a no brainer yeah?  But this is where paperwork and banks come in… (grumble)
  10. As of now – should have final approval for the loan in the next 24 hours!  To add to this, it took 48 hours, but who was counting, but now the contract is unconditional!

After that, if it all goes to plan, I get to have 2 open for inspections prior to settlement to try and lease it as close to settlement date as possible to minimise vacancy (a savvy clause to have in the contract of sale in case you’re playing along at home).  That being done, esuper (or your accountant if you set up a smsf with them) will arrange the annual auditing and hubby and I get to sit back while a tenant pays off our asset and our investment property gains in capital growth!  In 20 years time it will be paid off and I’ll be 5 years off retirement (unless the law changes in that respect, but that’s another story).

Want to have a chat about your investment or potentially buying something out of your super fund so you too can have an awesome asset to look after you in retirement?  Let me know, you can experience the personalised property management service.

Landlord to maintain premises – Supreme Court Ruling

A recent landmark supreme court ruling has sent ripples through the real estate world and has ramifications for properties that are not kept in good order.  Section 68 of the residential tenancy act states that it is the landlords obligation to maintain the premises in good repair.

In the past, there has been a consensus that if a tenant has viewed the property prior to moving in, that it is what it is and that’s how they accepted it.  This is no longer the case.  The supreme court ruling which can be found here but the gist of the ruling is as follows;

Tenant viewed a property and lived in the rental from 2008 –  2013, near the end of the tenancy, the tenant applied to VCAT for $50pw in comp (over $14,000) because throughout the tenancy, and prior to moving in, there were holes in walls, holes in the ceiling and floor, mould, rats and flooding issues…  The original hearing was awarded in favour of the owner as the tenant had not filed the appropriate maintenance requests or breaches – however, this was appealed  and as heard in the Supreme Court – it has now been interpreted that a landlord must maintain the premises in good repair – regardless of how it was when a tenant inspected it and, they are obligated to ensure it is in good repair more so than simply waiting for the appropriate maintenance notice from the tenant.

How does this affect a good landlord?  It doesn’t.  Good landlords look after their investments and ensure that everything is in good working order.  Good real estate agents inspect the property every 6 months (first one at 3 months into the tenancy) and with those inspections general maintenance is identified and acted upon accordingly.

For those that are the stereotypical slum lord, this is where the legislation interpretation will affect potential outcomes.  Here are some of the excuses I’ve heard over the years that certainly will no longer fly;

  • They inspected it like that so I don’t have to fix it.
  • I’m going to make that hole a feature of the wall (Rather than fix it)
  • They have a split system, I don’t need to fix the wall heater.
  • I lived in the property like that, so I don’t need to fix it

For those of you in the industry, have you got any good excuses?  Let me know in the comments section so we can all have a laugh.

 

Buyers Advocate – yes or no

There is a bit of a trend for savvy investors to source their next investor through a Buyers Advocate.  For those of you who don’t know;

Buyer’s agents (also known as ‘buyer’s advocates‘) are licensed professionals that specialise in searching, evaluating and negotiating the purchase of property on behalf of the buyer. They do not sell real estate.

They charge a fee (Ranging from $1000 up to 2% of the total sales price) to arrange purchase a property for their client. But when you think about that – if you’re buying even a cheap investment at $300,000 – that’s up to $6,000 in fees.

So if you’re not prepared to pay that to get the professional advice on your next investment, where do you turn – Sales agent?  I hate to say it, but sales agent’s tend to have a vested interest in selling you the property so there’s the opportunity there for them to provide data in its best light to sell you a property that gets them the commission!

Here’s a thought though – why not ask a property manager or business developer (for property management?).  They don’t charge a fee to provide information on how much they think a property would lease for and, property managers and bdm’s do not get commission when you buy a house.

Here at Eview Werribee, we offer all potential investors free market appraisals with current comparable data on what’s available to lease as well as what recently leased in the area relevant to the house you’re interested in buying.  If you’re thinking of buying an investment and you want to make sure it’s going to achieve the rent you’re hoping to get, why not get some free advice?  Contact me today so I can help you understand the local market – all for free.

Choosing the right agent

If you have ever had to buy, sell or rent a property, you’ll know that there is a wide range of agents to choose from.  When it comes to finding an agent to manage your investment property, who do you pick? Do you go for a franchise agent?  A boutique agency?  The cheapest one you can find on local agent finder?

As the landlord, the world is your oyster, but here are some things to consider when looking around.

The cost of your investment – this is something you worked hard for so it’s important you take the time to really investigate who you want to look after your property.  Cheap rates might be enticing, but how can an agency offer you cheap rates and provide top service for less money?  Do you really want to risk your property that is worth hundreds of thousands of dollars with someone cutting costs?

Reputation – with the internet, it’s so easy to google an agent.  If there’s something bad to be found, you can bet your bottom dollar it will be on line.  If there’s something good, even better!  They say only 1/10 who have a great experience share this with others so testimonials / good reviews are hard to come by so if your agent has them, you’re on the right track!

Skillyou might have to read between the lines here.  Think of a typical car salesman – don’t fall for the smooth talk, look for the data.  If you have an agent trying to tell you how much your house will rent for, they should have examples to back up their price.

Your point of contactthe person you’re dealing with to sign over your property.  Will they be the one actually managing your property, or, are they just the company business developer who will sign you up and hand you over to an unknown.

Communicationpretty simple this one.  When looking for a manager for my investment, I actually enquired about some properties on line to see what kind of service tenants were getting when looking for a rental.  To my surprise, only one agent emailed me back out of 5.  How will they lease a rental if they don’t respond to enquiries?

Those are the points I tend to look out for (even though I’m an agent myself, I chose an agent to manage my investment property).  Let me know if you have any other points that you look out for when choosing a real estate agent?