Nightmare house part 2

As you would have seen last week, we were left with a house destroyed by drug dealing tenants (confirmed by the police).  It took 2 months to get them out of the house (even though by that time they were almost 5 months behind in rent – but that’s another story).  The damage – all that was covered by insurance were the doors and the tiles – malicious damage, everything else  considered wear and tear.

Was rent covered?  No – this you need to be aware of, if you buy a house and the tenants are in rent arrears, no matter whether or not this is your fault, it is not covered by insurance.  So out of what was over $15,000 in the end, the owners only received $6,000 to put towards the repairs.

Depressing story, I know, but now that it’s July, and the owners have put in a fair amount of elbow grease, and the house is ready to lease (tenanted same week it was available).

Images below!

1 murhead after photos.jpg

It is now rented to a lovely family, in Werribee (it’s a 3 bed 1 bathroom property), at $300pw (considering it was getting $1000pm prior, $300pm more isn’t a bad increase – not enough to cover the work involved, but again, that’s another story).

How did we help?  For no additional charge, we evicted the past tenants, obtained the bond, did the insurance claim for the owner and helped them through the renovation process until the happy ending of a new tenancy!

Self managed nightmare repair part 1

Happy new financial year!  I thought I’d start off with a 2 part story about a self managed property.

Here we have our poor hopeful lovely owners who secured a ‘bargain’ property sold through a local Werribee agent.  It had tenants in it, was receiving regular income, great!

The day prior to settlement though, their conveyance receives notice that, sorry, owner self manages the property and was only using an agent to sell, he made a mistake and the rent was in fact, 2 months behind. Oops, sorry.  Also, they didn’t get to do a pre-settlement inspection – sales agent said it would be fine and the tenants were tired of allowing access…

For most investors, alarm bells would be ringing loud and clear!  But sadly, our lovely owners went through with settlement, thinking the sales agent said their property management department would take over management and all would be well.

A week after settlement, the owner received the property file in the mail – sorry, too hard for us to manage, we’re terminating our agreement to manage the property.

Here is we step in.  Short story sort, another 2 months later and finally we get possession of the house (kicking, screaming, police at the property, lock changing possession)

Below is what the house looked like after that moment;

This was in February 2017.  Tune in next week for what it looks like now!

Depreciation Schedule – do you have one

If you’re a first time investor, then you might not know about depreciation schedules.  The basics of it are – you send out a qualified depreciation agent to go through the property so that everything in the property can be given a depreciation value over 10 years.  This then applies against your tax return saving you money!

To ensure we look after our clients, we have arranged a discounted rate through Costin Quantity Surveyors.  Mention Eview when booking your tax depreciation to get your report for $440!  (the cost is also tax deductible).

Wise words I once heard from an accountant were ‘We all have to pay taxes, but there is no need to leave a tip!’.

If you want to discuss any other things that can help minimise your taxes against your investment property, get in touch!

tax depreciation.jpg

3 Months free management offer

So, we’re in the last month of the financial year and this is the best special offer we’ve ever run.  For all new landlords that transfer their property to us this month, they will receive 3 months free management!  On a $300pw property, this is a saving of $258.13 to start your new financial year off on the right foot!

Why transfer your property?

  • We offer great service with experienced staff (21 years alone between myself and Neval, our other property manager)
  • We care about your properties! (When was the last time you received a photo texted to you simply because your PM was in the area – if you only hear from your PM with bad news, then you’re not getting the service you deserve)
  • We tell it like it is – are you a long term investor that has experienced issues in the past because your PM was too afraid to tell you something?  Maybe they thought no maintenance was good maintenance, or they tried to sweep those 3 dogs and their land mines under the carpet once they found out the no-pet application miraculously had their long lost pets found against all odds?  Then this is part of our service that you’ll actually appreciate.
  • We’ll fight for you! Have you ever had someone simply write off an arrears debt because it was over the bond?  Just this week we recovered the last of an outstanding debt from a vacated tenant – apparently they didn’t appreciate us contacting all their emergency contacts / references and workplaces to finally collect what was fully owed.

What are you waiting for, contact me today so we can get the transfer process started.  What’s the small print you ask?  Easy.  To qualify for the 3 months free management, the management fee is 6.6% including gst, and all we ask is for a 6 month commitment.  If you’re not satisfied after 6 months of our service, you’re free to leave.

We’re expanding!

Exciting news.  Eview Werribee is expanding!  With recent staff additions (We hire before we need to so that we can continue to service our clients during periods of growth), we now manage not only the West of Melbourne, but the North as well!

I personally owned my own investment property and lived in Craigieburn for 5 years and now, we have Dianna who joined our office at the start of the year, who still lives there!

area of management

So, as per my awesome map, we now look after a broader area.  Already some of our current landlords (who had been asking for some time for us to look after their other properties) have bought over their investments so why don’t you do the same?

How do we manage such a wide area some may ask?  It’s simple – we manage where we live.  I live in Bacchus Marsh, our office is in Werribee – so it makes sense to manage everything in between because I drive it every day.  Same goes with our other staff who live in Geelong Craigieburn, Point Cook, Sanctuary Lakes, Wyndham Vale and Hoppers Crossing!

Would we manage outside this area?  Currently, no, as a company, we are only prepared to manage the areas where we are able to deliver a high standard of service.  So what are you waiting for, tell your friends and family that we can now offer a wider range of help with their investment homes!

Signage- how do you choose an agent

This post is more of a question to the landlords out there.  What kind of signage do you respond to?

One challenge I have found since coming to Eview Werribee over a year ago is that not many people in the western suburbs actually know the Eview brand so, we’ve taken the leap and we’re arranging to get some more signage out there and for that, I’m volunteering my car!

So, what type of signage grabs your eye?  And what signage turns you off.  Don’t worry, I don’t drive around in a sleazy sales agent vehicle, it’s just a stock standard holden cruze, but the plans are to get a see through rear windscreen design as well as side magnets.  So wherever I drive, people will see my name (and me).

I’d best drive well!

Let me know what you think!

An example of self management gone wrong!

Many landlords in the past (back in the good old days) used to self manage their own investment properties.  Before all the legislation (Residential tenancy act was introduced 1997), back before when people stood by a hand shake and back before when people signed a contract, if something was owed (like rent) it was paid without fuss!

Nowadays, self management is no longer the norm. Most Real Estate agents take property management seriously (at least hiring a qualified property manager rather than having the receptionist look after rental properties in between taking sales leads) and, there is a good reason for this.

Managing a property is hard!  Not only as a landlord do you have to abide by the legislation (so that’s not just the Residential Tenancy  Act, you also have to be aware of the Privacy Act, Fair Traiding, VCAT Act…) Breaching any one of these can get you into trouble.  But that’s not the biggest risk.  The biggest risk is not managing a property properly, resulting in more damage / debt than when you started!

One example can be found in the recent article from the Courier Mail – Landlord’s nightmare: Maggots, faeces and garbage.  This landlord thought she would go West to earn more money, renting out her home in the mean time.  She responded to an add on gumtree (every time a PM hears this we shudder) and rented her house to a large family.

“AS FLIES swarm and a pungent stench fills the air, a tearful Amanda Rehbein wonders where she went wrong.”

The gist of the tale is she felt sorry for them, went over west for a year, when she returned, she found that the house had been so poorly kept, that they couldn’t even unload their furniture.  I’m talking poop, maggots, filth and rubbish.  They’ve estimated 6 weeks before the house will be liveable, brand new carpets need removing (but they can’t afford it so they’re just going to have to clean the best they can) and they have to pay for accommodation in the mean time as well!

If there’s such damage, wouldn’t insurance cover this you would think?  The short answer is No.  And so is the long answer.  I am yet to find an insurance company that covers cleaning and rubbish removal, they just don’t do it (And it can be expensive).  Aside from this, she was self managing, from interstate?  How on earth could she keep tabs on her property?  By not using a local agent, she would not have been covered even if it had been malicious damage as she had not taken preventative measures to ensure the property was rented as it should have been.  Such rubbish and filth does not build up overnight!  A routine inspection carried out at 3 months (which is what you can do in Victoria, note all states are different), would have picked up the way the family was looking after the property and steps could have been taken then to minimise the damage including;

  • breach notices
  • follow up inspections
  • potential notice to vacate if breach is not remedied
  • compliance orders from VCAT
  • warrant of possession to be executed once possession is granted due to multiple breaches

If you’re not familiar with the residential tenancy act, how to make an application to VCAT or breach tenants, or even how often you can inspect the property, then don’t even think about self managing your property, it’s just not worth the risk, and certainly not worth the heart ache!  Thinking of renting to a friend… then read this article from the Age- The truth about renting to friends.

Need any advice about your investment?  Get in touch with me, I’m happy to have a chat.

 

 

Lease break – what happens?

So, you’ve leased your property out, you have a fixed term tenancy agreement and it’s happy days!  Then, half way through the lease, the tenant advises they have to break the lease, they return the keys and vacate the property, what now?

Well, the standard process for most agencies is to advise tenants of the lease break costs (tenants are obligated to pay for advertising and a pro-rata letting fee, this means if a landlord pays 1 weeks rent for a letting fee, and there’s 6 months left on a lease, the tenant only has to pay half a weeks letting fee in compensation).

From there, an agent does everything in their power to ‘minimise the tenant’s loss’.  This does not mean that the agent is working for the tenant by any means – they’re actually working for the landlord to minimise their risk.  Under the legislation, the landlord has an obligation to minimise loss to the tenant, and if you can not prove that you’re doing everything in your power to re-lease the property, then you risk not being able to claim rent from the tenant!

Once a new tenant is found, then the rent is calculated up until the new tenant moves in and this is what the old tenant owes.  Done and dusted.  If only it was always that simple…

A recent VCAT case has occurred where a tenant broke the lease, vacated the property and returned the keys.  After the property was vacant for 10 days, the tenant made an application to VCAT for his bond to be returned (knowing that agents only have 10 days to process bond refunds or make an application).

What do you think the outcome was?  There was a lease in place, the tenant broke this contract, surely the owner is entitled to hold onto the bond until a new tenant is found?  No, afraid not.  VCAT awarded the bond in full to the tenant, siting that the bond should not be used to cover rent and that the owner must apply for compensation after it is leased from the tenant!  When there is no bond, when applying for compensation, if the tenant doesn’t pay, you’re stuck with a pretty piece of paper from VCAT telling you the tenant should pay…

How infuriating!

How do you work around this?  Well, being proactive always helps.  Knowing the legislation is also a great benefit.

  • Don’t get the tenants to return the keys, once the keys are returned the tenant has returned possession and this limits your ability to claim further rent.  When they have possession, they have to pay rent.
  • Try your best to lease it out quickly, even if you have to drop the rent by $5pw. This puts the landlord in the best light and in a more powerful position when claiming from the tenant.  Better off taking a $260 hit for a 12 month lease rather than loosing weeks worth of rent by not being able to claim it from the tenant!
  • Negotiate, negotiate, negotiate!  Once instance we dealt with we had the lease break tenant pay weekly instead of monthly, it was more manageable from their end and, it gave the tenant hope that we were about to lease it (which we did).

Do you have any lease break questions or stories?  Let me know.

Self manage your rental – good or bad?

Just wanted to share a quick story about a recent situation that I had to fix up for an owner.  Not the standard self managed rental disaster I can tell you.

I was contacted by a new landlord who had recently settled on their new investment.  A week after the property had settled, the property manager (from the office that sold my poor landlord the investment) contacted her to collect management as it would be too hard for her to sort out!

Needless to say, this poor new investor was stuck!  So she gave me what information she had for me to fix the situation.

Long story short, the vendor had self managed his rental property, sold it, and at the last minute, advised for settlement that his tenant was 2.5 months behind in rent and that he was keeping the bond!  Now, beyond that, since getting the illegible lease agreement, it turns out that the self managed rental property had been paid for in cash!  The vendor never provided receipts and did not even lodge the bond with the RTBA!  (All big no no’s that can lead to $6000+ in fines for breach of the Residential Tenancy Act).

So, I love a challenge.  I was given the vendor’s details from the sales agent (slight breach of the privacy act there), and I explained to the vendor politely that he must have been given incorrect advice to breach the residential tenancy act so many times and if he could please transfer the $1000 bond to our office so we could lodge the bond (1.5 years after it was paid).

I also contacted the tenants, who advised that it’s their own fault for not getting receipts for the rent.  So either way, no one seems to be able to prove their paid to date as the vendor did not keep appropriate records!

The resolution, the purchaser (my very happy new landlord), receives rent from settlement from the tenant.  The tenant has agreed that the settlement date can be their paid to date and we sign them up on a valid lease.  We also get them to sign a bond lodgement for to lodge the bond and manage it from there.

As for the Vendor – should the tenants or the purchaser wish to report his actions, he still risks all those fines.  According to the Vendor, he also lost 2.5 months worth of rent (I think a little bit of business karma there because the property was sold subject to the lease and the tenancy which was made out to be secure and not in debt until the very last minute obviously to make the sale more attractive).

All in the day’s work for an experienced property manager!

Award Winning Property Management

Eview has award winning property management, so why not trust your investment property with us!

What are the awards for really for?  The blue ones are statistics – so that’s a pure case of numbers.  For Eview, for the whole Eview group (offices throughout Melbourne, in NSW, QLD and WA), I listed the most new managements out of the group and I leased the most properties out of the group.

For the other two awards, Rental Department of the Year – this one is a little more broad, but as a company, Eview Werribee grew their rent roll the most (organically, we don’t buy properties here).  For the Rising Star in Property Management Award – as nice as it sounds, this one is a little more ambiguous.  It’s a great accolade to be voted by the powers that be the rising star (as in the person that who has joined a company within the last 18 months to have achieved the most over their piers)  – this is the only one I feel a little shy about as such.  Here in Property Management – we have different personalities than Sales Agents.  Different Egos.  (Don’t worry, I have a healthy ego, it’s just not as loud as some of the sales agents).

Anyway, there’s me tooting our horn a little bit.  Trying to get our achievements out there for a company that provides award winning property management.