Buy home. Buy Property - rental property investment

Many people set out on the journey of wanting to buy property for rental property investment and for personal occupancy. If you want to buy property for rental property investment you can. If you are looking to buy a home to occupy you probably can do that too. Whilst the money is a big part of the process to buy property, it is not the only part. Even if you only have a little bit of money set aside you probably can buy property - you definitely do not to be filthy rich to become a savvy property investor or home owner.

So what is important about becoming a property investor who might one day own a portfolio of property investments? Here are a few important tips to start you thinking about your journey to becoming a property investor.

1. Establish a plan to buy property. There is no greater risk than that of buying property off the cuff without any planning, goals or research. Setting aside some time to create your own personalized property investor blueprint is worth its weight in returns in the long term.

2. Review your financials. You need to know exactly the condition your personal finances. Review your existing financial commitments. Document your income both gross and net (take home pay). It is important to understand the differences. Understand your current spending habits for your daily costs of living. Scrutinize your social expenses too. Review your current savings in the bank and any saving plans you might have in place now.

3. Seek advice from a financial planner. A good financial planner will help you to review all of your financials. The process of putting all your financials on the table for an outsider to review can be challenging but also very rewarding. You will be surprised how many new insights you can gain from a professional about your present situation. Some people advocate an accountant which is well and good however I believe that a financial planner will help you to create a big picture tapestry of your circumstances and set you up with a plan to help you buy property in the future.

4. Understand your superannuation. Have you ever considered establishing a self managed superannuation fund? Believe it or not, you might be sitting on a wealth of opportunity and resources by tapping into your superannuation funds to assist you with your plans to buy property. Just a note, if you buy property using your superannuation you will be unable to occupy such a purchase - the property can only be an investment property in most circumstances.

5. Research the areas that you are interested in or want to buy property. Don't limit yourself to buy property in areas you simply like but adopt a property investor mindset and research information from leading commentators and property professionals. Exclude slippery salespeople and "get rich overnight" investment companies from your research. Visit local councils and speak to town planners about future infrastructure to be constructed.

6. Follow the market. There is so much free information in the public realm nowadays - don't be afraid to use it. Inspect some homes for sale, attend public auctions, speak to some active salespeople , follow some leading property websites. Know the current value of home prices in the for sale homes pages of your local and state newspapers. You can develop a good understanding about an area in a reasonably short period of time. The internet does make research so much easier nowadays.

7. Research the cost of buying property as a property investor. Every state has variations in the cost of stamp duties and title registrations when you buy property. Every bank has a suite of fees, valuation fees, settlement fees and bank account fees associated on your loans when you buy property.

These suggestions can all be broken down into much smaller items and extensively expanded upon. The list is presented as an appetizer to the discussion you should be entering into in your pursuit of becoming a property investor. The real secret behind any property investor who sets out to buy property or establish a portfolio of investments properties is their commitment to the development of a plan that is researched, prepared, calculated and implemented.

Good luck with your mission to buy property - wishing you rental success.

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Real estate Melbourne - real estate listings, real estate sales and real estate rentals

Melbourne real estate is an apparent wrestle of commentary across all the major banks, economic commentators, the Reserve Bank and the treasurer’s office. Despite the signs of a softening market contradicted by high real estate auctions clearance rates of up to 80% across Melbourne in recent weeks, it is projected that the Melbourne real estate sales market will remain healthy over the long term as property investors continue to actively purchase property and owner occupiers continue to sell and buy respectively. I at times wonder what real numbers might be achieved if there were more real estate listings available on the market.

Inner and eastern suburbs continue to increase in value and a growing supply of new apartments are on offer as a new developments open onto the real estate listings market via a seemingly evergreen supply of construction approvals. Strong population growth is also causing massive development demand for housing and accompanying infrastructure. According to a recent report on 31st March 2015 by the Australian Bureau of Statistics, "Melbourne had the largest growth of all Greater Capital Cities (up by 95,700 people), followed by Sydney (84,200), Perth (48,400) and Brisbane (38,500)." It is no surprise that the outer suburbs and rural urban fringe areas such as in the northwest of the city where land is relatively cheap continues to reap the rewards of the developers eye. First home buyers are heading to these outer areas also to satisfy a desire to enter the property market and secure affordable homes away from the savvy investors market.

Whilst real estate sales may remain strong in the short term, recent reporting from CoreLogic RP Data Home Value Index results seem to indicate that Melbourne’s dwelling values may be on the decline. Research analyst Cameron Kusher says the city has moved past its cyclical peak, which was 11.9% in January 2014. It is worth noting that CoreLogic RP Data results show that Melbourne continues to have the lowest rental yields of all the capital cities, for both houses (3.3%) and units (4.2%) but this does not necessarily mean that landlords are sitting around with vacant properties. The team I manage at hockingstuart, having just come off the peak rental season (January - March), has leased some 350 real estate rentals across the CBD and inner Northern suburbs including, North Melbourne, Carlton, Brunswick, Collingwood, Northcote, Fitzroy and Melbourne. Subsequently our current stock list of properties being offered for lease is now the lowest I have known it in 5 years. Furthermore show me a leading bank that is offering 4% term deposit returns - it is just not achievable in the current market.

Consumer confidence in property remains upbeat and the pursuit of new lands by developers continues to provide opportunity for confident buyers. The Real Estate Institute of Victoria has also released data showing that demand from families wanting more space has led to strong price growth in four-bedroom homes over the past year. The median price of four-bedroom homes grew in inner, middle and outer Melbourne by 3.9%, 4.2% and 5.6% respectively. However, the biggest median price change in the outer suburbs was for smaller, two-bedroom homes. These were up 7% (to $390,000). This suggests that Melbourne’s rising property prices have increased demand for these more affordable smaller houses, which offer a good way to enter the market. Investors are likely to enjoy high occupancy with such investments as well as long term capital growth.

Melbourne real estate is not simply a wrestle of commentary it is a unique tension between sellers of real estate listings and buyers to the transaction of real estate sales woven into the fabric of a distinct tension between home buyers and real estate investors. Did somebody say "yield"? Lets defer that topic for another day.

Chris Snell is a licensed real estate agent and actively manages a substantial property investment rental management team within the hockingstuart group of offices Melbourne.

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Rent my house and make the tenants live like I do ...

One of the big mistakes that home owners make when they rent out their house is that they feel like they are trying to "rent my home". This creates huge problems from an emotional perspective. More often than not, the trap for the home occupier become landlord is that they expect a new tenant to live like they did.

Tell the tenants we never used that room to watch television!

Tensions arise during an owner visit to the now rental property during the tenancy. Here the owners wearing their hat of a landlord conduct a routine inspection which is a walk through their property. At this stage the landlord has come to realise that the property is not being occupied in a way that is consistent with they way they might have expected. A perfectly satisfactory tenancy may be in place and the new residents might well be the prefect tenant ... but the emotional owner is really struggling with letting go of the past. Over reaction at this stage may prove disastrous in the long term.

A few thoughts to help a challenged owner focus might include:

1. Your home was your home when you lived in it.
2. Your home is now your house and part of contractual agreement where somebody pays rent in exchange for exclusive occupancy.
3. Your tenants will set up their home as they think fit for their enjoyment.
4. Your house, when rented out will make various homes for multiple tenants over time.
5. So long as your tenants are not damaging or neglecting your house then allow it to be their home.

Continue to remind yourself that your house has taken up a whole new function for you whilst you rent it out. Embrace the new purpose of the tenancy relationship in place and you will be sure to embrace the new found freedom you are enjoying in your new home somewhere else.

Wishing you rental success.

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Do rental management companies lack ethics and honesty?

Choosing the right rental management company is a complicated task nowadays given the large number of them offering rental management services. 

As rental property management companies begin to present themselves as being different to sales companies, it is good to remember that both must be managed by licensed real estate agents and adhere to relevant statutory requirements. In fact, every standalone office requires a licensed estate agent to actively operate and oversee the business. Is your property manager supervised by a licensed estate agent?

Rental management services are often overlooked by savvy landlords and investors in the pursuit of discounted rental management fees. Believe it or not ... some real estate agents and property managers are untrustworthy and dishonest. In fact, the Roy Morgan Image of Professions Survey 2014 (Australia) has confirmed that real estate agents rank among the lowest trusted professionals in Australia. A sample size of 644 men and women across Australia were simply asked to rate or score people in various occupations for honesty and ethical standards. Roy Morgan's survey concluded that, “Once again Car Salesman (3%, down 1%) rank at the bottom of the list – a position they have held for over 30 years. The only other professions in single digits for ‘ethics and honesty’ are Advertising people (8%, down 1%) just behind Real Estate Agents (9%, down 3%).” Number one in the rankings were nurses followed by pharmacists and then doctors. At the bottom of the scale were car salespeople (30th), advertising agents (29th)and real estate agents at 28.

Focusing on rental management fees alone will come at the expense of good quality rental management services. The classic catch phrase of, "pay peanuts and you'll get monkeys", might be a little far fetched but it does beg the question, are rental management services more important in the long run than cheap rental management fees? Given that real estate agents have consistently ranked in the lowest end of the scale of ethics and honesty it might be time that you reviewed your current services agreement with your existing rental management company. Perhaps it is time you reflected on the rental management services you have received from your existing property manager during the past year. It may also be a opportune time for you to visit some alternative rental management companies and seriously think about engaging a professional property manager from a credible rental management company who will deliver the proper and timely rental management services you deserve.

Wishing you rental success. 

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The top three questions to ask a property manager

The top three questions to ask a property manager

Posted on Tuesday, September 30 2014 at 1:48 PM

By George Kafantaris

Finding a great property manager is one of the keys to having a successful ‘set and forget’ investment.

It means you’ll be able to safely leave your property in someone else’s hands, knowing the rent will be in your account at the same time every week or month and the home will be well maintained, along with its value.

We’ve all heard nightmare stories about terrible property managers. So how do you find that gem of a property manager – one who has your best interests at heart and will go out of their way to attend to the small details?

What you shouldn’t do is just pick the one with the cheapest fees. Your asset is worth a lot of money and consequently you should be looking for someone who will provide the best service rather than simply charging the lowest rates.

You should interview a few different property managers before making a decision, and while there’s a raft of things you should find out before engaging the services of a particular property manager, here are three questions that are a must-ask.

1 How much experience do you have?

An experienced property manager will have thorough knowledge of the relevant rules and laws that affect your property and tenants. They’re also likely to have come across most scenarios regarding maintenance and tenant issues, so they’ll know the best way to respond and consequently be able to take the best possible care of your property. In addition, an experienced property manager will be able to identify a bad tenant right off the bat, which is invaluable to the success of your investment.

A property manager who has good experience in the industry will also be able to accurately gauge tenant demand for your property and set the right rental rate to attract tenants. They’ll also be able to conduct regular rent reviews and ensure the rent accurately reflects the market, including increasing the rate at appropriate times, which will give you the highest possible return for your asset.

Property managers who are committed to their career are more likely to go that extra mile for you and your property. But rather than simply looking at the experience of the individual property manager you choose, you can look at the collective experience of the team they operate in, as you’ll be able to access all of this expertise. 

2 How many properties do you manage?

It’s the norm for property managers to handle around 100 properties, unless their duties are split between other team members. Some companies have leasing consultants as well as property managers, which means the latter can focus solely on maintaining your asset and taking care of the tenants. Ask the property manager you’re considering what their workload is, as you want to ensure they have enough time to tend to your property properly.

A good property manager will conduct regular inspections of your property and will provide reports to you as the landlord, including photographs. Regular inspections are essential as they enable the manager to pick up on any problems with the property before they get out of hand. For example, they might discover that a tenant is failing to treat the property properly, or pick up on maintenance issues that might cause costly damage to your property in the long run. If problems are picked up early they can be remedied quickly and the value of your property can be maintained.

3 How do you find and screen tenants?

Finding a good tenant is the first step in risk management for your investment, so it’s very important that your property manager has a thorough selection process in place. To find out what this involves, you can read my previous column on choosing great tenants.

You’ll also want to ensure your property isn’t left vacant for long periods of time, so it’s important to ask a potential property manager how they plan to find a tenant for your property. There are two main factors that will lead to your property being rented quickly: the way it’s presented (which includes the quality of the advertisement); and price. If your asset remains on the market for a longer period of time, some property management companies will offer incentives to attract tenants, such as offering a rent-free period or throwing in an iPod, or even a holiday.

George Kafantaris is the principal of property management company Property Portfolio.www.propertyportfolio.com.au

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