PROPERTY INVESTMENT: the plain sailing guide

Investors who insist on the highest rent the market will bear often end up with a greater level of vacancy once tenants have time to make comparisons and find a better value option.

“The key to both negligible vacancy and tenant harmony is setting rent at 95 percent of market value,” Bellarine Property managing director Christian Bartley said.

“At the end of the year, even a few weeks’ vacancy usually means a lower net income than if rent had been set at 95 percent.

“Investors whose properties are good value get more inquiry and can afford to be more selective when deciding who will rent their property.”

According to Mr Bartley, references are crucial when developing a tenant profile but the bottom line criterion is: do you believe they would be able to pay X dollars per week for Y weeks?

“An investor’s managing agent is the person with the expertise to advise on the tenant’s ability to meet their lease obligations.

“But many novice investors don’t know what to ask of their managing agent.

“If you can tell them upfront what your needs are, it’s much easier to keep abreast of what’s happening and avoid confusion.”

He said a managing agent should provide a monthly statement of all income and expenses with cheques banked directly into investors’ accounts.

“Ask for an annual written report of state of repair (internal and external) and cleanliness as well as a mid-year written kerbside report of state of repair and cleanliness.

“You should also receive a six-monthly written report of the rental value and the local area vacancy rate and an annual written report of the reasonable selling price of your property.

“Landlords should carry out an internal inspection of the property themselves once every two years so that they can visualise its state of wear and tear when maintenance and repairs are discussed.”

Mr Bartley said it would take investors three to six months to get to know their agent and how he or she operates.

“Until then, require all expense items to be referred to you (other than emergencies) prior to the agent spending any money.

“After the initial period, set a limit on the amount the agent can spend (usually about the equivalent of one week’s rent) without reference to you.”

As with any contractual arrangement, investors should always have their agreement with their agent evidenced in writing.

“It sounds obvious but it’s amazing how many people don’t think of it,” Mr Bartley said.

“Any business arrangement is more likely to be plain sailing if both parties have their rights and obligations clearly delineated.”

For more information, phone Christian Bartley on 0410 695 325, email [email protected] or head to bellarineproperty.com.au.