11 Dec 7 Common Mistakes That Cost Landlords Money
It’s in most people’s nature to try save money where-ever they can, but there are times when cost cutting can actually lead to bigger financial blowouts than the cost itself!
An insurance comparison expert has said that property investors looking to cut costs could set themselves up for financial ruin in the future.
Abigail Koch, of comparethemarket.com.au, said recently “Property is unlike other business models, because what is regarded as a business by the investor (Landlord) is a home for the tenant,’’ she said.
Vera from Property Asset Property Management has seen almost every possible situation and heard excuse you wouldn’t believe during her time in the industry. She sat down with me to share her insights on these common mistakes that landlords make on a regular basis that often end up costing them time or money or both!
These are the 7 big cost cutting Landlord Mistakes
1. DIY Property Management
Agent fees can range from 5% to 12% of the weekly rent collected.
(Property Asset Property Management is a Full Service Agent. Agents who charge at the lower end of the scale generally do so as they provide a lesser service.
Do you have more than 1 investment property?… if you do – ask us about our multiple property pricing!)
While some landlords don’t see the value in engaging an agent, Vera says that it’s a very small price to pay for professional work. Landlords who managed their own properties without knowledge and expertise in things such as handling the advertising, lodging lease agreements / bond forms and screening tenants, could risk paying much more in the end.
(Are you up to date on the Tax changes that came into effect on 1 July 2017 for DIY Property Managers? Click HERE to read the article)
2. Poor Screening Process
If your future tenants are not screened properly during the application stage, you could end up with someone in your investment who doesn’t pay their rent or look after the property.
“Landlords should know if their property managers are checking that applicants can afford the rent, have a good credit record – including a history of on-time rental payments – are making reference checks, and vetting applicants through a tenant database,’’ Vera said.
3. Failing To Act On Tenant Requests
It’s vital that repairs are dealt with in a timely manner.
“Tenants may legally be able to break their lease if the property becomes uninhabitable, leaving the landlord out of pocket for rent and needing to find a new tenant,’’ she said.
4. Failing To Comply With Safety Requirements
Many Landlords don’t realise that they are responsible for the safety and well-being of their tenants. If they don’t meet legislated requirements (such as installing smoke alarms and secure pool fencing) they may be fined.
5. Discriminating Against Tenants
Discrimination is simply not acceptable.
As a landlord, you have the right to choose a suitable tenant but you can’t discriminate. If found guilty of rejecting a tenant based on discrimination (i.e. ethnicity, age, religion), landlords could face heavy fines under State anti-discrimination laws.
6. Not Taking Out Landlord Insurance
“While building insurance generally covers repairs to the physical property, Landlord Insurance covers the loss of rent in many circumstances.”
“…say for example the home is involved in a fire, landlord insurance would cover the loss of rent during the time that the property is uninhabitable” Vera explains.
7. Rent Above Market Rates
If the asking rent is too high, you may struggle to find a tenant or only find shorter term tenants.
Constant turnover of tenants generally results in higher maintenance costs and periods of vacancy with no rent coming in.
“Simply by dropping your rent by $10 per week, the property is affordable to many more potential tenants; this will commonly result in it being tenanted sooner.
I understand that $520 (the overall cost of the $10 per week drop over the 52 week year) is difficult for some landlords to accept, but each week your property is empty, it’s costing you the full week’s rent… $300+! By reducing the rent by $10 per week, you’re only missing out on $520 across the entire year.”
Adapted from an article published by Michelle Hele of The Courier-Mail DECEMBER 7, 2017
Property Management Services
Generally investors choose to manage their own property because of the costs associated with a professional Property Manager.
Now that the government is reducing the ability to deduct travel costs from your personal income tax, the net costs of having a Property Manager are reduced. (Not to mention alleviating the headaches that go along with of having to do it all yourself!)
Why don’t you contact us today? Ask us about the FULL service that we provide along with our competitive pricing for Multiple Properties.
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OR: Email email@example.com