Every Landlords worst fear
Every Landlords Worst Fear
You are going about your daily routine when you get the phone call you don’t want from your Real Estate Property Manager.
“I have just done an inspection on your property and it seems the tenants are breeding rabbits in your lounge room. The place is a mess and it stinks. I think it is time to evict them”
That phone call came in November 2016. They were finally evicted through the courts and all of the legal channels in February 2017. They hadn’t paid rent since December.. why would you when you’re being evicted?? Why too would you look to clean up and maybe not steal or damage any of the owner’s property?
These are just a few of the questions the tenants clearly didn’t pose to themselves.
I used my own keys to access the property mid February 2017, the day after eviction. The tenants who had initially 4 years ago been good, had turned yes I will say it ‘feral’. They didn’t hand the keys back and no they weren’t there for final inspection.. funny that.
The cleanup and internal and external damage and fixing up of this rental premises to a standard of renting out again took till the 17th of April 2017.
This Blog isn’t written to scare people off being a landlord, far from … what I am aiming to do here is to showcase that regardless of the road blocks on your path with good contacts and structures in place it doesn’t have to be the end of the road for you as far as a great long term investment.
What have I learned as a result of this happening to me? Well I like to call myself a “Socially Responsible Landlord”. I mean that I specifically look for houses in low socio-economic demographic areas with high yields. Some would say “what did you expect to happen in those areas?”. Those nay sayers are the ones that cant see the wood for the trees so to speak.
Look around in everyone of your major Australian capital cities and you will find low socioeconomic suburbs. Suburbs where the battlers live, the single parents and disability pensioners, those fleeing domestic violence in shelters and of course the housing commission areas run by welfare groups like in South Australia Anglicare. These areas people cannot or do not have the education to understand that they can purchase their own homes and hence third generational renting exists. As a “Socially Responsible landlord” I look to be the best Landlord I can be to give these people and their children the best start in life.
This house is exactly slam bang in the middle of one of those areas. The park across the street has been beautified by a Famous South Australian tennis coach to a famous tennis player to the sum of $350,000. The slogan at the end of one of the fully fenced courts says “believe in yourself” very apt for the kids playing in that park.
That slogan can be very apt to my situation as regardless of what these tenants can throw at me (pardon the pun but they did on the walls inside!) I will survive it and out of the ruins will raise the phoenix. In this case out of the renovation came a single mother of 3 kids and one with special needs who cried when they were accepted into the house. The park across the road and close to all facilities also assisted her wanting the house. As the landlord that is what makes me feel that I see the woods and the journey ahead will be worth it regardless of the setbacks.
FIRST TIMER RECOMMENDATIONS
Each time I go back into one of my investment properties between tenants there are varying levels of work to be done. A lot of the work I do myself to save on costs, but a lot I have my cherished tradespeople to do for me. Below is a list of suggestions or recommendations if you are a first time investor:
- Landlord Protection Insurance is a must ( will speak on this further)
- Have trusted trades people on speed dial on your phone, plumbers, electricians, gardeners, cleaners etc.
- Have money up your sleeve to be able to carry the costs of repair and loss of rent prior to insurance claim coming through.
- Take lots of photos and ensure the outgoing inspection report is thorough and completed by your Agent.
- Have a Property Manager… I cannot stress this enough.. there are various reasons for this but most of all they deal with the tenants direct and you don’t need the phone calls at 2 am for leaking taps. And most importantly they check the Tickr database or the bad tenant register which you cannot.
- Ensure that all inside decoration is neutral and if you have multiple properties keep the colour schemes and paint colours the same throughout.. saves a lot of time when it comes to repainting.
- Most importantly if you are getting painters in or doing it yourself, buy the best quality maxi wash high grade washable wall paint you can afford. The washing/scrubbing of walls can assist in cleaning and not having to repaint saving you a lot of money.
- Comfort with airconditioning/ heating is a must, as are fans in bedrooms if only a split system. Yes, this causes some landlords to say that’s not needed but hey I figure I would live in all of my properties how I present them and my comfort is just as important as the tenant, hence it in my mind it is a MUST.
- Keep your yard and landscaping to a minimum. Tenants even with the best of intentions don’t necessarily look after the yard as you would so try and add in a gardener into the rent for the month, saves them lifting a finger. ( this is exactly what I did with this house just recently)
- Finally suggest to the Property Manager that the tenants if they are being paid by government benefits, on the dole or single parents or carers or disability pensioners, then in South Australia they are paid by Centrelink as the Government Agency. Under that Agency they can pay their rent directly to the landlord through an agreement called “centrepay”. Is essence this means that I pay a minimal sum each fortnight to get my rent paid directly into my bank account by their Centrelink payments prior to it hitting their own bank accounts. Happy people all round!
- I nearly forgot if you can say ‘NO PETS’ yes this house was and I ended up with massive cleaning bills for the tens of cats, dogs, and rabbits and their excrements and stench left behind. Be on that immediately if your Agent sees illegal pets.
INSURANCE SPECIFICS TO LOOK OUT FOR
As I said earlier Landlord Protection insurance is a MUST, especially in these areas where damage and theft can be common. I have been lucky though and it certainly isn’t all of my properties over the years, but I wouldn’t be without it. Ensure that you also have your house insured via building insurance for fire etc this is a separate policy.
Read your policies very thoroughly. I learnt this when getting this house ready for rent, I learnt that the loss of rent provision that I was insured for was to max out at 105 days since last payment. ( this was my policy read yours to ensure you may have a limit too). Of course my limit was reached and hence I was out of pocket for any further time it took to rent out.
Check also the amount of the excess for each of the claims. If the excess exceeds the amount claimed then guess what you get nothing! yes that was my case when a burn hole on the bench top was estimated at $200 to fix and the insurance excess was $250 so it didn’t cover it, I got nothing. You are left with a decision to leave or replace at your own cost.
Check also for damage done by the tenant. It was only after a day of cleaning the disgusting oven that I realised the heating element was sitting on the bottom of the stove and had burnt a hole in the oven base. Of course the tenants didn’t report that as maintenance to the Agent as they couldn’t see the bottom of the stove for the filth!, hence when I put a claim in for the damage to the oven, the insurance company advised that it was my fault due to lack of maintenance!! yes good if I knew about it!
These are just a few of the things to keep an eye out for and if there is damage done via storm then that is where an assessor may need to come out also. In this case that is the claim I am still waiting on as a back fence and roof damage were claimed due to very heavy storms in November/December 2016.
So I hope I haven’t turned you off purchasing a property to rent out to those less fortunate than yourselves. It can be a very rewarding outcome when the ugly duckling turns into the swan and smells just as sweet (haha). Ensure that the base structure of the houses you purchase is good.
If they are solid double brick houses like mine are, then literally you can kick holes in all the doors but you break your foot on the walls! They can withstand some pretty heavy use and this is their purpose so keep that in mind when adding your own touches and ensure everything is sturdy and strong enough so you’re not replacing fixtures and flimsy fittings repeatedly.
Get gardeners in if you need to at least you know the yards are looking their best and of course this is a tax deduction as well as keeping the value of your property up. The tenants will thank you if you are able to fix and replace and be hot on any maintenance also. Don’t be the landlord that doesn’t care.
If you are faced with this scenario as I was which can be seen to be the landlords greatest fear, then realise that it can ben overcome and look forward to the bigger picture as to why you bought this property in the first place.. ensure a secure investment for your financial future moving forward and also to give back to those that would be renting from someone else if not from you.. so why not turn it around into becoming the best Socially Responsible Landlord out there.!