Friday, November 27, 2009

Landlords don’t always have insurance

A substantial proportion of landlords fail to insure themselves against rent default, theft or malicious damage by their tenants, according to an insurance provider.

RACV Insurance has found that only 50 per cent of its home insurance members with a rental property have insurance to protect them.

The company's general manager Paul Northey says standard home building and contents policies do not generally provide cover for two major risks facing landlords – malicious or intentional damage caused by their tenants and failure to pay rent.

Rather, he says, these risks can be covered by a landlord policy.

"Most tenants do the right thing," he says.

"However it's possible that your tenant or even their guests could cause significant damage to your property for which you may not be covered."

"Having your tenant default on several months of rent payments could result in significant financial stress."

Editor of Australian Property Investor magazine Eynas Brodie says a thorough understanding of the types of insurance protection available is important to both homeowners and investors.

"Seeking cover for buildings and contents, loss of rent and legal liability needs to be at the top of your list of priorities," she says, "and so does understanding the policy terms and conditions that are set out in the policy because the types of loss for which you are covered are defined clearly and it’s only those losses that are covered."

Tuesday, November 24, 2009

Don't list your property before calling David Grubb...
There are many different reasons why people decide to sell an investment property. There are also lots of different ways to sell a
property and lots of different alternatives to selling a property in the event that your financial situation has changed.
What a lot of people don't realise is that at David Grubb Real Estate we can show you a range of alternatives to selling your property if your
circumstances do change. You see because we specialise in property management, most of our income is derived from our property
management business. Unlike normal sales based agencies, we don't rely on the income from selling properties to keep the business
running. This means that if you ask us whether the best thing to do is sell your property we'll give you an unbiased opinion. Because
if you've ever asked a real estate sales agent whether or not you should sell your property, the answer will always be yes, (even if it's
really not in your best interest). After all that's how they make money.
So before you decide to list your property for sale, give us a call on (o2) 4285 0550, or call your property manager who will put you in
touch with one of our sales experts to give you an unbiased opinion as to whether selling now is the right thing to do. Whatever you
do, don't rely on the advice from a normal real estate agent. The only way they get paid is when you sell.

Friday, November 13, 2009

How to avoid the 8 most common landlord traps

How to avoid the 8 most common landlord traps

Tenants from hell, high loan repayments
and persistent maintenance problems
can conspire to make landlords feel
investing in residential property is best
left to suckers.
Bricks and mortar, however, remain one
of the most popular and effective ways
to build long-term wealth, without the
wild swings share market investors have
experienced this year.
Property investors should always look at
taking a long-term view.
1. Bad tenants
Poor tenant selection can be a major
trap. Signing up a bad tenant can lead to
a series of problems that may be timeconsuming
and expensive to fix. You
need to screen prospective tenants
carefully.
A professional property manager will be
able to help with this. They have access
to default registers that lists tenants who
have caused past problems. It is
important to check and phone all of the
referees, past property managers and all
details provided by the applicant.
2. Where's the rent?
Tenants from hell aren't always those
who trash your property. Those who
don't pay the rent or continually slip
behind in payments can be just as painful
for landlords.
If a tenant is late in paying rent, it is
important to take action immediately.
This serves two purposes. First, it
ensures that the outstanding rent is
followed up and hopefully collected as
soon as possible. It also communicates to
the tenant that if they are late in paying,
there will be immediate action taken,
The short-term problems
that can plague landlords can
be avoided or at least
reduced with planning and
research.
which sets a good precedent going
forward.
3. No insurance
A landlord insurance policy eliminates
unnecessary risk and potentially
expensive payouts. Landlord insurance
provides a safety net and peace of mind.
It can provide you with cover against
malicious and accidental damage to your
property by tenants. It can also protect
you from loss of rental income as a result
of a tenant absconding or damaging a
property and leaving it unable to be relet
while repairs are made.
4. Overcommitting
Many property investors use negative
gearing to get a nice tax refund but
should remember they don't get all their
expenses back.
With rental income yields below home
loan interest rates (although yields have
been increasing with the latest
reductions in interest rates), investors
need to ensure they have the spare cash
to cover not only the interest cost
differential but also such expenses as
council rates, land tax, water rates,
maintenance costs and management
fees.
5. Can you fix it?
When maintenance or repairs are
required, landlords should act as quickly
as possible. As a landlord, once you have
been alerted to maintenance issues, it is
your responsibility to act or authorise
your property manager to take the
necessary action. Failure to do so can be
a legal liability risk. If a maintenance
issue arises and you are slow to fix it, you
may be held legally liable if your tenant
injures themselves.
Landlords should be proactive with
maintenance. Regular routine inspections
will highlight areas that need attention
and it's a good idea to implement a
regular maintenance program.
6. Tenants as friends
Ideally the relationship between landlord
and tenant should be at arm's length. Too
close a relationship can lead to
difficulties down the track, especially in
situations where the parties have a
falling out. It is best to have a
professional property manager that
won't be swayed by any personal
interest.
7. No inspections
Conducting regular routine inspections
and documenting the information can
alleviate many possible problems. Many
landlords who self manage don't conduct
regular inspections. This can have two
consequences. If a tenant is causing
damage to a property and regular
inspections are not being held, the
damage may go unnoticed and be costly
to fix later on.
Second, if maintenance issues occur and
are not fixed, legal liability issues may
arise for the landlord if the tenant injures
themselves.
8. Self-managing
People who don't have the time, the
knowledge or an interest in property
management can get burned if they try
to be their own property manager.
Many landlords simply don't have the
time to respond to maintenance requests
or conduct regular inspections to address
potential liabilities. While it can be
tempting to save a small percentage of
rental income by self-managing your
property, the benefits of appointing a
property manager far outweigh costs.
How to avoid the 8 most common landlord traps.

Regards David Grubb