FNB News – Landlord’s Fears & Tips when Buying with Relatives

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First National Capel Sound News August 2019 Edition

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The five factors landlords fear most

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Keeping your rental investment property well maintained and market-competitive is vital in the battle to assure continuity of income, capital value and peace of mind. As our property managers go about their daily tasks, the five things we’re completely focused on are the five things that landlords fear the most.

Time management

Effective property management is all about efficient time management, and this is where landlords who manage their properties themselves can really struggle. Staying up to date with ever changing legislative and safety requirements can really overwhelm landlords, whereas property managers are well trained and resourced to manage your property in full compliance with government legislation. To properly protect your investment, your property manager devotes time to building good relations with your tenant, routine inspections, entry and exit condition reports, and managing maintenance.

Unpaid rent

Unpaid rent is one of the greatest challenges Landlords face because, as with most investors, rental income is critical to meeting mortgage repayments. Property managers quickly identify arrears and bring their experience to the fore to establish the best plan of action. With good tenants, temporary issues may be resolved and repayment plans put in place, but in other circumstances, your property manager will follow carefully established procedures, issue notices in the correct timeframes, and do everything necessary to assure the debt is recovered.

Maintenance

Responding promptly and correctly to maintenance requests helps assure tenants are kept happy, risk is minimized, and costly vacancy periods or legal claims are avoided. By using properly licensed and insured tradesmen as well as maintenance tracking systems, our property managers keep your costs to a minimum. If your property is vacant for even just a few weeks, losses can run quickly into the thousands.

Rowdy tenants

When a tenant violates the terms of their lease, engages in anti-social activities, or doesn’t maintain gardens in accord with their lease, property managers are trained to be expert in the art of problem resolution. Early intervention and routine property inspections are key to preventing escalation of problems and potentially costly damage.

Vacancies

If your property is vacant for even just a few weeks, losses can run quickly into the thousands. Although vacancy periods are inevitable, the industry’s best property managers minimize them – alerting future tenants via databases and marketing campaigns that incorporate traditional and digital media.

ATO Tips

Deductions for repairs, maintenance and improvements are matters the Australian Taxation Office pay particular attention to on annual tax returns. For this reason, it is important that landlords understand the difference.

Repairs

Repairs are considered work completed to fix damage or deterioration of a property, for example replacing part of a damaged fence.

Maintenance

Maintenance is considered work completed to prevent deterioration to a property, for example oiling a deck. Any costs incurred to repair or maintain a rental property can be claimed as an immediate 100 per cent deduction in the year of the expense.

Capital improvements

A capital improvement occurs when the condition or value of an item is enhanced beyond its original state at the time of purchase. This must then be classified as either a capital works deduction and depreciated over time, or as plant and equipment depreciation. An example of a capital works deductions could be replacing the kitchen cupboards. If any plant and equipment items are removed and replaced, for example an air conditioner, this will also be considered.

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5 tips for buying property with friends or relatives

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Lifestyles have changed considerably in the last few decades and many people are turning to buying properties with a friend or relative as a solution. Pooling resources allows many people, who may not have otherwise had access to the property market, the chance to achieve a shared goal. However, it makes sense to be aware of a few precautions before you proceed.

Make sensible, not emotional decisions

Deciding to enter a financial relationship with someone should not be based in emotion but in cold hard numbers. Don’t let your feelings for the person cloud the reality of this decision.

Get Professional Advice

Agree that you will get independent professional advice from lawyers, accountants and real estate agents whenever necessary.

Understand each other’s finances

Agreeing to get credit checks, reviewing each other’s tax returns for the past few years and looking at each other’s current income and expenses is a sensible approach that informs both of you – to ensure neither of you is getting in over their head.

Plan Ahead

It’s also a good idea to have a plan if one of you loses your job and can’t make the mortgage payments.

Decide on clear terms of co-ownership

There are a couple of options to choose from in terms of the ownership structure. ‘Tenants in Common’ gives each party a share in the ownership of the property, while ‘Joint Tenants’ means the two of you together own the property as one entity, without individual shares or rights of ownership.

Talk to your local team of experts at First National Real Estate.

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Paul Basso

Author Paul Basso

Established in 2000, First National Basso is a business based on transparency, honesty, personal service and trust. With a commitment to innovation, First National Basso has continually evolved and grown to become one of the longest running and most trusted real estate teams on the Mornington Peninsula.

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