Cairns office: 07 4035 3044

PROPERTY MANAGEMENT

We never started out to become a Real Estate Agent, nor did we ever intend to be Property Managers. It all just happened by default, and we believe this is part of the reason that we are different to most other agencies you will come across. We are Property Investors first and foremost – we are Property Managers as a result of this.

When we bought our properties, we soon found out that we could do a better job of managing our investments than any one we met in the industry at that point in time. The rest wasn’t a plan we made, it just all happened over time and here we are today!

HAVING AN INVESTMENT PROPERTY – IDEAL CONCEPT

The concept of having an investment property is a great way to increase your net worth, and in the long run give you the ability to have a passive income in retirement.

In an ideal world, you buy a property, it is rented out all the time with great tenants. They look after the property beautifully, they are never behind in their rent and they never party.
You manage to keep the rents going up to cover any increases in costs that come along.

The cost of the mortgage, the rates, insurance and all the other outgoings are all covered by the rent that is coming in. There is minimal maintenance to be done - everything works perfectly.

Major maintenance like blown hot water system, air conditioning - no these things don't go wrong.

In ten years time you have doubled you money. As a bonus, along the way you have managed to get a deduction from the ATO for the building depreciation and get a tax refund!

I wish we lived in a perfect world, but this just isn't the way it is.

Tenants can be great, but they can be just awful.

Things are going to go wrong in the property - just when you least want them to. I didn't see the GFC coming, nor how long it would last - did you?

INVESTMENT PROPERTIES – LOOKING AFTER YOUR INVESTMENT

Instead of talking about your property, I am going to take a different tact. I will tell you all about my Volkswagen EOS. This was the very first brand new car that I bought for me, just because I liked it and it was exactly what I wanted. The only other new cars we bought to this date were the Kia Rio - which was more of a necessity than a luxury. It was replacing the Lada Niva - oh I can hear you laughing and making Lada jokes but she got us and our caravan around Australia without missing a beat. The other was the Kia Pregio - and even today I still miss the van. The amount of stuff I could get squashed into the back of that van was pretty amazing!

No the EOS or better known in my world as the Lemon was the very first nice, luxury car that I have owned. We walked into the show room and picked out the parts I wanted and in a factory some where in Germany it was built and then shipped out to Australia. This was late 2007.

It is a great, fun car and when you are driving home with the roof down, the heated seats on and the stereo up loudly singing along with Kylie - well it is pretty special. None the less it is a Lemon of a car and the troubles I have had have been endless.

Along the way I have had to pay the registration and the insurance each year. There goes $1500 a year. I have had to get it serviced - the last one cost close to $1500. I have had two sets of tyres, a battery and even had to replace the stereo as the screen literally peeled off - that was another $400 just for the parts alone.

The air conditioner now probably needs to be replaced as it isn't working properly. The exhaust warning sensor came on, and it looks like that needs to be replaced and the shock absorbers also need to be replaced.

SURE, AS IT IS USED IN THE BUSINESS I HAVE RECEIVED SOME TAX BENEFITS ALONG THE WAY

The harsh reality is that the original price we paid for it was $68,000 and we have just traded it in and received $12,000! If I work out just what we have lost in the value of the car alone it is $56,000. We have owned the car now for 8.5 years and just on the value of the car we have LOST $6588 per annum. Now if I factor in the annum registration and insurance, plus servicing, tyres etc I would put this figure at closer $8,500 per annum.

Meanwhile back in time, way back to around the same time as we bought the Lemon we also bought a unit at Keith Street, Whitfield. It is a basic but nice one bedroom unit that is actually a loft townhouse. We bought this for $105,000. Since the day we bought it, basically it has been rented out. We may have had the odd week every so often where it was vacant between tenants.

Yes, the Council Rates are obscene with what they charge us each year.

Yes, the body corporate has increased substantially due to the insurance rises - but this has been off set by lower interest rates, and higher rents.

When we first bought the unit it was bringing in $150 per week.

We have gone in and repainted it, put in new porcelain kitchen tops but reused the existing kitchen, upgraded the vanity, upgraded the white goods through out, tiled through out and put in new furniture. We have also just put in a new split system. Over the years we have put in about $10,000 into the property in upgrades.

We now rent the unit for $230 per week. There was a unit very similar on Cannon Street that just sold for $145,000. Sure the increase in property value isn't alot - but it is more than what we paid - unlike the Lemon which is essentially worthless.

Being a property investor isn't easy, especially in these extraordinary times that we are living in right now. We all need to find a way to build up our nest egg for our old age. For us property has worked - yes, it has been a hard road and it has taken far longer than we ever anticipated. When ever I doubt what we are doing I just remember "Being old is sucky, but being old and poor is even suckier".

In a round about way, I am trying to say that if you are going to invest in property you need to look after it along the way, as it will continue to bring in you in income and appreciate in value, unlike a car!!

QUESTIONS TO ASK ANY POTENTIAL PROPERTY MANAGER

• Is your current property manager actually a property investor?
• How long have they been doing Property Management for?
• Do they have a plan for regular maintenance for the property?
• Do they know much about the tax advantages such as building depreciation?
• Do they understand body corporate and how they work?
• Can they tell you the last sale of a property similar to yours?
• Can they tell you the rental of similar properties and the vacancy rates in the area?
• If you want to speak to them outside business hours can you call them?
• Do they show properties after hours?
• Do they answer the phone after hours for potential tenants?

One of the biggest complaints that prospective tenants have is the ability to actually see the property. Most other agencies do not show after hours – and this can be an issue in renting the property quickly. We not only show the properties after hours, but our tenants know that if they have an issue they can call any time. To put this to the test, try and call your current manager after hours. We can assure you that if you call us on the mobile it will answered, and if not we will return your call as soon as we get the message. Tenants like this and we have many that have been with us for years. In fact when they outgrow the current property they ask that we find them another so that they can stay with us.

OUR FEES – FLAT FEE ON RENTS COLLECTED

Many agents have chosen to go down the path of offering a small fee for management, another small fee for rent collection – and most owners think that this is all that they charge – but it isn’t. When deciding the fees to charge for our services, we decided it was best to do a flat fee that is all inclusive.

It is easy to look at this figure and believe we are higher than the others. Some of the fees the others charge over their management and collection fees include

• One week’s letting fee to find a tenant
• Postage and Stationary
• Inspection Fees
• Maintenance Fees
• End of Financial Year Statement Fees
• Court Fees
• Insurance Lodgement Fees
• Lease Renewal Fees
• Application Processing Fees
• Excessive Advertising Costs
• Refurbishment Fee
• Fee to obtain Quotes

We charge a flat fee of 12% plus GST of all rent collected. This may sound higher than what you are currently paying, but when you add in all the extra fees you may find that this is actually closer to 15%. The one week’s let fee is equivalent to 8 weeks of our management fee.

There are many areas that we save you money on. Our advertising cost is fixed at $38.50 per changeover of tenancy. This includes listing the property on www.realestate.com.au and the local Cairns Post if required. Should the cost be higher, then then our company covers the extra cost – this is not passed onto you.

MAINTENANCE ON YOUR INVESTMENT

Maintenance is another area that we hear a lot of complaints about not just from tenants but owners equally. The biggest issue most tenants have is that maintenance is not completed. If a call is made on an urgent issue it is normally dealt with and resolved within a few hours. If it is of a non-urgent nature, we have it completed normally within a week. We have a fantastic group of handy men, electricians, tree loppers, plumbers and other contractors that we work with regularly.

The quality of workmanship is high, but each understands that the job must be done with a budget in mind. Many of our owners are very surprised at how cost effective our maintenance program is.

We recently had a client show us a quote from another agent on works to be completed. These were very basic maintenance items however the invoice was close to $1000. Our handy man completed the works and it was under $300 for the same job.

WHY CHOOSE US?

The other day whilst showing a potential buyer a property, they turned to me and asked about our property management service. They said “Are you good?” to which I say “We’re one of the best”.

When they ask what we charge I simply say “The best isn’t cheap, if you want cheap then we aren’t the people for you”. I will admit, I have a few flaws – one of them is that I am not a natural salesperson and at times I doubt how good we are at what we do. After saying it, I went into an immediate self doubt phase.

I have been pondering this statement for the past few weeks now and it has had time to rattle around inside. It is now time to put it down on paper.

On the surface, our fees may appear to be higher than other agents, but the reality is that most other property managers aren’t investors. They simply don’t understand what an investment property needs, what an investor needs and the consequences of their actions are on the owner and the property. I could give you hundreds of examples, but today I am going to focus on just one that we came across recently.

There are two units for sale in Whitfield. They are both one bedroom units and in the same complex. They are owned by the same investor and he bought them almost 14 years ago. Fortunately he managed to buy them cheaply before the market went up last time, and even with the lower prices he will still make a slight profit. We happen to manage similar units in the area, and we have been achieving $200 per week for the past few years. We also manage similar ones in the Manunda area which we also achieve between $190 – 200 per week. We do furnish our units and although there is an initial cost to do this, the extra weekly return is $20 – 30 per week. Better than this we tend to find the quality of tenant is better by furnishing it – that is just the way it is in Cairns.

This complex is a small complex of just 12 units. You can tell that we haven’t had a hand in the property – from the high body corporate levies, to the presentation of the property externally, to the quality of tenants over all in the complex. Worst of all, both of these units that are for sale have just been signed up for 12 month leases at $170 per week! We are getting $185 per week for a bedsit, so why on earth would you give it away at $170 for a bigger and nicer unit, in a better area?

We are walking through the first unit, and my eyes are lighting up with what we can do internally with very little upgrading. It is a good sized one bedroom unit and the potential is there. The unit is just as good as the first one. Even better the owner has just put in a new hot water system and the stove is being replaced – that on its own is worth at least $2500.

Firstly, there is no way on earth we would have let these properties rent for $170 per week – we would have upgraded the property and had it rented at $200 per week.

Secondly, we would have got involved with the body corporate and this would not be the worst block in the street.

Thirdly and this I believe is the most important one, there is no way we would have let our owner sell this property for the price our buyers got it for. Being conservative, having a poor property manager and in turn a poor sales agent has cost this owner at least $10,000 per unit – and that is just on the sales price! It has also cost him a minimum of $40 extra a week, every week that he has owned it.

So yes, on paper we may appear to be more expensive than your franchise property management company, but those few dollars extra you pay for us really is worth it.

Why investing in Cairns makes sense

Linda goes backs to the Tools

A long Way from St Georges Terrace

Linda’s Love/Hate Relationship

Cairns, North Queensland is amongst the top 10 fastest growing towns, cities and regions in Australia and one of Queensland’s fastest growing regional centres.

ReadMore

For the first ten years, I would work alongside Ramon on the renovations and upgrading the properties. There would be no hair, no make-up - I drew the line at giving up the fake finger nails even if they did get covered in paint constantly.

ReadMore

Lots of people think that Ramon and I are different to them, but the reality is we are no different to you. Lots of people say we were at the right place at the right time - well that could be true to a degree, but 100,000 other people are in Cairns at the same time.

ReadMore

It has been an incredibly long journey for the past 16 years ago. If you had of asked that young secretary walking down St Georges Terrace in Perth all those years ago where she would end up - I bet she wouldn't have said "Oh I'd love to be a Property Manager."

ReadMore

Property Ladder Realty Cairns
128 Aumuller Street, Cairns, Queensland, 4870 Australia
Telephone: 07 4035 3044 Fax: 07 4035 3077
Email: info@plrealty.com.au

Website designed, hosted & maintained by Allcorp © 2016