Understanding the Property Management process

Property Investment may not be an appropriate investment tool as there are base requirements that need to be met; from minimum income requirements and equity to a guarantor with equity and savings.

For an accurate assessment of what your repayments would be and how much you can borrow, it is important to speak to a property specialist before making a decision on purchasing a property. Specialist advice is essential to maximise borrowing capacity and returns, which includes various mortgage and accounting structures if you are intending to purchase an investment property.

A rough guideline can be gained from calculators, which when we meet will assist you in assessing what your repayments would be and how much you can borrow.

1. Property Investment Calculator
2. Tax Depreciation Calculator
3. Mortgage Calculator
4. Extra Payment Calculator
5. Borrowing Capacity Calculator
6. Loan Repayment Calculator

Taking into account the market data and statistics collaborated from our extensive research analysis, we only recommend properties that meet our rental yield and capital growth criteria, which is determined by the selling price. We only work with a select group of quality boutique developers who rely on our experience when pricing the properties.

Pricing is based on our due diligence of keeping in the loop with local agents, developers, builders and councils, and our inherent knowledge of prices based on the thousand plus properties we have recommended and sold and the rental returns the property can expect to yield.

The “Rule of 72” is a valuable tool, as it allows one to determine where to purchase property. Property is a mid to long term investment as it is cyclic. There are times of high growth and times of little or no growth, and the various states within Australia can go through phases where one state has high growth and the other state has low growth. When one state is doing well and another is not doing well, it is known as counter cyclic. One determining factor is capital growth, and the Rule of 72 determines how long it will take for the property to double in value, as if you get it right it allows you to build equity faster and to roll over that equity to add to your property portfolio.  The aim is to select markets with high capital growth to develop a diversified and well-balanced portfolio.

Years it will take for property to double = 72 / Anticipated Capital Growth %

Some other factors to consider for significant capital growth:

• Geographic location
• Location to CBD
• Population Growth
• Migration patterns
• Economic Activity
• Property Type
• Changing Demographic Profiles

Key Property Solutions search daily for investment property for you with significant capital growth. In our one-on-one consultations we will preview those properties with you that meet your requirements, and you too will benefit from investing in property with strong capital growth, high rental yields and low vacancy.

After exchange of your property or close to settlement we prepare a Managing Agency Agreement for you to sign.

The sooner it is signed the more time we have to prepare to:

• carry out a pre settlement inspection on your behalf if requested
• set up professional photography of your unit on settlement.

Professional photography will be done at cost, and is a must in today’s competitive market. It allows the property to present as best as possible to prospective tenants by

• presenting your property in a professional light
  this the only time you will have the property looking so pristine, not cluttered with tenant’s furniture and belongings
• the cost is less than ½ weeks rent which can benefit your property many times over

More than 90% of potential tenants use online as their main search tool for property, making professional photography an essential addition to your advertising strategy. Realestate.com.au and domain.com.au have more than 5 million people visiting their sites and apps each month.

The Managing Agency Agreement is one that the Real Estate Institute of NSW/VIC/QLD recommends agents to use and covers all elements of letting and management.

We also cover additional items that all investors should consider.

• Owners Request for a Depreciation Schedule
• Owners Request for Landlord’s Insurance to be taken out on your behalf
  • We recommend using EBM Insurance (Ultra Policy) as they have given us fastidious service over many, many years. This together with the fact that 98% of our owners are with EBM, does give us negotiating power in endeavouring to sort out insurance claims on your behalf.
    We also supply you with alternative companies to use, as the final decision rests with you.
  • The cost in taking EBM Landlords Insurance out through our company, gives you a discounted price in the first year, though note these rates are subject to change. The cost can increase annually but as of 2018, it is
    • NSW $303 first year and then $363 on renewal
    • VIC and QLD $255 first year and then $305 on renewal
• Authority for us to apply to have all Levy notices from Water, Council and Strata to be sent to us.
  Where the actual levy notice from these organisations is required to assist in the process,
  usually Council and Water, you, the owner, will need to email us the first levy notices you receive, so as to assist us in the process.
• Approval to engage a company specialising in Annual Smoke Alarm testing. The approximate cost, though subject to change, is currently $99 per annum and includes replacement of batteries and replacement of any faulty smoke alarms.
• Key Authority Form to enable us to collect on your behalf, the Move-In Package and relevant keys for you unit
• Additional Key, Remote and Fob Order as a spare set is recommended as a full set of entry items needs to be kept at our office in case of emergencies. We will order these on your behalf and invoice you accordingly.

All our trust accounting work is to ensure that at the financial year end you receive a clean trail of income and expenditure with supporting invoices to help you at tax time.

The following are a list of property related accounts we pay for on your behalf from the rental revenue.

• Council rates
• Water rates
• Owner’s Corporation Fees
• Landlord Insurance
• Repairs and Maintenance
• Other Related Property Outgoings

No expenses are overlooked for your tax deductions.

Once you have signed a Management Agreement authorising us to act on your behalf, we will list your property on the 2 main property rental sites as well as the assetadvanatage.com.au website.

Internet:

www.realestate.com.au
www.domain.com.au
www.assetadvantage.com.au

We also consider these sites at various times:

www.rent.com.au
www.realestateview.com.au
www.homely.com.au
www.thehomepage.com.au

We use the Inspect Real Estate app. This database contains our prospective tenants. Quite often we lease properties prior to the commencement of advertising, making this one of the most efficient and cost effective leasing tools available.

Inspect Real Estate is an online booking system that assists in shorter vacancy periods, Potential tenants are able to book an inspection time that is convenient to them.

• Your property is advertised on the relevant real estate websites and is shown by appointment or at selected viewing times.
• All applicants for the property must view the property in person, or have someone view the property on their behalf.
• The prospective tenants then complete an online application form, including authority for us to carry out reference checks
• We will inform you of all prospective applicants and present you with our findings, both negative and positive. The final decision will be yours.
• If the applicants do not meet your precise criteria, it may result in your property being vacant a little longer than anticipated. The first tenant is not always the most suitable tenant.
• Tenant selection is what will make your investment in property a pleasurable experience or not. For this reason we have a stringent application process where every reference is checked both manually and via a tenancy database. We do Facebook searches along with employment checks and ensure that the applicants are financially capable of renting your property.

• After checking all criteria current and previous rental history, current and previous employment, reasons for leaving the last property, bank and credit references (where possible), we then do a tenancy database screen check on the selected tenant, which screens against a tenant’s rental history as well as credit and bankruptcy.
• Once the application has been thoroughly checked and approved by you, we ask for payment of the first two to four weeks to secure the property. We prepare the lease on our electronic lease app, I Agree, and electronically transmit it to the tenant, along with the consumer affairs details on Renting a Home, covering legislation, condition reports, etc
• Once paid we will prepare all relevant documentation including the Residential Tenancy Agreement request to the tenant to sign the lease via iAgree, an electronic lease signing app.
• Our Residential Tenancy Agreements cover all aspects required in the legislation of that state – NSW Residential Tenancies Act 2010; VIC Residential Tenancies Act 1997; and QLD Residential Tenancies and Rooming Accommodation Act 2008; in accordance with the relevant laws.

• The lease fully covers all terms and conditions of the lease, as well as almost 60 special conditions which do not contradict the law. The sets out the tenant’s responsibilities minimising any misunderstanding of the owner’s guidelines.
• Where possible it includes a 12 month lease period, thus reducing vacancy and maximising rental returns

• A comprehensive inspection of your property is carried out of the living space and outdoor area and a condition report is prepared prior to the tenant moving in. A copy of this detailed report is given to the incoming tenant in accordance with the legislation. The tenant must inform us of any discrepancies within the set time period of that State, by returning the condition report signed with their respective comments.
• The property condition report is a very useful reference from a maintenance perspective as it reports the brand, type and model number (if possible) for all appliances and fixtures (eg. hot water system, cooling system etc…) so we can pre-warn contractors allowing them to bring the correct parts to minimise labor costs.
• We take comprehensive photography of each room which assist us in monitoring the condition of the property as well as handle final bond disputes effectively.
• The report is essential when the property becomes vacant as any discrepancies are then highlighted in comparing to the the outgoing condition report, and assist in determining the tenant’s bond refund. We do this by taking into account fair wear and tear as per our requirements under the legislation.

• A bond is paid in accordance with the legislation – 4 weeks in NSW and QLD; and 6 weeks in VIC if rent is more than $350 pw at time of signing the lease.
• In Victoria, an additional Pet Bond is requested in the amount of 2 weeks rent.
• All bond monies are placed with the Residential Tenancies Bond Authority. At the end of the tenancy these are released based on legislation relating to Bond monies. There is no interest paid on Bonds.
• A vacating tenant who owes rent and has caused damage to the property will not get their full bond back as rent owning and cost of damage will be deducted from the bond owing, subject to Civil and Administrative Tribunal hearing and order of each State.
• If the amount owing is more than the bond, then a claim will be made on 
 Landlord’s Insurance, which in turn will pursue the tenant for the money

• Our Console software alerts us the moment a tenants rent in in arrears.
• We send out reminders to the tenant to pay and continue to do this until all rent is paid.
• If a tenant is one day in arrears they are sent an email. At 6 days in arrears they receive an email and a phone call and at 11 days they are asked to remedy the situation failing which after 14 days in arrears, they will receive a termination notice. You will be contacted to discuss this beforehand. This is usually enough to make the tenant pay rent.
• We take rental arrears seriously and leave no stone unturned in rectifying payment issues if they arise. Although our attendance at Tribunal is minimal, our success rate when we attend, is exceptional.
• Our tenants are encouraged to pay via a range of Macquarie DEFT and direct debit options. This regular payment will endeavour to ensure that you have peace of mind with regards to your mortgage payments.

• Routine Inspections are carried out in accordance with legislation – 1 per 12 month period. We aim to conduct inspections around the 6 month mark of the tenancy.
• We will provide you with a written routine inspect report from our Live Agent app with photos and any recommendations on maintenance, refurbishment, lease renewals and reviewing rent if applicable.

• To ensure that the landlords can maximise rental income to achieve the best returns, we review rents annually unless it is of course a 6 month lease, then reviews are bi-annual.
• Our understanding of the market, and the fact that we manage a number of units in each development, allows us to remain on top of the most current rentals in each building and suburb.
• As our aim is to maximise rental. Through negotiation with both yourself and your tenant, we are able to get a maximum increase and still retain the tenant in the process. Our aim is to spare the owner any advertising costs, let fees and minimising any vacancy period.

• NO, The property manager will be in contact with the tenant to assess whether they want to renew the lease.
• We will be in contact with you to discuss rent increases and lease renewals.
• The property manager will then negotiate a rental increase with the tenant and get approval from the owner, whereupon a new lease will be drawn up and entered into
• Should the tenant decide not to renew the lease, the owner can choose between letting the tenant continue on a month to month basis (should the tenant so choose), or requesting the tenant to vacate, whereupon the property manager will commence advertising for a new tenant.
• If the tenant decides to give notice, the property manager will commence advertising for a new tenant immediately and discuss the anticipated rental with the owner.

• The main fact to bear in mind is maintaining a cash flow that allows you to meet your financial commitments relating to the property. Maximising cash flow is ideal, and that can be achieved in a strong market. In a weak slowing market, one can consider keeping the existing tenant either at the same rental or at a lesser rental.
• Factors to bear in mind include: – if the tenant were to vacate, the associated costs to the owner would be a let fee, advertising costs and vacancy, which can be anywhere from 1 day to potentially 4 weeks, not to mention it renting at a lesser rental that the owner was getting. – These costs cannot, in effect, be recouped. To achieve this, the rent would need to be $20 to $50 more than what the existing tenant is paying. – You would also be losing a ‘known’ tenant for an ‘unknown’ tenant
• Being proactive is the panacea for this, undertaking rental reviews in consideration of the broader objective.

On receipt of the tenants notice to vacate, with a notice based on the relevant legislative requirements in each state, the property manager will email the tenants specific details with regards to: – Cleaning the unit, noting the specifics of each room – A recommended cleaner – Rent owing up to vacate date

The owner will be notified by email of the tenants intention to vacate.

• After written notice is received, we will commence advertising for the unit, noting relevant inspections times. Interested parties will be contacted and appointments will be made in accordance with legislation. The unit must obviously be ‘inspection ready’.
• Once the tenant moves out we will carry out an exit inspection prior to the bond being refunded to your tenant. The Bond will or will not be refunded, depending on the condition of the property and payment of rent. If required, an application will be made to the Civil and Administrative Tribunal to get a resolution. We will also make recommendations if any work is required prior to new tenant moving in, to ensure your property is at its best.

• A Fixed Term Tenancy Agreement is for a set period of time, usually 6 or 12 months.
• At the end of this fixed time period, the lease will expire and automatically revert to a Periodic Tenancy, month to month basis. The same terms of the Fixed Term Tenancy Agreement exist, unless a new fixed term tenancy agreement is entered into.
• The difference between these two tenancies, is generally the vacate notice periods required by the tenant and the owner.

• Urgent repairs will only be undertaken based on the determination of such under the Residential Legislation.
• All other repairs are generally quoted on by qualified tradespeople. Such repairs are undertaken after informing the owner about costs as per the parameters set by the owner. There is a set dollar limit, as noted in the Management Agency Agreement, for repairs we can undertake immediately without disturbing the owner.
• Copies of invoices for all work carried out, are attached to the month end statements for your records

We certainly can. All you need to do is contact us on 0408 000 011.