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February 16, 2007 - 9:01 am

Thanks Milly, I was suggesting the same thing to my husband last night. The challenge is that my mum lent us 20% of the deposit + closing costs (via her equity) to get the house = 105k. She owns her house outright, but it’s all she has, so I think we will have to wait until we can refinance and release her from the deal before we can renovate? At this stage we don’t have any spare cash until we refinance. If anyone has any alternate ideas on this I would love to hear them, because it seems like we’re dealing with an unknown factor.

Thanks for the figures about depreciation Julie, I hadn’t thought of that.

The PM got back to me and said she always has a steady stream of renters looking for 4x2s on any size block in the area. She thought it sounded like a good idea so long as the cost doesn’t outweigh the rental income. Does anyone know how I can work this out? I’m still waiting to hear back from her about what she thinks the rental income would be if it was a 4×2.

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February 15, 2007 - 7:00 am

Thanks for the suggestions. I’m waiting to hear back from my PM regarding the demand for 4x2s on big blocks in the area. It is encouraging to hear that you think Shoalwater is in a good spot for the next boom Millions.

Ideally we’d like to hold on to the place for as long as possible to assist us with leverage for future IPs, otherwise I’m afraid I will see it as ‘the one that got away’ if we sell. According to council, they have no plans to rezone the block for duplex unless there is an increase in population/demand. It will be interesting to see if the new railway station & town development has an impact.

I know valuers cost a fair bit to give you an appraisal, so I was thinking that I should be doing this each anniversary (meaning Sept 07) unless there is an indication of prices rising steadily again. It seems for now that things are starting to cool in the area because a similar house on the same street has been for sale for quite some time and even dropped it’s price by 5k to 410k.

The PM is due to do a rental appraisal in April which will at least give me current figures.

I’ll let you know what she says about the demand

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February 14, 2007 - 4:28 pm

Wow, I didn’t even know that accountants recommended IPs in their general line of work!

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February 10, 2007 - 5:42 am

Just a quick update to let you know that we went and saw Tony @ Mack & Co this morning. He is by far the best accountant I’ve met, so we’ve decided to go with him.

Thanks so much Artaud & Celeste for suggesting him [biggrin]

Thanks also to Wayne for your input and for sharing your experience with accountants. This forum is brilliant! [lmao]

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February 9, 2007 - 7:42 am

I would ask how many properties each PM manages. If the number is really high, then you would question how capable they are of giving your property the attention it deserves. I’ve recently got a job at a property management place to get some experience and my boss manages nearly 100! For this reason I would not use her, even though she has a ‘good reputation’. I’m doing the loose end stuff (like tenancy checklists) and it is quite apparent that things are getting done at the last minute because she is just so snowed under.

You could also ask for a reference from one of their landlords who has a currently tenanted property and one who doesn’t to give you a better idea of the overall service they provide.

When I was looking back in October, I got the local PMs to send me through their details (either by post or email) and then compiled a spreadsheet to compare all the costs/services. I found that this made it really easy to see everything on one sheet as opposed to sifting through a mountain of paperwork. I would also recommend that you use someone local who knows the area well and who therefor has a better idea of the local market for rental reviews.

Lastly (and this is completely subjective) I took their personalities into account. Management fees are really high in WA if you only have one property because you are limited with your ability to negotiate a flat fee, not sure what the deal is in NSW. One guy I spoke to was .5% cheaper than the next cheapest, but I felt like he was a bit of a cowboy with the way he presented himself – I didn’t feel like I could trust him. So I went with the next one because she was very personable and interested in my input. To date I feel like this was a smart move as she keeps me well informed of issues ahead of time and always asks before charging me money for maintenance issues. If you have a good raport with your PM, there is less likely to be a breakdown in communication.

Best of luck to you

[exhappy]

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February 7, 2007 - 12:42 pm

I’ve got an appointment with an accountant on Friday who was recommended via a previous post. He also is qualified to give financial advice, so armed with the information you have both given me, it will give me a head start to understanding what he says about it.

Thanks so much for your valued opinions [biggrin]

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February 7, 2007 - 4:46 am

Thanks Simon.

So does that mean that we could both salary sacrifice the PPOR?

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February 4, 2007 - 8:46 am

Thanks LA Aussie

I think the penny finally dropped about +ve cashflow vs +ve gearing. Now I know what to look for next time to get off the -ve gearing merrygoround.

[wacko]

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January 28, 2007 - 10:42 am

Thanks Celeste, I really respect the opinion of fellow investors on this forum and would prefer to see someone who is recommended.

I’ve got a couple of leads so far, thanks to both you and Wayne [cap]

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January 28, 2007 - 3:54 am

Cheers Wayne, I’ll look it up and see what it’s all about [exhappy]

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January 27, 2007 - 4:28 pm

Thanks for sharing your experience and insight Wayne. What do you mean by “SMSF”?

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January 7, 2007 - 3:41 pm

or you can go to realestate.com.au and click on “Find Buyer’s agent”

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January 7, 2007 - 3:19 pm

What about if the long term plan is to purchase IPs that will eventually fund a PPOR in a very desirable location? Could you take the chance buying -ve geared properties (with good growth potential) and pay down the debt over time until they become +ve (or rent goes up)? The reason I ask is that someone (who is an experienced investor and works in the business) told me that purchasing for +ve cashflow is the quickest way to destroy wealth creation [weird]. My one (and only) property is -vely geared and I thought it only logical that this would need to be offset with cashflow +ve IPs in order to continue growing the portfolio.
I haven’t had a chance to quiz him further on this. Is he talking crap?
Just to reiterate, the long term goal is for IPs to fund beachside PPOR, then retirement. I’m 28.

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January 7, 2007 - 2:48 pm

P.S. I also found it really helpful to set up a spreadsheet to compare the fees and charges of local property managers. I got them all to either post or email me the info and then compiled the data. For me, it was easier to compare their prices on one page. I also went for a local PM because we only have the one property and they have local knowledge of when rents should increase as well as easy access for inspections/issues and to organise local tradies, should the need arise.

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January 7, 2007 - 2:39 pm

Hi Katie,

I used a buyer agent in WA to help me source our first property. I set up a meeting with the director who spent a couple of hours with me outlining what they do etc. Apparently this was a complete novelty for them as they rarely meet clients face to face, but it helped me to feel confident that I was parting with the finders fee for the right reasons. If you use one, I would recommend setting up a meeting for your own peace of mind. You can also compare a few that way. I used the same approach to find an accountant (luckily) because the first guy couldn’t care less and I wouldn’t have known that if I hadn’t met him face to face.

With regards to property managers, here are a few questions I would ask them before signing up:

1 How many properties does the property manager look after? If is more than 100 then you would really think that the service they provide may be limited.

2 Ask them how many vacant properties they have on their books.

3 Get a reference from one of their clients who has a tenant in place and a reference from a client who has a current vacancy. This will give you a good guide to the property manager’s performance.

I would also look out for the personality of the manager. If you get a bad vibe, it may be advisable to go to the next manager even if there fees were cheaper because apparently a good vibe from the managers is always good and you have fewer problems. Can’t back this one up, although I’m sure others will be able to clarify.

Good luck and happy investing!

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January 7, 2007 - 2:04 pm

LOL Wings! Thanks for your congratulations, same to you

When I was ‘interviewing’ PMs, one of my questions was “how many properties are you currently managing?” because I didn’t want to be some forgotten number. We’re doing ok in that respect as they are a small RE office (not part of a franchise). It must be quite frustrating for you to be overseas trying to manage PMs from afar. It is helpful (and amusing) for us beginners to hear anacdotes, good and bad as it opens our eyes a bit to the possibilities. Thanks for everyone’s suggestions and experiences so far.

Will get on to that consumer booklet…

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January 7, 2007 - 1:26 pm

Is it still wise to get an IO loan on an IP that you plan to hold for the long, long term? Don’t you have to pay something off the principle eventually?

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January 5, 2007 - 9:49 am

Can’t offer any advice regarding an outside investor, but my inlaws recently did the same thing in the UK. They bought their council house 3.5 years ago with the view of returning to Australia to live.

My father-in-law is on a disability pension and my mother-in-law did shift work on a factory production line, so it was really only her money paying the mortgage. They achieved this by getting an interest only loan, which reduced the payments compared with a principle & interest loan. It was really tough on them for the 3 years financially (no unecessary lifestyle expenses), but they knew it was the only way to get a deposit for a home back here.

What I’m getting at is that if you can’t find an investor and want to try it yourselves somehow, it may be restrictive on your lifestyle but the end goal is what keeps you going. They stuck it out for exactly 3 years and spent that time doing the place up when they could spare any cash.

Even though there is no real advice here, perhaps hearing how they did it will inspire you.

I wish you the very best of luck and keep thinking outside the box like you are. The answer is out there, keep looking for it!

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January 5, 2007 - 8:42 am

You can also go to realestate.com.au and click on ‘Find me a buyer’s Agent’. This is where I found mine.

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January 4, 2007 - 7:16 am

Bridgebuff – I phoned Centerlink, got shuffled around and couldn’t find a definitive answer. I was advised that payments have recently been increased until further review in March ’07, but the woman could only guess that it was due to inflation. When I asked who could confirm this @ Centerlink, she said no one would know why they increase, they just do [eh]. I will certainly keep in contact with the PM though and ask their opinion in time.

vjones – thanks for the advice, Landlord insurance was one of the first things I organised! I wouldn’t drive my car without it and I apply that thinking to our property too – you just never know. Also, great tip with the postage and petties, I’ll look into that. Otherwise, Christ knows what the 8.5% is for because inspections etc are extra, but they are all the same in the area unless you are willing to pay upwards of 14% all inclusive!