Posted on June 29, 2012
The recent disasters of Queensland bring to light the topic of insurance. If a similar occurrence happened to your rental property would you be insured? Do you know what your insurance covers? These are important things to know before taking out a policy with an insurance company.
A common assumption amongst strata property owners is that the strata insurance will cover your property for damage that may occur. This can often lead to investment properties being under insured, while it is estimated that 70% of all households are under insured. Strata insurance will only cover common areas, meaning that if your property is flooded the strata may cover removing the water; however the owner would be responsible for rectifying any damage caused to the internal items including, carpets, repainting walls, replacement of furniture and also repairs to fixed items such as kitchens or bathroom vanities. This can be costly when you consider the damaged items need to also be removed and the property must be in a habitable condition before rent is received again.
Also while your property is being brought back to a habitable standard, you will not be receiving any rental income. A natural disaster can turn a great investment into a nightmare without the correct insurances.
There are companies which offer a landlord protection insurance policy however it is wise to read the policy details before deciding as there are often terms and conditions associated with the payout. For example: A tenant must not be in arrears for the first 4 weeks of the tenancy otherwise the policy is void, or the property must always be under a current residential tenancy agreement and not be relying on the month to month continuation clause.
Late premium payments can also attribute to a claim either being delayed or rejected as the above mentioned conditions can be reintroduced depending on the situation. If the policy lapses and the tenant is in arrears at that time, it could cause a claim for rental arrears to be denied. The easiest way is to have the premium taken directly from the rent by your property manager before the funds are transferred to your account at the end of the month.
Several companies offer landlord insurance as their core business with competitive premiums currently around a few hundred dollars per annum. It is worth while taking the time to find a specialist policy as they can save you time and money in the future when it counts.
Posted on June 19, 2012
There are a lot of different types of property management that you can hire, and one of this is the so-called commission-based property management. Today, I will be explaining to you some of the basics about this kind of service, and the things that you can get from it. If you are going to read this article, you will be able to determine which type of service will be more beneficial for you, and will help you make a more educated decision.
When we say commission-based, the property management that you will be hiring will be the ones to manage the property that you have, and they will be responsible for collecting the rent. The amount that you will be receiving from them is the amount that was collected from the property minus the commission that both parties have agreed upon. For example, if you have agreed for a 10% commission and the property can generate $10,000 per month, then you will be receiving $9,000 per month.
Although the amount that you will be receiving from your property, you will be able to avoid most of the disadvantages that are associated with managing properties. This will help you save more time, and will allow you to focus in buying more properties that will allow you to make more money with your real estate. Aside from this, you won't have to worry about anything when it comes to maintaining the proper condition of your property, since they will be handling everything for you.
Commission-based property management could be one of the best services that you can get for your properties because you will only be paying them the percentage of the amount that you make. This means that you won't be forced to pay more than what your properties are earning, and will ensure that you won't be spending more than what you have allotted.
Although it is one of the best, hiring a commission-based property management service is more of a preferential decision. It doesn't mean that your property won't be profitable if you are not going to hire them, and it also doesn't mean that you need to hire them in order to make money. The choice depends on your preferences and the budget that you are expecting from the properties that you have. Just make sure that you will be hiring the best whenever you have decided to hire a commission-based property management.
Posted on June 9, 2012
When you are working as a property or leasing manager on commercial investment property, it is wise to implement a tenant retention program for the property itself but also for the landlord in the greater portfolio they may own.
A tenant retention plan will help the overall income strategy for the subject property and minimise vacancy downtime. In this property market and economy a retention plan within the tenant mix will help the income and expenditure budget for the property. It's simply a great idea and tool for the property manager to use.
So the tenant retention plan can become a specialised service for the real estate agent that specialises in commercial and retail investment property. It can be called a number of things, all of which help the marketing of the concept to the property owners the agent represents.
The key benefits of a tenant retention plan or program are:
- Income stability through planned lease options, rent reviews, new leases and tenant placement
- Allocation of leased space to the tenants that most need it
- Maximised rental given local market rental trends in comparable properties
- Directed lease strategies to sitting tenants that retain their occupancy
- Expenditure recovery from a more stable and predictable occupancy and outgoings base
- Lease terms and conditions that help the landlord match their investment holding plans
- Renovation and relocation programs that can be integrated into the retention plan
The tenants in a property will usually cooperate with a retention program for the simple reason that they appreciate the focus of the landlord and property manager on their needs as a business.
To get the retention program up and running a simple staged approach is best. Here are some ideas:
- Set up a questionnaire for the tenants to complete and talk to you about each month or quarter; meeting frequency is depending on the activity in the property and the surrounding area.
- Expect that other agents will be chasing your tenants to change property lease. The retention program helps keep this pressure under control.
- Review all leases in the property so you know the critical dates that will impact the retention plan. They are usually rent reviews, lease options, lease expiry, and renewals.
- Check out the supply and demand for leased space in the local area as it will have impact on the choices you make with your property.
- Changes to the community and businesses surrounding the property should be monitored on a monthly basis at the local planning office.
- Negotiate early with any desirable sitting tenant. This prevents them getting rental offers and proposals from other nearby properties.
A tenant retention plan is a good property management or leasing tool. The property owner will see solid advantages in implementing the plan into their tenant mix and investment plans.