Is it time to trade up?

15th Dec, 2018

When the media report a slowing in the property boom, many people think it's no longer a good time to sell. Some postpone plans to move to a better suburb or to a home with more space for their growing family. They reason that selling in a buyers market is a mug's game.

What they forget is that when they are trading up, they will be buying a more expensive home than the one they are selling. It?s not hard to work out that in the roundabouts and swings department, anyone buying a more expensive property than the one they have just sold stands to gain financially from the double transaction.

Let's keep the figures simple. If you get $380,000 for your old home when you were expecting $400,000 you could be forgiven for thinking of this as a 5% loss. But is it? After all, you will gain 5% when you purchase your next property in the same or even better market conditions. And 5% of a more expensive property (say $500,000) is $25,000 - a net gain of $5,000 from the double transaction.

In a sellers? market, the reverse occurs. In fact, in a sellers market, many people feel rushed into making hasty purchasing decisions because once they have sold their original home, they watch the gap between the price they got for their original property and the price they have to pay for their next one increasing at an alarming rate.

In a buyers market, once vendors have sold their original property, there is no rush to beat rising prices by making an often-too-quick decision on their next purchase. They are no longer competing with too many other buyers for too few properties. Prices are stable and there is time to research the market properly and make a well-considered choice.

Whats wrong with managing your own rental property?

15th Dec, 2018

Sometimes new investors make the decision to manage their own investment property. After all, its seems obvious - why pay an agent to do something so simple as banking a rent cheque?

Once they start doing it on a day-to-day basis, however, most investors realise they don?t have level of expertise required to maximise income and minimise expenses. They realise that they cannot do the work cost-effectively, and that tenancy legislation is best left to the experts. Most novices need to spend a disproportionate amount of time making sure they get it right. Even then they worry that they haven?t thought of everything. Most find it an enormous relief to hand over to an expert who has the up-to-date legal knowledge to prevent problems developing. Most investors report an increase in their net income as well as in their leisure time.

Happily, most people hand over to an agent before things go wrong. They realise that staying up-to-date with week-to-week fluctuations in the rental market is difficult for those not in the business. It takes a lot longer for trends to become apparent to people who are looking after just one or two properties. Do-it-yourself investors do all the work themselves and it may still cost them money in higher vacancies. It?s also very hard to keep a distance from demanding tenants when there is no third party to liaise.

Communication and arbitration is also an area where the objectivity of a third party is essential. Dialogue via a disinterested third party minimises income reducing anger and personality conflicts. Even negotiating rent is difficult for a landlord, firstly because of the emotional involvement and secondly because of lack of experience.

What is a reasonable rent to set? What are fair and reasonable repairs? How can I make sure the lease covers every contingency?

The answer? Do your homework, find out who are the most professional managing agents in your area and ask them to manage your precious investments.