When buying for pure investment purposes, rather than having a friend or relative as a tenant, the do-it-yourself approach to letting and management is not recommended for overseas landlords. Even minor problems such as a faulty hot water system or a broken window are more likely to become expensive and frustrating when trying to deal with them from such a distance. Major problems can present great difficulties for the tenant and the absentee landlord as they can be time- consuming to resolve.
In addition, the legal requirements involved in letting properties require detailed and prompt attention to documentation for both the incoming and outgoing tenant. Delays in completing documentation or uncertainty as to what is required can create unnecessary inconvenience for both landlord and tenant.
In order to maximize the potential of your investment, it is important to ensure that the property is rented and managed efficiently. There is little point in buying an investment property that says vacant for a long period of time or is not maintained properly throughout the years.
For non-resident owners it makes good business sense to employ a professional property manager to look after your investment property. Indeed many developments offer an ‘investor package’ whereby management is provided within the purchase price or at an additional cost.
The 4-Steps Process
Understanding what you want
Matching your investment objective
with the right property
Review and monitor
Appointment of An Agent
When necessary, choosing a reputable agent should be fairly simple. You should ideally instruct one of the major national real estate agency organizations or check that the agent is a member of the Real Estate Institute. This will help ensure a high standard of professionalism. It will also mean that the agent will be covered by professional indemnity insurance, designed to provide a measure of protection in the event of the agent’s negligence.
You may also seek references from some of the agent’s current management clients.
The agent will require you to sign an appointment form which will detail the services to be provided, the fees applicable, and any specific instructions you have.
For an overseas landlord, the best service will be one which is comprehensive and covers all aspects of the tenancy and ongoing management of the property.
Comprehensive Letting And Management Service
This comprehensive service is ideal for a landlord who does not want to be concerned with any administrative details in the letting and management of his or her property.
It includes finding a tenant, organizing a tenancy agreement and rental bond lodgment, collecting the rent, and conducting an inventory and condition report. It also covers managing the maintenance and repairs on the property, or paying of third party account, eg: insurance, service charges etc.
Ongoing management : From 6% to 10% of the gross rent collected.
In addition, there may be some additional charges for attending body corporate meetings advertising, postage, telephone calls, faxes, photocopies and bank charges and in some cases fees are change for providing inspection reports.
All leasing agency are required to provide a statement of accounts to landlord. A sample is enclosed. It should clearly state all incoming and outgoings through your rental account. These statements can be delivered to you via email, hard copy or even via iphone. Please ensure that all invoices for job done on your property are also enclosed as evidence.
Annual Income and Expense Report
For tax purposes, your leasing agent, can and will upon request send you an annual income and expense report to you and or your tax agent. It provides a summary of all incoming and outgoings for your property.
We advice that you provide a copy to your property investment consultant to track the yield on your property.