$10K Saving Challenge- Week 4
Week 4 Challenge: Maximising an Investment Property
We just purchased a new home (YAY!!) Which means that we needed to find tenants for what will now be our rental property. We went with a local agent that we trusted and they recommended a price that we list our home for. Here is what we did to get the best possible price for our property- which was $50 per week more than the property manager recommended for us.
Getting the best income:
One of the things that we took extra care with before our house was open for inspection to tenants was to make sure it was C.L.E.A.N. Most of the cosmetic things can be looked over, but we believed that making sure that the showers, toilets, sinks, kitchen and mirrors are sparkling clean are critical as this can really put off a potential tenant. We presented it to a standard that we would like it to be kept.
I love our home, we have made the most wonderful memories here. We wanted to sell that dream to our new tenants. It helps anyone who comes to inspect build an emotional connection. Use what you love about your home- if it's the kitchen make some anzac biscuits (or if you're as great at baking as I am- heat some cookies from woolies up in the oven just before the inspection). Turn all the lights on. If it's warm put on the aircon, if it's cool put on the heater. If you have a great balcony- open the doors, if you have a backyard, mow the lawns and put an outdoor game out there.
Photos- we wanted our photos to sell the dream too. Even though we were preparing to pack up the house, we tried to keep it to a minimum so there wouldn't be too much clutter around.
Know the market. We are in a townhouse so we were able to work out what similar properties were being leased for and compared our home to those. In the end, the property manager recommended a price, but we believed that it was worth $50 more and we advertised it as such.
Outcome: 7 people came to the inspection, we had a few applications filled out, but we chose someone who agreed to our price and was looking for a 2 year lease. Rookie error, on the recommendation of the agent we only allowed a 12 month lease, but I wish we had secured the property for 2 years. Oh well, we'll see what happens next year!
Negotiating with your agents:
We were quoted a price for a letting fee and ongoing management fee. We were able to negotiate 2% off the management fee and 50% off the letting fee. If you already have a property manager and you have signed an agreement there won't be too much you can do. BUT, when your contract with them expires, you can prepare yourself by getting quotes from other local real estate agents and know where you are in the market. But great property managers can be hard to come across, so there is more to consider than just the money you can save in this scenario. A property manager that is responsive and proactive when there are issues is really important.
What this meant for us;
It means that we earn an extra $50 per week in income $2,600 or $2,457 after the management fee
$350 saving in letting fee
$728 in management fees
Saving: $3,535 for 12 months.
Week 1: $420 + 210 = $630
Week 4: $3,535
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General Advice Disclaimer:
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs. This information is based on our personal circumstance and it will be different for everyone. Information provided on this website is general in nature and does not constitute financial advice.
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Who am I? I’m still figuring it out. I love being a wife to Tim and mum to our 2 boys. I started The Melbourne Kid in 2012 and stopped writing to focus on our family and our business Accession Finance. I am an accountant, I love being outside and in nature, I love the salty smell of the air at the beach. I love coriander and I hope you won’t judge me for it. And when I was 6 years old I knew I wanted to be a writer but my mum told me it was a dreamers job. So this blog… it’s the combination of what I know (numbers) and my childhood dream (to write) so thank you for reading and making my 6 year old self’s little dream come true.