A quick update on our property investing journey –
So, since running out of money for deposits on Property #5 earlier this year, we (dad and I) more or less decided to chill out, kick back and have a few brewskis while our properties made us filthy rich… eeerrrrr wrong!
While we were sipping on a few coldies, our property manager decided to do the same! HA! Well not exactly... Actually, what happened was our Kempsey property manager decided to quit and unbeknownst to us wasn’t replaced… FOR A MONTH! Meanwhile the tenant decided to stop paying rent! This obviously wasn’t picked up until we raised the alarm bells when the monthly rent didn’t go in. Then when the tenant was confronted, she conveniently handed notice to move out… in another 2 weeks.
“Oh it’ll be alright”, “don’t worry, she’ll pay the money back”, we were assured by the real estate.. yeah right! We never saw another cent. So combine 1&1/2 months unpaid rent and a $1000 damage & repairs parting gift, and we’re down $2,500.
Property investing rule No.1 – You need a tenant.
Property investing rule No.1a – The tenant needs to be paying rent!
I know what your saying – “landlords insurance?” Forget it. Insurance companies always win. 5 x wks rent as excess, loss of no-claims-bonus… you get the picture.
“Tenancy Tribunal” you ask? Once the tenant is put on the blacklist, there’s nothing the tribunal can do.
We dropped the 8 ball, and now we’ve learnt. Agents should not be drinking on the job! Property managers need to be managed!
On to more positive news –
Touch wood, all our properties are rented and everyone is happy for the meantime. And our overall position (since acquiring all 5 x properties), is that we’ve contributed $3,500 of our own money ($2,500 from the Kempsey debacle). All other costs – mortgage, rates, water, agent fees, repairs/maintenance - have been covered by the income generated from the properties, which isn’t bad considering we’re 2 years into our journey, and still learning the ropes.
The goal now is to focus on lowering costs & increasing supervision of the agents!
We’ve also been researching some other ideas like subdividing & joint ventures, but I’ll leave that till the next journal entry.
I’m off to have a cautious coldie!
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A professional photographer and now avid renovator, Duane has made fast work of starting small. His first purchases were nicknamed ‘El Cheapo’ and ‘El Dumpo’, but he’s moved on to bigger projects as he and his father/investment partner explore joint venture and development projects. From his home base in Sydney’s Maroubra, he splits his time between eyeing photos and property deals.
You can also read our profile of Duane here.
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