Negative banter about how tough things are in our State is having a strong impact on confidence in our economy. It’s time we considered a change in mindset and adapted to the changes. Blaming the Government is not the solution for right here and right now and is beyond our immediate control. So moving onwards and upwards we are here to offer some advice to property investors.
Moving onward and upward
There are facts that we need to face in order to move forward, one of these is that our property market has seen better days. The volume of sales is low, prices are down and the rental market is in high supply with rents falling by more than 10% in many cases. We can choose to complain about it, ignore it, blame someone else or on the other hand we can accept the situation for what it is and take action.Sometimes we need to look at the big picture and focus on the positives. We will always have cycles in our economy and in our property market we just need to learn how to ride the wave to survive the downturn in order to thrive in the good times.
To move forward we must seek out the best professional advice and listen to the people who have the experience and local knowledge to help you get the best results. Avoid making rash decisions in a state of panic or you could find yourself regretting those decisions later.
Retain for long term reward
We have had a number of investor clients so concerned about the state of our economy that they have sold their investments at a loss or worse have been trying to sell for some time with no success. Usually because they have been told by well meaning friends or colleagues how bad things are in Tasmania. We remind our clients of the number one rule when investing in property and that is “never sell in a down market if you can avoid it”. Investors should also consider that interest rates are low and this will often balance out cash flow. History also tells us that now is a time when we should be buying property ready for the next upward trend, not selling.
It is no secret that if you get into property investing you need to be in it for the long term (10 years plus) to make any significant gains.
Often it comes down to priorities and commitment. What could you give up aside from your property investment in order to retain it? We can all be a little guilty of being short sighted at times, yet it could be the difference between independent financial security and a government funded age pension.
Cutting out the middle man
In recent times we have started to see more investors question the value in a Property Manager. This is often when things are tight and they have good quality tenants in place. With rents down up to 10%, investors figure they can save that by ditching the professional management. In reality they have a whole lot more to lose than $20 - $40 per week in tax deductible management fees if they make this decision without considering the long term advantages of professional management. Often a tenancy can be rosy until the tenant vacates, this is a time where it often all falls apart for the investor. There are so many variables and scenarios where without the right systems and processes in place the investor stands to lose more than they would have paid in management fees for the entire year.
Where is the value in a PM?
Vacancy management is of course the main factor, having access to a much larger market and proactively seeking tenants well before the last tenants vacate. Following up on lease renewals well in advance to secure a new term, regular rent reviews and increases, negotiation lease terms that suit the investor, proactively managing maintenance issues following regular inspections to maintain capital value, monitoring rent payments, maximising insurance claims and disputes, managing and providing evidence for small claims court or bond claims with the RDA, dealing with lease break situations and change of tenancy processes and effectively managing potential eviction process mitigating any potential loss to the investor and this is only a snippet of what we do as property managers behind the scenes. The question is, is it all worth the risk to save on average $25 per week in tax deductible management fees?
In summary, hang in there through the tough times because there is always light at the end of each tunnel. Trust the people you have engaged to give you the right advice and let’s get things moving together.
Michelle Williams
Managing Director
@home Property Management Solutions
