Newsletter April 2010

RAY WHITE CHELTENHAM CELEBRATES 21 YEARS

2010 represents a special year for the office at Cheltenham as we are celebrating 21 years in operation. The business has grown from a team of 3 in 1989 to a team of 18 today. Directors Phil Rawlings and Paul Sansom both agree that our people are central to the culture and success of the business. They are passionate and proud of what they do and make the process of selling or leasing homes easy for our customers. To celebrate the 21 years, we will be focusing on a marketing campaign which will include local press, direct mail and a Company video. Thank you to all our clients for their continued support that they could have access to a closed storeroom so the tenant’s son could play the drums. They also asked the landlord if they could paint and carpet the room.

Without informing the agent, the landlord paid the tenant cash for the paint and carpet. Some months later the landlord visited the property and noticed that the tenants had turned the room into a functional bedroom by undertaking major structural repairs of inserting windows, removing doors and inserting a skylight.

The landlord was distressed and contacted their property manager. The property manager gave two options:

1) The tenant had breached the agreement and a notice of termination could be served, or

2) The issue could be dealt with at the end of the tenancy whereby the tenant would have to leave the property in the same condition (allowing for fair wear and tear) as it was at the commencement.

The Landlord could not afford to have the property vacant so he allowed the tenants to stay. Shortly after, due to health reasons, the landlord had to move back into the property and asked the tenants to restore the property to its former condition. Why? The alterations the tenants had made did not comply with council regulations, which he believed devalued the property and made it difficult to sell. The tenant had completely different mindset and wanted to be further compensated for the substantial renovations.

The matter went to court and lucky for his landlord the court member (drawing on his many years ofexperience, which included the building division of the tribunal) understood that although the room.

From Our Property Management Team

Are you thinking about buying or selling a property? If you would like an obligation free appraisal of your rental property or are thinking about buying another investment property, please feel welcome to contact our friendly and knowledgeable sales team was technicallyin better condition it did not comply with council requirements. Instead of the landlord’s $3,454 rectification claim, the tenant was ordered to pay $1200 in damages. The moral of the story  Always letyour property manager communicate with your tenants  Always get all agreements in writing You may have the best intentions when speaking with your tenant; however, your property manager is experienced in foreseeing the possible consequences on what can go wrong.

What is your net rental yield return?

When buying or owning investment property, one of the important figures to look at is the net return on the money you’ve invested, also known as the net rental yield. Many investors will take the return on their money into consideration when determining where they will invest. Does one particular property show a better return than another? How does investing in property compare with bank interest returns. The property market is rising and you could be pleasantly surprised at the value of your property.

The Risk of informal agreements…It must be in writing

When things go wrong, they can go terribly wrong It often starts out with all parties having the best of intentions. A landlord who is on friendly terms with their tenant verbally agrees to a new pet, or consents to a room being painted, or out of compassion says that it is okay for the tenant to catch up on rent – without consulting the property manager.

These types of situations are more common than you may think and are fraught with danger if you don’t ensure that it is in writing. There was a recent court case between Jemmeson and Fisher where the landlord verbally consented directly to their tenant When considering the returns on an investment property you also need to look at the long term capital growth. The property may have a lower short term return (income), however, provide a high long term return (capitol growth), which can often give you a far greater opportunity for making money.

HOW DO YOU CALCULATE YOUR RENTAL NET YIELD RETURN?

A simple example:
Purchase price: $623,000
Weekly rent: $700 x 50 weeks
(Allow for vacancy factor)
Gross Rental Rent: $35,000
Less Expenses: $10,000(E.g.
Maintenance, insurance,
management fees, cleaning,
interest costs, depreciation)
Net rent: $25,000
$25,000/$623,000 x 100
Net rental yield return = 4.01%
For a detailed more accurate return on your property that takes all expenses and depreciation into consideration, we recommend that you speak to your accountant or financial advisors.

PDF version: April Newsletter