Lending Game-changer | Adelaide High-Yielder | Tips for Property Repairs
Welcome to the August 2019 edition of the Adviseable newsletter!
Last month we reported the possibility of some further good news for property investors following APRA’s proposal to ease back on some of the “guidance” they enforce on the banks. Well these changes have since come to fruition and the banks have now started to loosen their lending policies accordingly.
Gone are the days where loan assessment rates are set in stone at 7.25% irrespective of the fact that actual loan interest rates might be dropping. Assessment rates are now pegged to the actual interest rate of the loan with a 2.5% buffer. This tweak is a game-changer and it means that the RBA’s recent rate cuts will now impact new loans and in turn provide a substantial boost to the amount a homebuyer can borrow.
Not only is this set to create a significant shift in market activity, it may also mean that if you were previously advised that you were maxed out with your borrowings, this mightn’t be the case anymore. Speak to your trusted finance broker to find out more…
In light of this improved market sentiment, we’ve been keeping a watchful eye on a few pockets of Sydney that we feel are poised to shine. One of these areas is the City of Blacktown:
Recently Purchased by Adviseable: 92 Jarrah Drive Munno Para West SA
This 11 year old, 3 bed, 2 bath, 1 car garage home on a 383m2 block was purchased by the Adviseable team for $257,888. We targeted properties in this particular pocket of Munno Para West due to the inclusion in the highly sought after local school zone (catering to years K through 12). Currently tenanted at $300 per week, with a few cosmetic upgrades such as paint, new window furnishings, and a spruce up to the garden, rent return could be upped to $330 per week (equating to a yield of 6.7%).
Playford City SA highlights:
- Fastest growing local government area (LGA) in SA
- Located 30km from the Adelaide CBD
- Population forecast to double (to 160,000) by 2031
- $500M infrastructure investment from LGA
- Metro train line & airport upgrade projects
- 0.8% vacancy rate (Munno Para West)
Question of the month:
Q: Although I’ve only owned my first investment property for a few months now, there seems to be a continual stream of unexpected repair and maintenance related expenses being passed on by the property manager. Is this normal?
A: Well, when it comes to being a landlord it does seem to be a cosmic law that all repair/maintenance costs for an investment property will strike at once. And when you own multiple investment properties, the misfortune of this phenomenon seems to be compounded even further as things within all of the properties need repair or replacement simultaneously – Almost as if your various property managers were all in cahoots!
Seriously though, apart from the obvious considerations regarding the age and/or condition of your investment property, if these maintenance issues seem to be unending and genuinely questionable in nature I would strongly suggest raising the matter with your property manager as a priority. Although you have a legal obligation as a landlord to ensure that your rental property is “safe & secure” for tenancy, by the same token it’s your property manager’s responsibility to ensure that the return on your investment property is maximised (that is after all essentially what you’re paying them for!).
On this basis you should in turn expect that they provide expert advice, recommendations, and solutions to deal with repair and maintenance related issues as they arise. This includes explaining what items need to be done in order to remain compliant with regulations (both existing and imminent), what items should be done sooner than later to prevent longer term damage to the property and minimise any potentially large repair related expenses in the future, and any discretionary issues or upgrades that the tenants may have requested. Further to the latter point, your property manager should also provide you with advice regarding any possible market driven risks of not keeping in good stead with your current tenant. In other words, how would the property rent in the marketplace if your tenant were to become disgruntled and vacate?
Admittedly the process of keeping your tenant happy whilst maximising the return of the property can be a difficult balance to maintain, however a good property manager should readily be able to strike this balance and never make you feel like you’re getting the raw end of the deal and taken for a ride. So if this is the case and the aforementioned service standard isn’t being met, it might be time to shop around for a new property manager. If on the other hand your property manager is doing everything within their control to minimise the financial impact of repairs and maintenance, I can assure you that these costs are not a constant and relief will inevitably come! – Alex
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