Penelope Valentine from Property Alchemy joined me to talk about investing in property. Her business involves working with property investors. It is important to her that she works with people who have a mindset of wealth creation through property. Penelope and her partner, Belinda, are particularly skilled at managing investment properties.
After you purchase an investment property and add value to it through renovation, it is important that it generates wealth over time. Penelope and belinda are both long-term property investors and understand the value of a great property manager.
The Motivation For Investing In Property
Everyone is an investor at some point in their lives. Many of the women I have worked with have wanted to move out of their family home, but not sell it. All of a sudden they have become a property investor.
When you are wanting to create wealth through your family home, it can be difficult not to be a little precious about it. There is a lot of emotion attached to your family home. Penelope calls this a motive.
Emotion has no place in creating wealth through property. When you move into being a property investor, the numbers become the motivation. In order to make money from your property the numbers need to add up.
What Can A Property Manager Do For You To Create Wealth?
Penelope said that she finds that a lot of people do not see the value in spending $30 to $40 dollars per week to manage their property. When an investment property is well managed you are more likely to create wealth. The services offered by Penelope and Belinda include:
- Appraising and advising on the value and the condition of the property.
- Offer suggestions on how to add value to the property.
- Market analysis – comparing the property to other rental properties on the market.
- Marketing the property.
- Conduct open homes to meet prospective tenants.
- Background checks on prospective tenants before putting them forward to the investor.
- Ingoing inspection reports.
- Tenant inductions.
- Regular routine property inspections.
- Rent and lease reviews.
- Ongoing guidance about asset growth.
Two Types Of Property Management Systems
There are two systems for managing properties:
- The standalone property manager who oversees every aspect of the investment property. They do everything from the leasing of the property to the day-to-day maintenance. The investor deals with a single person for everything.
- The pod system involves three people who manage a larger portfolio. One person will focus on leasing the properties; another will do the day-to-day maintenance; and someone else will deal with the condition reports. It means that all three people need to communicate with the investor.
Penelope prefers the standalone system and finds the pod system a recipe for disaster. There is often a miscommunication between all of the parties involved in the investment property. Agencies that use the pod system often take on too many properties to be able to service the properties they manage effectively.
What To Look For In A Property Manager
The best way to choose a property manager that can help you build wealth is through a referral from someone who is already using one to manage their investment properties. It is important for you to interview your prospective property manager and their company before making your decision.
Some of the things to consider when hiring a property manager who can help in building your wealth:
- How long have they been a property manager?
- How many properties do they manage?
- Which system do you use?
- What is their depth of knowledge of property legislation?
- Ask about their processes?
- What do you get as a property investor?
- Ask about their speed of return?
- Check their reviews on Google
Investment Property Inspections
Property inspections are an important part of owning an investment property to maintain the value of your investment. Penelope talked me through what is involved when her company manages a property:
- If you are wondering whether or not you should attend the inspections, Penelope says that it is up to you. She has clients who attend every inspection she does on their properties and others who prefer to be more hands off.
- Once the lease is in place, Penelope will inspect the property after three months and then again every six months.
- Inspections are very thorough and any problems are highlighted so that they can be followed up at the next inspection.
- The reports are shared with the investor so that they are aware of how their property is fairing and whether any maintenance is required.
What Are Tenants Looking For In Different Types Of Rentals
Just as rental properties come in all shapes and sizes, so do the type of rentals. I asked Penelope to outline the different types of rentals she deals with:
- Executive leasing is always fully furnished and it is usually short-term.
- Airbnb leasing for short stays of a week to then days for example.
- Short term leasing for a minimum of three months.
- Long term leasing, both furnished and unfurnished.
If you wish to target the executive leasing market, Penelope recommends that the property should have two bedrooms and two bathrooms. It must be high end and close to everything the executives who rent them need, especially near public transport.
In the current environment, people looking for a long term rental are wanting a home office or a study space. Penelope says that floor boards are more practical than carpets and a fresh coat of paint can transform the property. It is also important to make sure the space has enough natural light not to feel dark during the day.
Before doing any renovations it pays to speak to your property manager. They are in touch with what people are looking for in a property and can advise you on what you should do to improve the perceived value of the rental. It could be something as simple as spray painting the bathroom tiles and changing the handles on cupboard doors.
How The Recent Changes In The Tenancy Act Affect Your Rental Property
Some changes have recently been made in the tenancy act that are important for you to know about if you own an investment property. Penelope says that there are two amendments that stand out for her the most:
- Break lease fees: It used to be that if your tenant broke their 12-month lease they had to pay all out of pocket costs for the owner to get a new tenant. So they would have to pay for the leasing fee, the advertising and any rent up until such time as a new tenant moves in. The twelve months have now been broken into four lots. If the lease is broken within the first three months, the tenant will have to pay four weeks’ rent. If the lease is broken within the second three months, the break lease fee is the equivalent of three weeks’ rent.
- Pets: Potential tenants cannot be declined based on them owning a pet. There needs to be a very good reason, such as wanting to have a large dog in a small apartment. It is important for pet owners to understand their responsibilities and compensate the owner if anything is damaged by their pet.
A Good Property Manager Can Help You Build Wealth Through Property
If you have an investment property or two, or are busy renovating a property you intend to rent out, consider talking to a property manager. They are familiar with the rental market and know what people are looking for in the properties they lease. Having a mindset for creating wealth through property combined with working with a good property manager can see your investment grow and prosper.