What to Look For in Your Landlord Insurance Policy

What to Look For in Your Landlord Insurance Policy

Landlord insurance is a vital part of protecting one of your most valuable assets:  your investment property. A landlord insurance policy can protect your building, fixtures and contents, as well as provide additional options for tenant default and theft.     Does the policy cover building, contents, or both?  When choosing your landlord policy, you will usually be able to select whether you would like to cover your building, contents, or both. If you are opting for building landlord insurance only, check that your policy includes fixtures such as air-conditioners, dishwashers, and fans. Otherwise any significant damage to your property will leave you substantially out of pocket. If your property is furnished, you’ll want to consider contents insurance. Contents insurance not only covers loose items, but will usually also protect movable swimming pools or spas, carpets, curtains and removable light fittings.    Are you covered against the most common natural events?  Natural events can devastate your property in a matter of minutes, so make sure you’re properly protected. As a minimum, check that your policy covers fire, storm, and impact damage. If you’re in an area where flooding is possible, you’ll also want to look into flood cover. Most policies will allow you to add this as an additional extra, subject to certain eligibility criteria.    Are you protected against legal liability?  Most people don’t consider legal liability when choosing a landlord insurance policy, but it is one of the most expensive costs a property owner can face. Legal liability cover will protect you against claims arising from injury to another person or their property, caused by or within your investment property....
A checklist for off-the-plan success 

A checklist for off-the-plan success 

Every area and property is different, there are certain things to look out for across the board. Here are some key things to check when purchasing property:  Uniqueness  Look at the nearby area of any proposed investment property and do some research on how unique the property is for the area. This will inform whether there is a desire within the local community for a rental property such as this, and therefore, whether it will be easy to find tenants.   Infrastructure  Always look at infrastructure or impending infrastructure of the development if you’re buying off-the-plan.  Some developments have their own infrastructure, so the proximity of a resident to places like supermarkets, shopping malls, cinemas and so on is not an issue – residents can park their car and get groceries on the way to their apartment.  Then there’s external infrastructure to consider, such as proximity to the CBD, hospitals, schools and transport.   Would I live here?  Consider the demographic of the people who would be looking to live in the development. Each development is different. Different apartments suit different lifestyles and budgets.    What will the area be like in five to 10 years?  Property investment normally requires a long-term strategy, so look at the last five to 10 years of population growth and property price fluctuations. No one has a crystal ball for property investment, but you can look at other factors in the area and make an educated guess.  If the local community has shown support for the development because it will bring much needed amenity to the area, and a huge amount of jobs you are on a winner. ...
Set a Framework with your Property Manager 

Set a Framework with your Property Manager 

As much as property managers want to give the best service to their clients, investors must also be responsible enough to reflect on the kind of relationship they have established with their financial team—how do they become a better client to attract the best professionals?  Being good property managers takes time and effort so having a client who is consistently proactive in pursuit of his own success makes work considerably easier and even fun.  First and foremost, investors must keep in mind that property managers are professionals—they know their way around the market because they quite literally spend every working hour studying it. It is, therefore, important for them to keep a clear set of tasks to accomplish every day in order to serve all different clients with different needs without compromising the quality of their work.  They know the market, they usually have a clear schedule. They know exactly what they need to do. They’ve got to set the task list when it comes to leasing a property, to managing a property, and how they address each of the items they’ve got to do.  The best thing for a property investor to do, is to have the same mindset. Being able to understand exactly what the investor wants saves both the property manager and their client from misunderstandings as well as wasted time and effort.  They might have an investment strategy, they might know when they plan on doing these renovations, what their targets are, exactly why they bought the property, what sort of communication they need, and what sort of schedule they want to be on.  While...
How to increase your rental yield

How to increase your rental yield

Market places change. These tactics can help investors increase their rental yield, regardless of price and market conditions.    Cosmetic renovations  Humans can be superficial. So even a basic cosmetic facelift to your investment property may be enough to command extra dollars in rent each week.  This could be a fresh coat of paint, more modern light fixtures, or updated blinds and curtains to maximise light. The rule is to keep it simple, not blow the budget, and ensure all changes you make are mostly timeless.    More substantial renovations  No amount of fresh paint will help if the kitchen and bathrooms look like something out of the dark ages.   Substantial renovations, like a new kitchen and bathroom, or new flooring, require capital and time, and of course a loss of rent, but can dramatically increase your yield. Apart from the immediate increase in rent, it will also reduce how much you will spend on repairs and maintenance in the long term, as you will have new appliances and fixtures.  Assess similar local properties to understand what the local standards are to avoid overcapitalising and to assist with budgeting.    Add furnishings  Furnishing a property can instantly lift its rent, so long as this is appropriate for your location.  As an example, furnished properties may be ideal near universities where there is high demand for “turnkey solutions” by students. In this case, styling should reflect a younger demographic, and cater for potential wear and tear from socialising.  Travelling business people may also require furnished properties near airports or city centres, and may prefer not to spend through the nose on more expensive...
Tenant problems to be aware of

Tenant problems to be aware of

When you first purchase an investment property, it’s easy to think of rent as a passive income stream that simply takes care of itself. But tenants can cause you problems….  Most tenants comply with their obligations, and are respectful of their landlord’s property.  If you’re planning to be a landlord long term, however, there are a couple of tenant problems you’re almost certain to face. Fortunately, landlord insurance could offer a mix of options that may be able to cover you against some or all these risks, so if the day comes you won’t be left empty handed!  Tenants leave without telling you  Contractually, every tenant is required to give notice before they end their lease at a property.  Sometimes, however tenants leave with short – or no – notice for a variety of reasons.   When tenants leave in a hurry, it’s sometimes difficult to retrieve the rent you can lose while preparing the property for occupation and finding new tenants.   Landlord insurance policies may cover you for up to six weeks while you search for a replacement tenant, and could help to reduce your out of pocket losses.  Tenants stop paying their rent  This is the big one. Failure by tenants to pay their rent is more common than you think. In fact, claims for rent make up more than 40% of all applications to Australian tenancy tribunals.   Sometimes by the time you’re able to replace your non-paying tenants with new tenants, you may have lost more rent than is covered by the bond.   Landlord rent default insurance is generally available as an optional cover that can protect you from loss of rent for a period...
10 Property Investing Mistakes 

10 Property Investing Mistakes 

Whether you’re new to property investment, or you need a quick refresher course, here are some mistakes all property investors need to avoid for a successful investment career.   1. Falling in love with the property  You need to stop thinking like a home owner and start thinking like a business owner. You need to like the property. A question you should ask is could you live in it yourself? If you can, then it’s likely someone else can and so the property is probably rentable.  2. Not checking the facts  Due diligence is more than just an inspection of the property, it’s also a thorough investigation of your area’s rental market — vacancy rates, average rents, average age of the rental stock, zoning, government regulations.  3. The home improvement rule  It will always take three times the money and twice as long as you first estimate to get a property ready to rent. Allow for additional funds to pay the mortgage whilst the property is vacant, obtain a building inspection by a qualified building inspector.  4. Cash reserves  A lack of cash reserves puts unnecessary pressure on you to do substandard repairs, accept substandard tenants or make other poor decisions because of a fear of vacancy. When you have a sufficient cash reserve, you act rationally.  5. Doing it yourself  New investors often attempt to manage it themselves. That approach can end up costing more in the long run. Find an accountant you can talk to, a lender who will work with you and a reputable real estate agent to find a property in your price bracket. Find a...