The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1378 BEING A LANDLORD: PASSIVE INCOME OR A FULL TIME HEADACHE? TRUTH VS. MYTH!
Have you ever wondered about the life of a landlord? This episode delves deep into the intricacies of property management, dispelling common fears and highlighting the rewarding aspects often overlooked. We explore the daily realities and challenges that landlords face, from managing tenant relationships to navigating the sometimes-complex world of property maintenance. With real-life stories and valuable insights, we shed light on why engaging a skilled property manager can be the key to a smooth and successful landlord experience. Listeners will gain a wealth of practical information, covering essential topics like tenant management, the stigma around vacancies, and the importance of timely communication. Whether you are a seasoned landlord or considering taking your first step into the property market, this episode will equip you with the knowledge to make informed decisions and approach property management with confidence. Join us as we break down the myths, share personal anecdotes, and provide expert tips for aspiring landlords. Don't miss the opportunity to transform your understanding of the landlord experience—subscribe, share, and add your voice to the conversation!
What's it really like being a landlord? Is it as stressful as you think? Is there vacancy to contend with? Heavy repairs to contend with? We're dealing with 2,000 landlords. We're going to talk about life of a landlord every day. Stay tuned.
Speaker 2:I'm the ringleader, so let's go Hi. Good morning, mr Real Estate man. Hi, how are you? Passionate real estate agent, passionate what I like to call um an accommodation provider, not a landlord well, in melbourne, you're not allowed to call them a landlord.
Speaker 1:You're not allowed to call them a tenant. We have to call them a property provider and a property occupier.
Speaker 2:It's illegal it's property, provided that was the one I was looking for. But yeah, it's um it's a nicer way of saying it like, at the end of the day, you're providing accommodation for someone to live in, um, and I reckon this is like. You know, there is a great divide between people that love the idea of of that, and then people that just steer away going. I can earn money in the bank with no headache.
Speaker 1:Yes, and look, I think, if you're not exposed to it, how would you know? I think, having a bit of good old-fashioned conversation today about what we encounter on a daily basis with our landlords, um, the highs, the lows, you know, I often talk to people and they get surprised about the lack of the virtually, or the lack of vacancy. So properties being quite easy to rent, and I'm talking over a 10 or 20 year period, 30 year period, it's never really a problem to rent properties out. So there's basic things that happen in the life of the landlord that I guess, unless you don't, you are a landlord. Who do you talk to about this and ask about the trials and tribulations? You don't get educated at school on it, formally educated. So, yeah, how do you find out these?
Speaker 2:things. Yeah, that's right, you're pretty much just talking to people and their experiences and, you know, sometimes going into it a little bit in the dark, um, but look, the common, common pitfalls of being a landlord. I reckon this is the number one. Number one that people manage worry about, um is the tenant management side of things like dealing with tenant issues such as late payments, property damage.
Speaker 1:Um, they're probably the two biggest ones in people's head well, it's pretty scary that one person can strangle your cash flow, um and I think that's that's quite a daunting process that if that tenant of your property stops paying rent, how are you going to pay the mortgage?
Speaker 2:yeah, and, and it's not exactly easy either to get the tenant, you know, moving. If there is, you know, a legitimate reason, their work's frozen up or whatever you know, you can't exactly just move them out straight away. There is a bit of a process to follow, so yeah, I think that's probably the landlord's biggest, you know concern.
Speaker 1:And you know, I think you'd find that that reason number one is why people actually don't buy property. And today we just wanted to sort of clear up. The nice thing is, because we are looking after so many landlords and so many tenants of properties, we've got a bit of a metric for you that we wanted to share of what's normal and what's not. And I do have to say with all the landlords and all the tenants tenants do meet their commitments. They don't often freeze up and hang the owner out to dry. I would say out of 2000 properties we probably would be lucky to see that once or twice in a year. Late payment sure, no payment very rare.
Speaker 2:And that's managed pretty well from the property manager's end. That's why you need a good property manager and we'll come back to whether you should have one or not. But a property manager will monitor those rental payments and you know, if you set a good posture from the start of the tenancy, and expectation with someone moving in, it often carries through the whole of the lease. But rental arrears they don't just come on from overnight either, you know. So if they're monitored and I think the girls you know the team upstairs in our office really pay attention in that first 14 days it's critical getting onto it early and and pretty much making a payment plan, like if someone needs a bit of help, um, just having the conversation. It's not never bad to phone into the office and just say look, I'm going through a bit of a period in between work or something like that. But the worst thing you can do is not communicate.
Speaker 1:Not big time. What else spooks landlords?
Speaker 2:Say again, what else spooks a landlord? Let me refer back to my notes. I think the vacancy is another big one. However, on the residential side, the average letting period between putting the property on the market and finding someone is seven to 14 days. In the current market, providing you're using all the realestatecom portals and things like that, it's pretty quick. So not a thing, not really. And like often, tenants are giving a minimum of two to three weeks notice anyway, sometimes a a little bit more. So you could always start doing the rental open homes just a little bit earlier, hoping to line someone up on the back of their vacate date. So you reduce that vacancy period. Commercial landlords seem to have a different mindset.
Speaker 1:You've probably got a little bit more perspective there Look commercial landlords hard because I think you've got less comparisons um to measure up against as a property manager. So when you're comparing those recent those properties um to you know other other things are rented. There's just less comparison out there so it's a little bit harder um. But I do have to say we've worked in the most ferocious rental markets with vacancy. We've worked through GFC through vacancy. We've worked through COVID with vacancies on rental properties GFC1, gfc2, worked through the recession as well and I've got to say that the vacancies element side of it again Not bad, not bad, not freaky.
Speaker 2:Yeah, yeah, jonathan Craig, good morning to you. Sir Damage, it's probably you know again right up there on people's Worry list. I was having a bit of a look this morning worry list. I was having a bit of a look this morning. Anywhere between sort of 1% to 2% of the property value is what you should probably be keeping aside for a bit of a kitty. But let's assume your property is worth $500,000, you know $5,000 to $10,000 of that. I reckon it's actually more than enough. But if you're buying the right kind of asset and there are assets where you can buy it knowing that you've got to invest and you've got to do repairs and you're probably saving on your purchase price but if you buy the right kind of asset for example, there's buildings in DUI that are only five to 10 years old. A lot of them don't need a whole lot doing.
Speaker 1:The general maintenance of them is very low the general maintenance of them is very low and and I I do have to say the area that you're buying in will be more conducive to damage or less damage. So if you're buying in a transient area, where, or a rough area, and you're renting your property out, there's more chances it could be damaged. But I think you'll find, like eastern suburbs, north shore, northern beaches of sydney that should hold damage thing, like to give you an idea. Again, we're managing over 2 000 properties and again we don't see much malicious damage. Or I'd say, see any. You may see, you might see an accidental, an accidental damage, but malicious damage no well, think about you know, from a um an entry-level landlord's perspective.
Speaker 2:If they've just bought their first apartment they've probably been worried about you know they're being trashed. There's only so many people you can fit in a one-bedroom apartment and the lease going into it is generally a single or a couple, so there's not room for big parties or things like that. You know what the landlords consider nightmares and look these.
Speaker 1:These guys are generally they're not overnighters like in a hotel room, they're going to be hanging around for a while. We've id'd them, we've reference checked them. Generally you know the the quality control of the way the tenants been putting this good and it's their home. They you know people generally look after their home. So I think if you're buying an investment property on the northern beaches, there's there's some really good things there that you don't have, that we can assure you that you don't have to worry about. And we know that because we're just looking after the amount of properties that we're looking after. So if the things we went over today, billy, was rent, rent coming in on time, we talked about malicious damage, we talked about vacancy, they're all actually they can really play havoc on your brain as a potential landlord, but I do have to sort of give you that assurance that actually they're not really a thing at all, and the biggest way to prevent any problem going wrong is getting it right from the start.
Speaker 2:I I personally think that starts with a good property manager, because if you try and do that yourself, um, it's, it's. It's like trying to take on someone's whole profession. You know there's some of the team members upstairs in the office that have been doing this for 15 years in the same office. Like that's really rare to have that level of experience and you know you can't think that you're going to be able to get it right your first time as a new learner landlord, rather than employing someone to manage that process for you.
Speaker 1:I love that saying that you know we're looking after a pot of gold. You're going to give a million dollars, which is your asset, to someone and you're going to ask them to look after it. Furthermore, you're going to ask them that when you come back for the pot of cash, there's more in there. So there's an enormous amount of trust going into your property manager. Make sure you do your research with your property manager that they're great and 100% they're going to look after that pot of gold so so well because they're trained. It's like military precision.
Speaker 2:Yeah, yeah, and I agree with Jonathan. I think if you buy a particular class of asset, you will attract a particular class of asset.
Speaker 1:you will attract a particular class of tenant I'm going to sell jonathan a property on the northern beaches. I will, I will. Oh yeah, it will happen that's it, that's the show. That's the show. Bottom line is if you're a landlord, uh, don't freak out. Why? Because we manage a buck, a load of properties and when you look at compared to the amount that we manage, compared to the pains that landlords have, it's just minimal and you're people dealing to people at the end of the day.
Speaker 2:Don't overthink it. Have a good day.
Speaker 1:Have a good day, everyone, take care, see you. Thank you to the jury. Have a good day, everyone, take care, see ya.