In my last blog I talked about getting out of your head and a way to do that is to learn from experts…..the key word there is experts!
Not the guy next door who’s investment portfolio is made up of Smurf figurines.
I love Smurfs, but this is not the guy to help get you out of your head.
Which brings me to the heading, would you take driving lessons from someone who has never driven?
Here’s some more information, what if they had no desire to drive, are scared of driving and believes cars are are dangerous? You’d run a mile, and you have to run because now you are just as scared of driving as they are!
Yet when we are stuck in our head, let’s say about buying our first investment property, who do we turn to? Family and friends, who don’t invest but have a bunch of horror stories to share. Remember M Night Shalalalala from my first blog?
What is wrong with this you ask, their stories match your concerns, therefore 1+1 = investment properties are nightmares worthy of M Night Shalalalala (how do you spell his name, I must find out?). What’s wrong? These are not their stories, they don’t invest in property, they invest in Smurfs.
Your family and friends have the best intentions, but you nearly learnt to drive from someone who can’t drive!
Here are the 2 most common horror stories I hear from people who don’t have an investment property, but want to give me advice:
No Tenant and you can’t pay the Mortgage?
This is the first horror grenade non investors like to throw. The property won’t rent, it’ll be empty for months, and you can’t pay the mortgage. Here’s the reality:
- less than 53% of Australian adults own their own home, and this is projected to fall below 50% in the next few years. Add in population growth and the number of people renting increases further. Woo hoo, a growth market.
- the number of new properties being built is not keeping up with population growth. More people renting and not enough properties, double woo hoo!
- well maintained properties in the right area, right price will rent, all the time.
There are very few, very few, rental properties that don’t rent, and with good research you can avoid those properties (a whole blog on its own!)
Tenants will trash the house!
Horror grenade 2 and I love this one. The conversation usually starts with “there was a story on Today Tonight”. They will talk about how all tenants are evil and your house will be turned in to a rodent infested meth lab, which explodes as they are incompetent drug cooks.
The reality is for most tenants this is their home, it’s where they sleep at night, where they feel safe, entertain their family and friends, watching shows about meth labs!
I ask you, have you ever rented, or currently rent? Did you or will you trash the house?
If more than 50% of the population is going to be renting, are they all going to be house trashers?
I don’t ignore the risk that there are undesirable tenants, but you can protect yourself with landlord insurance and a robust tenant selection process.
The cost of landlord insurance is proof that tenants that trash are rare. Annual landlord insurance premiums usually cost the equivalent of 1 weeks rent. Why so cheap I hear you ask?
Insurance companies have really smart people working out premiums, and they reckon the risk of a dodgy tenant is low, and that makes me feel all warm and fuzzy.
Tenant selection, my advice is outsource and get a great agent. Aside from having better things to do with my time, agents have access to potential tenants, other agents and databases that aren’t accessible to you and I.
Let me help you get out of your head, I know how to drive, in fact I love driving. There might be a few wrong turns, a speeding fine, you could feel a little lost, but if we use the GPS we’ll reach your destination, your investment goals.
Disclaimer: I will pay my own speeding fines!