Investment Property Advice

you decide exactly who you can trust when it comes to advice that you can trust. One quick and easy check you can do is to go to www.asic.gov.au and from there you can search for business registrations and financial license registrations. I’ve seen companies come in from overseas and register their company in an attempt to look legit – but when they’re providing financial advice and don’t have an Australian financial license and try to tell you they don’t need one – that’s an instant indicator they’re scammers. You can check all those details here.

3. There are other ‘instant indicators’ which tell you that the people you’re dealing with are real, honest and genuine. One indicator is testimonials and client comments.

Can they give you even just a couple of people who will say nice things about them? Better yet, can the provider give you good evidence? By that I mean if somebody will say these comments on video, there’s no disputing the facts. Written comments are good too, but if they can’t give you 2 people who would do business with them again, that’s a worry. Are they a ‘fly-by-night’ operation? Were they first registered as a business last week? Or have they been in the area for many years? Do they promise expertise over the entire country, telling you they know every detail about every area, or do they specialize in one area of Australia? It’s much more likely that they know what you need to know, if they specialize in one area.

The main point to remember is that most companies and most people are legitimate, knowledgeable people. The real crooks and cowboys aren’t as common as the media would have you believe. But, importantly, they are out there, awaiting the unsuspecting first time investor, looking for answers.

Don’t let a sales pitch put you off, watch out for people lacking credentials and experience instead.

Mistake #6: Being under-insured

Insurance for your investment property goes far beyond simply insuring against fire or natural disasters. There are several providers of landlord insurance, and you simply cannot afford to neglect this area. There always seems to be stories on the news and current affairs shows about deadbeat tenants refusing to leave a property, refusing to pay rent, even going so far as to basically destroy an entire property, and without complete insurance, guess who’s paying the bills? You are, unless you are covered for the damage.

Insuring rental property is crucial for real estate investors and just as essential for lessees who own valuable goods that would cost thousands to replace. Both real estate investors and tenants can be sued for medical payments if someone is injured on their property, whether inside or outside.

Sudden accidents such as high winds that shatter windows, plumbing problems that instigate water damage or burglaries that happen due to lax security measures affect not merely the landlord who has to repair the damaged building, but also the lessees whose property has been stolen or destroyed. Landlord insurance does not cover a lessee’s personal property.

Landlords Require Insurance to Deal with Various Risks

Landlord insurance policies vary widely, from simple “named peril” policies to comprehensive or “all-risk” insurance policies. Whether coverage is restricted to specified risks or includes every risk not specifically excluded in the policy, landlord insurance applies to storm damage to the building and any of the landlord’s fixtures and appliances inside the units. Premiums depend on quite a few factors, from the building’s construction to its tenants, and optional coverage makes premiums increase but offers necessary protection.

Optional coverage can include shielding from loss of rents, landlord liability that covers legal defense expenses and medical payments, coverage for theft or vandalism, earthquake coverage, flood insurance and Replacement Cost coverage, which pays far more than an ordinary Actual Cash Value policy that subtracts depreciation. Landlords can reduce their premiums by accepting a higher deductible, not allowing pets or holding on to excellent lessees. The increase in lawsuits over toxic black mold has many insurers dropping mold coverage or making it an expensive option, which may still be essential if the leased property is older or located in one of the many states prone to mold.

Rental property owners should realize just what their policy covers, what it excludes, and how to file a claim. They also should take photos or videotape their property, take inventory of what they own inside the units, and maintain excellent records of tenant communications. Keeping the property clean and secure can prevent negligence lawsuits, so real estate investors should make important repairs immediately. Owners also should inform their insurance agent or their insurance company’s claims hotline as soon as a covered incident takes place.

There are so many insurance companies and so many options out there; it’s well beyond the scope of this book. I mainly want to warn you about the dangers of not being covered for absolutely every eventuality that could cost you money. Your investment property is in all likelihood going to be the biggest investment you will ever make, so it makes sense to protect that investment.

Mistake #7: Doing it all yourself

One big mistake many first-time investors make is going it alone. It’s tempting to think you know everything you need to know, you’re seen the people talking about investment tips on TV, you’ve spoken to your friends about what they think they know about it, and you have approval from the bank.

No man (or woman) is an island. One commonality about all successful real estate investors is they all seek expert advice. If you pay $ 500, $ 1,000, or more for advice which saves you or makes you tens or even hundreds of thousands of dollars, is that not a good investment in itself?

You are not alone. You do not need to go to the ‘school of hard knocks’, wouldn’t it be helpful to be able to pick the brains of someone who has been there, done that?

Never be afraid to ask for help.

I used to keep problems to myself. I never want to ask for help. This is because I feel that if I ask for help, it will reflect badly on my capability to deal with personal problems. In other words, I was too proud to ask for help.

For example, if all my peers know how to swim very well and I have difficulty learning to swim, I will be too proud to ask them to share and teach me how to swim well. I am afraid that they will laugh at my inability to swim.

It is normal for people to have problems too big for them to solve alone. It is normal for such people to ask for help. Talk to people around you, especially old people. You will find that they have asked other people for help at some points of their lives.

What I am trying to highlight is that any problems that you have encountered is nothing new. History of human civilization is already so long. This means that there is definitely someone else that has encountered the same problems as you. This implies that there are ready solutions to your problems. All you have to do is to change your mindset and ask for help!

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