Showing posts with label Insurance. Show all posts

29 – Pets Allowed?

Of all the varied decisions we’ve had to make of late, we also had to consider whether to allow our first tenants to keep pets. Queue the cat lady.

By way of a preface to this post, we’ve always been “dog people”, had pets in the properties we’ve tenanted, and keep a dog and a cat in our own home—so we know all about animals. The dog in the photo is Riley. She's a ridgeback cross Rottweiler, around ten years old now (the photo was taken when she was younger). We also have a cat, who thinks he's a dog—and he's almost as big, named Ted. This crux of this post is our personal story about how we acquired Riley without permission while renting and our experience as pet owners (in case you’re not). I discuss some other considerations further down.

Ten or twelve years ago, we were living in in Adelaide near the university where we both studied. We found a house through the university's accommodation board after landing in Adelaide from Perth, days after I emigrated to Australia (a sordid tale, those first few weeks in Adelaide).

The landlord, Grant, worked next door as a steel fabricator and the house was ancient—or felt that way to us. Think green and yellow motif in the kitchen, gold threadbare carpets, a toilet in the sagging rear addition that was so cold on a winter’s night you might as well have been in an outdoor dunny, and ceilings that stretched to infinity. Our view from the front veranda was an old Colourbond fence across the street, what I would come to call an "ugly tree" on the verge, and Grant's crane through the twisted chain link fence separating the house from his factory. Grant started early—7am at the latest—and steel deliveries would often arrive around that time with a flatbed truck reversing down his drive which ran alongside the boundary of the rental property—and the master bedroom—with only inches to spare.

The house was close to the university and shops, it was clean, and it served us well given the affordable weekly rental of $125. Despite the occasional late night and weekend, Grant was a good neighbour and it was convenient having our landlord next door when it came time to pay the rent. Upon meeting Grant, we told him we had an old cat to deal with but, to quote me, "she'd be dead soon", and he was okay with that.

We spent four years in Adelaide, in the same rental. I think our rent increased once by five or ten dollars—a very good thing too as we had no money to our name (I was studying as an international student and we simply had nothing behind us despite menial part-time jobs, a meagre Centrelink allowance, and a simple existence).

At the start of our last year in Adelaide we woke up one overcast Saturday morning and started talking about dogs. We'd both had dogs we loved growing up. The wife said, hypothetically, she'd really like a Ridgeback. I said I'd really like a Rottweiler. We decided to drive down to the RSPCA that morning "just to look." We came home with 10 week-old Riley: a laughable sack of brown, wrinkly skin and a Ridgeback-Rottweiler cross.

Sunday we spent playing with Riley and thinking through how we might explain this situation to Grant. We thought he may not be too keen on the idea but we knew he had a family dog of his own. The rent was due on Monday so we had to go over anyway and he would have seen Riley in the garden if we weren't upfront things. We took Riley with us in the hope of persuading our landlord with puppy cuteness. Of course she was happy as any puppy can be be out for a walk, not knowing how much trouble her new parents might be in.

Grant met us at the roller door of his shed. The sun typically came up behind the shed and, walking up the workshop’s driveway it was often impossible to see what was going on inside, through the deep shadows beyond the door.

As we approached and my eyes adjusted to the dimness I saw an inquisitive smile on Grant's face and a raised eyebrow. He asked us what we'd done as we both cringed slightly and avoided eye contact.

Grant told us she'd dig holes in the grass and I promised him we'd look after the place. By this point he'd bent over to scratch her ears. All the necessary exchanges, of course—there was really no negotiation required and Grant's smile said it all.

And so we had a dog. The surprise was sprung upon our landlord but at least he was on board. The puppy dug holes every so often and I dutifully filled them in. She peed and pooped on the kitchen floor, where we left her the first few days when we had to go off to uni; when we arrived home, we washed the tired lino floor after collecting the mess and the freshly shredded newspaper we’d left down. She ate our phone once, while in that kitchen. She pulled laundry from the clothesline, once outside more regularly, and we arrived home one afternoon to find wifey’s unmentionables strewn across the front lawn. Thankfully she was quiet about it all and never barked much.

Grant would park his ute in a little garage at the corner of the factory lot and open the side gate first most mornings. As Riley slept outside in Adelaide, she'd come to greet him through the chain link fence every morning, sauntering sheepishly past our corner bedroom window to say hello. Or so we thought: we peeked at the two of them one morning from behind the curtain and realised Grant was actually sneaking Riley treats.

When we left Adelaide to move to Perth, Grant asked for a picture of Riley. Obviously we lucked out as Grant could have told us to get rid of the dog or cancelled the lease when we brought her home.

We still have Riley today. She still digs holes and sheds fur and tracks mud and sand into the house. She’s older now and drools brown slobber through her old teeth. As work progressed on our first investment property we discussed whether it would be wise to allow prospective tenants to have pets. The house and all of its fittings, including the carpets and gardens, are brand new. We can’t ask tenants for a pet bond in Queensland but I suppose we could charge a premium rent if the market would tolerate it (Open Wealth’s rental guarantee might not, however). Allowing pets has the potential to widen the market of applicants and might also help install a long-term tenant at that.

We've read horror stories about the smell that lingered even after the carpets were pulled out. We know from first hand experience dogs and cats have oils on their fur that gets left behind on every doorway and corner they rub past. Fur gets into everything. Cats have claws that pick at carpets. Dogs dig holes. And they all get poop and occasionally vomit on floor coverings and walls. They sometimes bleed (another story). They sometimes claw at doors. They sometimes chew wood. They sometimes dig up new gardens. They bark (and meow). Even a fish tank might leak and a snake might eat the kids. Is any premium really worth it? It would likely be hard work to evict a cat lady and insurance might or not might not cover some of these problems.

We've loved our pets. They cause us no end of heartache at times but they're good value nonetheless and the kids love them. I don't think a new house is the best place for tenants with pets—from my perspective as a landlord, anyway. Maybe in ten years when the place has been bumped through by several shorter term tenants and is due for a fresh coat of paint and new carpets.

Nonetheless, our property manager at Century 21, Kerry West, indicated most of the applicants looking for a 4x2 house in the area have pets (think family: mum, dad, and two or three kids plus cat or dog or both). Kerry further suggested a family without a pet on move-in day might seek to acquire a pet later on, which would likely be a juvenile animal instead the mature animal(s) we might get upfront. All valid points we hadn’t considered.

And so we left the Pets Allowed box ticked on the appointment form and agreed to wait and see what happens. In the end, the first application through (which we accepted) is from a trio of roommates with no pets and the lease formally stipulates no pets.

If the tenants come to us in time asking to have a pet (or having acquired one) I can’t say I’ll be as sympathetic as Grant was with us but I can’t say that I’d say no either. At the very least there would the cost of replacing the tenants if they chose to leave in order to find a more accommodating rental. We certainly understand the benefits of having pets in our lives and it would be hard to begrudge someone else that luxury.

I suppose a disclaimer is also worth posting: I'm just a guy, I'm not an accountant, lawyer, solicitor, tax agent, mortgage broker, banker, financial adviser, insurance agent, land developer, builder, government agent, or anything else so I disclaim your application of anything I write here is to be applied at your own risk. What I write may be incorrect and you are best to seek your own professional advice (tax, legal, financial, and otherwise) before entering into contracts or spending your money. Your situation is unique to you and what I write here reflects my experience only. This content is not professional advice and is not tailored to your situation. I'm learning too and expect to make many, many mistakes along the way.

Enjoy,

Michael

27 - Appointing a Property Manager

The first step in transitioning our newly-built Queensland investment property to an income-generating asset—rather than a financial liability—is to find a rent-paying tenant. But let’s not jump ahead because first it’s time to find a good property manager.

As we reside in Western Australia, managing an interstate investment property ourselves would be challenging but not impossible.

Travel costs to inspect an investment property are tax deductible once the property is income generating but not before. Once a property is tenanted, the ATO allows its owners to deduct travel costs twice per year but be careful because if you and your spouse are joint owners and travel together that’s your two trips (and if you’re thinking about making the trip into a holiday opportunity, think again: you may not be able to deduct all—or any—of your costs). It’s also worthwhile attaching a dollar amount to your time and asking yourself if that time can be spent more productively.

Then there’s Queensland law, in our case, which entitles a property owner to only four inspections per year. That number includes regular, scheduled inspections by the property manager.

To my mind, hiring a licensed property manager to manage an investment property offers another layer of risk management—an insurance of sorts—and is yet another cost of “doing business” as a property investor. We could play the role ourselves but it doesn’t seem to be a good idea apart from the cost savings, which are tax deductible anyway. Speaking of insurance, some insurance companies offering landlord insurance require the insured property be managed by a professional property manager.

In theory, even an average property manager will know the area (and rent benchmarks for that area) and may have a database of possible applicants ready to go. The property manager will advertise the property, schedule and host open for inspections, screen applicants, conduct rent inspections, and manage maintenance. We also have the option of having the property manager arrange payment of some charges, such as rates, the water connection, cleaning, landlord insurance, etc from rents collected. Of course a property manager also deals with rent collection and bond monies and can represent you at tribunal (for an additional fee) if necessary.

Importantly, a property manager offers a layer of separation between you and your tenants to avoid getting too personal and keep things business-like.

Expect to pay between 7 and 10 percent for a property manager. In our case that breaks down as commission of 5.5% of one week’s rent (including GST) plus a 2.2% management fee.

I’ve heard it suggested finding a good property manager is imperative but perhaps not the easiest thing to do. There are countless property managers for hire out there and a much smaller selection of really good ones.

Open Wealth recommended us to West Property Group (Century 21) and I spoke with Kerry West, the proprietor, who was extremely helpful and patient as we talked about everything from insurance to rent expectations to annual rent increases to pet bonds and so on. Kerry is a property investor herself and having someone representing you who understands what you’re trying to achieve is a big plus in my view.

Notably, Open Wealth include a rental guarantee with their properties, the terms of which mandate the property is to be managed through the agent they nominate.

Our success is linked with that of Open Wealth, in a way, so it’s obviously good for Open Wealth to have their client’s properties managed by good managers, with the added bonus that we receive a slightly discounted management rate. At the end of the day, this property is a turn-key investment and I’m happy to accept Open Wealth’s advice as we move from acquisition and construction to “commissioning”.

There were a few minor differences between property management norms in WA and Queensland that surprised us.

We’ve previously rented in Perth and, as tenants, had to pay the letting fee ourselves; in Queensland, the landlord pays the letting fee (of 110% of one week’s rent—inc GST).

Apparently the area attracts many families with pets. In WA, as pet owning tenants, we paid a pet bond. In Queensland it’s not legal to charge a pet bond. I’ll be writing more about pets in an upcoming post.

Given the rental guarantee, the geographic distance between Perth and Brisbane, and our lack of experience as landlords, appointing a professional property manager is the right thing do in our case, at least for now. Hopefully they earn their keep and attract a quality tenant at a good weekly rent!

Enjoy,

Michael

25 – Insurance for Landlords

As we move progressively closer to the “launch” of our first investment property, our handler at Open Wealth noted we should start looking at insurance options. I seem to write a lot about insurance!

For our family home, we have building insurance because the bank requires it and this is the same for an investment property, of course. Although the building itself is a depreciating asset, it’s what allows us to generate revenue on the land (an appreciating asset) and would be expensive to repair or rebuild in the event of fire, flood, impact from space debris (!), etc, etc.

We also have contents insurance to cover the things inside the house like the furniture, clothing, pots and pans, and the TV. Notably, our insurance company classifies window and floor coverings under the banner of contents insurance.

As landlords we have a few more things to consider, such as malicious damage by a tenant and lost rental income for reasons like the tenant not paying rent. We also need public liability insurance to cover things like a tenant injuring himself because he tripped over a crack in our driveway, for example. In general, these things come under the heading of “landlord insurance”.

When I initially started comparing insurance products, I assumed we’d need standard building (and possibly contents) cover and then bolt on a landlord insurance product through the same insurer or another insurer. I was surprised to find that many insurers selling landlord insurance already bundle building and landlord under the heading of Landlord Insurance, and typically include public liability insurance as part of that offering. These products also tend to cover window and floor coverings too—either through the building component of the policy or through a modest contents component.

As usual, the pricing and inclusions for insurance from the various providers varies widely. I’ve received quotes ranging in cost from $600 to nearly $2000 for our 4x2 single storey IP. Some insurers will include removal of rubbish and motor burnout while others do not. Some insurers include theft by a tenant while others list it as optional. Most insurers will deduct the bond from any claim payment for themselves—but not all. Some insurers will insure you only if the property is managed by a licensed property manager and has a fixed term lease in place—i.e. not a periodic lease; others offer flexibility on these points. The only way to get to the point of a like for like comparison is to read the (lengthy—and boring) product disclosure statements for each product you may be considering. Needless to say, the last few evenings at our house have been painfully dry!

I’ve also investigated having a broker recommend a suitable insurance product and thus far Queensland Insurance Services has supplied me with a few quotes after I submitted a fact finder document to them.

One nice feature offered by some insurers like Allianz and CGU is the option to pay monthly, instead of annually, at no extra cost. Normally I’d prefer the convenience (and cost savings) of paying annually for personal bills but when it comes to an investment property I’m thinking more about cashflow—especially in these early days when the property will be negatively geared.

In terms of paying for running costs like these, we’ve got a few options. The easiest would be to have the property manager deduct the payment amount from rents collected and then make the payment on our behalf. I haven’t set this up yet but likely will once I’ve got a grip on it all. An alternative would be to pay costs from the line of credit account we have associated with this property—and into which rental income and tax variations are paid.

I’m still in the process of exploring insurance companies in Queensland. As we’re insured through GIO in Western Australia, I’d hoped to insure this property in Queensland with them as well to obtain a multi-policy discount. Unfortunately GIO don’t offer insurance in Queensland—despite the fact their parent company, Suncorp—does. Which is frustrating.

Mortgage Choice referred me to Allianz and they’ve come back with a strong quote; I’d initially written them off because their online quote system told me they don’t insure for flood but the rep I spoke to following the Mortgage Choice referral was able to add flood cover. I’ve also had a look at RACQ but they don’t offer landlord insurance.

Suncorp seems to be very similar to GIO here but they are a little pricey. I’ve also looked at Commbank, Terri Sheer (owned by Suncorp—also a little expensive but recommended to me by our newly-appointed property manager, who gets a $22 kickback if we sign up), CGU (very cheap but offering a strong insurance product as far as I can tell), and QBE.

As I do with all of my insurance purchases, I’ll increase the basic excess to at least $1000. I’m not sure if this is a wise move or not for the small cost savings. That’s the unfortunate thing about tenants: they’re largely outside of your control in your house (er, investment property)!

One final aspect to consider when selecting an insurer is how likely they’ll be to pay a claim. This will likely come down to experience and anecdotal evidence from jaded (or maybe the odd happy) customers who post about their experience online.

Insurance, despite being awkward and boring, is one of those things required to manage risk. You pay the premium in the hope you’ll never need to make a claim.

Enjoy,

Michael

23 – Progress Update: Fixing Stage Complete

On Monday came the “enclosed” invoice for a not-insignificant chunk of cash; today the “fixing” stage invoice arrived for about half that amount again. Apparently the builder was hanging on to invoices around the end of financial year period.

If nothing else, it seems like progress is moving quickly now (quicker than it really is!). In either case, we’re now nearing the end of the construction phase with “practical completion” the last outstanding invoice.

Stacey, our Client Liason Manager at Open Wealth, called this morning to let me know the fixing stage invoice would be sent through and we also spoke briefly about inspections, insurance, and property management. Notably, the real estate agency recommended by Open Wealth will send us an updated rental appraisal. The initial appraisal we received late last year was (a conservative) $380/week and I’m curious to see whether this has moved up or down (Open Wealth suggested the actual rental income on many of their builds in this estate is closer to the $410/week mark—I based my forecasts on the $380 figure). As more new product becomes available in this estate, and on the back the health of the national economy, I’ll be interested to see where we land—hopefully above the $380 benchmark and also in relation to the higher $410 figure.

It’s hard to believe we’re already nearing the point when a tenant will move in and the property will become income generating. Although I’d obviously prefer to be on the ground supervising the details of the build and feeling in-tune with this aspect of the process, I’m also comfortable knowing we don’t need to be there—that we’ve put our trust in Open Wealth and paid them to stand in our place while we undertake more productive activities.

With this stage complete, items like the plastering, tiling, kitchen, and laundry have been ticked off. With the next milestone, tap ware, sinks, shower screen, light fittings, air conditioners, blinds, and kitchen appliances go in, the carpet will be laid and the house painted, feature walls will be rendered and the driveway poured, the letterbox will be built, and the house will be cleaned.

Meanwhile, the property manager will be rounding up potential tenants for short-listing by Open Wealth and, ultimately, selection by us. The builder will have two weeks to address any issues found during inspection (following the practical completion milestone) and it may be possible (I’d guess likely—given the rental guarantee) there will be a few pre-handover inspections before any formal open for inspections take place after handover.

Enjoy,

Michael

21 – Tax Time

I’ve spent the last few days (on and off) gathering together everything needed by our accountant to complete our tax returns. This year’s tax return is more involved than normal because we have the purchase of our first investment property to consider and my wife’s life insurance—part of which may be tax deductible.

We’ve had an accountant prepare our tax returns for many years now—initially because it all seemed a little complicated and now because it is a little complicated.

Back then we had income from one or two employers, bank interest, HECS debts, and deductions like professional memberships and insurances, training, mobile phones, internet, stationary, uniforms, and depreciation of office equipment and furniture. I wasn’t sure how my income and tax returns related to my wife’s and vice versa.

These days, we’ve got more of the same plus private health insurance, life insurance, the investment property establishment costs (any IP is an interesting mess in its own right when it comes to taxation), dependent children, and the occasional minor offset to me as a non-earning stay-at-home parent. And of course the tax laws are always changing in many of these areas, making it hard to keep on top of what we can and cannot do, legally. Next year we’ll have the IP income or loss, interest and running costs to deduct, building and fittings depreciation, and so on.

The first accountant we worked with claimed he would be able to to cover his costs and we always found that to be the case… in other words, he was able to include valid deductions that we probably wouldn’t have considered (plus he didn’t charge us much).

That first year our intention was to use his return as a template for subsequent years but it seemed just as easy to go back to him and so we did.

Although I wouldn’t recommend using your accountant as your financial adviser, our first accountant was the only financial professional we relied on at that point in time and he was able to offer some useful tips. For example, he highlighted the benefits of having private health insurance instead of paying roughly the same amount for the Medicare Levy (of course our insurance premiums increased as we started planning a family and it seems like the Medicare Levy doubled at some point along the way too…).

Now days our accountant is a key member of our broader financial team and we’ve “upgraded” to an accounting firm that deals regularly with clients who own investment properties (WSC Group—I’ve written about them before in the context of financial advice and insurance). WSC were recommended to us by Open Wealth and they’ve offered an outstanding service thus far—note they’re not directly affiliated with Open Wealth.

We pay for the expertise of an accountant but did you know accounting costs can be deducted the following year? Our first accountant also claimed he’d never had the ATO question a return he submitted (I assume tax return audits are fairly random but having a professional submit your return can’t hurt). While I probably could do our taxes, I’d prefer to know the return is correct and, more importantly, that I’ve claimed all of the deductions I can to reduce our taxable income.

If you’re considering the purchase of an investment property, or hold an investment property today, do you know how your quantity surveyor’s report relates to the depreciation of your building and fittings—and therefore you tax return? I’m estimating those two deductions alone will be worth nearly $10,000 in the first year. Don’t know what a quantity surveyor’s report is? Ask your accountant!

I forwarded 7MBs of PDFs to our accountant this morning so that’s my job done for now, hopefully.

Enjoy,

Michael

20 - The saga of a sliding door, seven years later

This post doesn’t really belong on this blog but I wanted to share my experience dealing with a builder’s defect more than seven years out from practical completion, particularly as we’ll soon have our first investment property build complete and under warranty. I’ve written in the past about pushing your lenders and insurers; this post is about pushing your builder and their suppliers.

As regular readers of this blog will know, we built our family home through 2006-2008. The house was constructed by one of the project builders here in WA, Don Russell Homes. The house is a two-storey double brick and tile construction, typical of many homes built in Western Australia to modern standards. The block on which we built was originally sloping so we retained and filled with sand prior to the builder compacting and commencing construction. We took up residence in mid-2008.

One notable feature—and the subject of this post—is the double sliding door at the rear of the house which opens on to our back garden. The door opening is 3500mm wide and is filled by two fixed panes at either end and the two doors in the middle which slide open over each fixed pane. A galvanised steel lintel spans the window opening and the door frame is powder-coated aluminium. The windows throughout our house were manufactured by Jason Windows.

During our practical completion inspection near the end of the build, I flagged to our site manager a problem with the sliding action of one of the doors. This was noted on the PCI report and I subsequently listed it in my communications with the builder. Essentially one of the doors would catch and stick as it travelled along the track.

The builder’s initial solution to this problem was to lubricate the door track. This worked as a temporary solution (long enough for the fix-it man to make his get away!) but was not a lasting solution for an unsheltered external door which catches the weather coming from the Western coast. The external garden was also still a sandpit at this stage and of course sand and lube don’t mix very well. It was apparent to me there was either a problem with the door wheels, the frame, or the track and it was the responsibility of the builder to address.

In addition to our PCI report we listed a large number of issues (forty, actually) on our 16-week “liability issues” report, which we submitted a few months after move-in day. A number of these were major issues which required the builder’s attention and watered down some of the lesser issues like a sticky door. Other than lube, there was also no quick fix for this problem by the builder’s trusty fix-it man and it should have been referred back to the window company. It eventually fell off the radar as Don Russell’s maintenance division became less and less communicative and as time wore on.

Over the next few years the problem got worse and I assumed the door wheels were clogged with or damaged by the sand and needed to be replaced. After I tried to change the wheels myself in 2010 without success (the doors, including the fixed panels, need to be completely removed to change the wheels, my wife arranged for a window maintenance firm to come out. Jason Windows do not offer a maintenance service.

The maintenance firm suggested, to our surprise, the wheels were fine but the door would need to be cut down to better fit the opening. The gap was so minimal, the metal of door frame itself was riding directly on the track. We never received a quote for the work and the issue once again slipped off the radar as life marched forward for us. I telephoned a sliding door repair company from the Yellow Pages at one point and it was suggested this is a common problem with the lintel having sagged but, again, the fellow was reluctant to come out to inspect and quote.

In retrospect, I should have flagged this as a warranty issue to Jason Windows while the door was still under warranty but the path for resolution under warranty of a supplier’s product when you’ve previously dealt exclusively with the builder is not well defined. It’s also not terribly obvious (to me) if windows form part of the structure and are therefore covered by structural warranties—it’s likely they do not.

In recent years the door became virtually unusable. Both doors now stuck as they “slid” open or closed and on a hot day would take a proper shove to move.

I finally contacted the Sliding Door Doctor and a window manufacturing company. The Sliding Door Doctor quoted $600 to repair the door whereas the window company quoted around $6,000 to replace the doors. Both groups reiterated the “sagged lintel” idea, based on the measurements from top to bottom across the door opening (see the opening image above). The Door Doctor also pointed out the top locking plate was missing—likely removed when the door was installed as the door wouldn’t have fit with it in place!

As there are no other signs of a sagged lintel (cracks to the brickwork) I concluded the lintel was likely bent when it was installed or the door opening measurements were incorrectly supplied to the window company/the door was built too large by the manufacturer.

At this point, after picking my jaw up off the floor (I expected a replacement door set to cost around $2,000-3,000) I decided enough was enough and attempted afresh to contact the service department at Don Russell. My emails and calls were ignored for weeks if not months and I finally went in to the builder’s office in person to ask to see the Service Manager. He wasn’t in and I asked to see his superior… who also “wasn’t in”.

The receptionist must have sensed my frustration and as I noted down contact details for the Service Manager’s manager (the Construction Manager), I was offered details for the Operations Manager. Only by writing to this individual did I finally receive a response from Don Russell.

In my letter to the Operations Manager I complained about the lack of response I’d received from the Service department and included the log of my failed contact attempts. I included my measurements (illustrated above) and photographs showing the sagged lintel. I made a video of me opening the door to demonstrate the severity of the problem—which I posted on YouTube (as a semi-private video). I included a copy of the original PCI report and the 16-week liability issues report.

And I demanded the issue be addressed at the builder’s expense.

After another brief delay, the Operations Manager replied to tell me the Service Manager would be in touch, which I took as a good sign. The Don Russell Service Manager and the Jason Windows Service Manager eventually came out to the house together to inspect the problem. During this appointment the builder’s Service Manager vehemently declared the lintel not to be sagged. The Jason Windows representative was simply aghast at the idea we’d lived with this problem for such a long time. The issue of cost did come up before I suggested it would be dealt with between the two companies and it was not mentioned again.

After another few months of manufacturing delays, the original door stiles were replaced to lock to each other (instead of using a lock rod system), the track was properly secured to the lintel, the door frames were filed down slightly, and the wheels were replaced. The doors now slide much better than they ever have before and, while not perfect, are functional.

Yes it was embarrassing and annoying to have to chase the builder on this matter after such a lengthy time period. This is time lost I could have spent on other more prosperous activities if the builder had done their job properly in the first place. Thankfully both Don Russell and Jason Windows were sympathetic to the situation and did the right thing by their mutual customer.

As a last resort I could have raised this problem with our house insurance company but we have a high excess and I’d prefer not to have that black mark on our insurance file for something that wasn’t, originally, our fault.

At the end of the day, I felt I had a case to be heard and was finally able to get my point across to someone with the authority to see the problem resolved. I’m thankful to both companies for addressing this problem and, more than anything, glad to see the end of it!

Enjoy,

Michael

13 – Life Insurance

As part of a review of all matters financial I initiated in the middle of 2014, one of the items I added to my list of things to mull over was life insurance. The matter surfaced for me when I realised I no longer had any insurance cover through my superannuation fund by virtue of not working (i.e. being a stay-at-home parent) and not contributing regularly to my super account.

I’m not planning to die or be critically injured any time soon but I remember when we took on the mortgage for our PPOR in 2006: the commitment felt almost too large handle. I used to commute into the city regularly by bicycle but, having recently moved to Perth from Adelaide—with a related increase in minor accidents, and as one of two income earners critical to our ability to repay the mortgage, I felt it was time to stop riding. With a few years of wisdom on my side, I don’t feel the same way this time around with the investment property but, conversely, I now have kids and want more than ever to protect my family from the risk of loosing an income/resource.

From personal experience again, my father died at the age of 56 and my grandfather at 65 so I joke that I’ll likely expire at 45. Specifically, my father had a life insurance policy worth $500k when he died and had only recently opted not to increase that policy to $1m. The $500k has served my mom well over the years as she retired and downsized the family home but she also weathered the 2001 tech bubble and then the GFC with most of that money in the stock market. With the payout she’s been comfortable; without it, I don’t know that her retirement years would have been as amenable as she was expecting had my dad lived to retire with her.

When we were working, my wife and I both had automatic life and salary continuance insurance (SCI) (also called income protection) through our super funds. We didn’t pay directly for these policies but they were funded through the fees we pay to each fund (a percentage of our super balances). Notably, the amounts insured were very small—a couple of hundred thousand each for life and SCI.

We had the option, of course, to increase the benefit amounts and do everything through super but I soon came to learn there is a better way—an approach that not only pays for some of the premiums from our otherwise inaccessible (preserved) super balances (we’re not running SMSFs) but also offers tax benefits.

By way of background, I’d scheduled a complimentary meeting with a financial advisor through our accountants at WSC Group (through Jigsaw Financial Planning—again no affiliation here). I took with me our written financial goals and described to Matthew Laird (the advisor) what we’re doing with real estate, where we are with super, and that I’m not looking at stocks or mutual funds. It soon became apparent we didn’t need much in terms of paid financial advice… yet. We did, however, talk about insurance and Matt promised to get some numbers together for us. Importantly, he highlighted the concept of a partial rollover from our super funds to pay some of the premium costs, reducing our out-of-pocket expenses and thereby removing what had been the single biggest blocker, to my mind, to insuring ourselves adequately: cost.

The first thing Matt’s team did was prepare a Personal Protection Plan document for us which summarised our current position in terms of income, assets, expenses, liabilities, goals, and existing insurance. This offered a framework for understanding our insurance shortfall and potential requirements into which the planner injects their recommendations for level of cover and ownership structure. There was no charge for this.

It’s worth quickly describing the different types of insurance because I found this enormously confusing at first. I like to categorise insurance into two simple groups: living benefit, which you receive if you’re not dead, and death benefit, which your estate or nominated beneficiary receives when you die.

Living Benefit

Total or Permanent Disability (TPD). A lump sum payout when you’re declared totally and permanently disabled—and can’t work. These policies might exclude heart attack, stroke, cancer and others. A very important distinction to be aware of between TPD policies is that of “Any Occupation” versus “Own Occupation”: with an Own Occupation policy, you’ll receive a payout if you can’t work in your own profession; with an Any Occupation you’ll only receive a payout if you can’t work in any occupation (as Matt says, “as long as you can lick stamps…”). The premium is not tax deductible and the payout is typically not taxed.
Trauma (also called Critical Illness or Living). A lump sum payout that covers heart attack, stroke, cancer, and other specific conditions. The sum insured is typically lower and this cover overlaps somewhat with income protection. The premium is not tax deductible and the payout is typically not taxed. For us, I felt this was very much an optional insurance given our SCI cover (see below) and we didn’t buy any trauma.
Salary Continuance (SCI) (also called Income Protection). Pays ~75% of your income on an on-going basis, after a waiting period, to the age of 65 if you can’t work. SCI covers heart attack, stroke, cancer, etc. The premium is tax deductible and can be paid through super but I’m told it’s best to pay this one yourself for maximum tax benefits. The benefit is classed as taxable income. With the wife’s insurer, the maximum monthly benefit they’ll underwrite is based on 75% of her highest income year in the last three years.

Death Benefit

Term Life. A lump sum payout at death or when you are declared terminally ill (i.e. before you die but with less than 12 months to live). You’ll likely purchase “term” life insurance, in which your premiums cover you for death up to a certain age. You might also be able to purchase permanent life insurance, although I’m not sure this is available in Australia. The premium is not tax deductible and the payout is typically not taxed (but it may be if paid via a super fund or if paid to someone who isn’t a financial dependent—i.e. not your spouse or children).

Note that life insurance tends to get more expensive the older you get—I suppose because you’re more likely, statistically, to receive a payout. I was specifically told by Matt insurance gets a lot more expensive past the age of 47.

The other problem you might face the older you are relates to your medical history. In my (young) case, I broke my back in a snowboarding accident at the age of 21. So my insurance policy includes a blanket exclusion on spinal cover—with no reduction in premium, of course. Basically if my back suddenly gives way tomorrow I’m not covered but if I’m in a car accident and break my back I would be covered. Of course, some insurers may offer you a policy with increased premiums to cover the additional risk. My suggestion therefore is to get yourself insured as soon as you can, as a young person, so you at least have something in place even if health problems do present as you get older which might preclude you from becoming insured.

In the same vein, you’ll also want to be careful what you tell your GP—and what they record in your patient file (the insurer will request your patient file from your GP as part of the assessment process). One thing in particular to be mindful of is mental health—depression, anxiety, etc. If you’re having a bad week at work and mention that when you visit your GP for an unrelated reason—and let’s say your GP recommends you see a counsellor, the insurer may take that into consideration when assessing your application.

With some insurance products like SCI you can insure at indemnity value or agreed value. Indemnity value means the benefit is paid as a percentage of your earnings (i.e. 75%) whereas agreed value means your benefit is whatever fixed amount the insurer has agreed to cover.

Your premiums will also increase annually (these are called “stepped” premiums)—beyond the rate of inflation. You may have the option to pay a higher, “levelled” premium that remains constant throughout the course of your policy. If you can afford to, a levelled premium seems like the way to go to me—assuming premiums will increase beyond the levelled premium and you’ll save money. That said, part of me thinks “the house always wins”.

Our risk of death increase as we age but we conversely approach the end of our careers and our income generating potential. In other words, we should theoretically have a lessened need for insurance as we get older. My aim therefore is to wind back insurance over the next twenty years, with the assumption that we’ll be further progressed in our financial lives and less dependent on income or a large payout to set us in good stead. I’ve therefore opted for stepped premiums.

With other products you can purchase a lower-cost “rider” policy. For example, if you have a trauma rider to your life policy and claim against the trauma policy, your life policy benefit will be reduced by the amount you claim for trauma.

With the concepts out of the way, we started by defining our insurance goals, i.e. what costs would need to be paid for if one or both of us could no longer work. With my wife as the only income earner, we would firstly want to reduce debt and replace her income. With me providing child care, we would also want to cover the cost of child care if I couldn’t provide that function. Pretty simple. Anything else is a bonus—i.e. paying down property debt. In short, we calculated benefits from income, factoring in living expenses and debt. As with most things we do, we insured for modest amounts. Since income protection would be paid at 75%, I opted to go for the maximum amount we could purchase however.

From there, we were able to structure the insurance so the premiums are partly held through a superannuation account. This is accomplished through a partial rollover from our own super funds to the insurer’s zero-balance fund for the amount of the annual premium. In other words, that percentage of the premium for the policy held in the super fund is paid with super dollars that I otherwise cannot touch until I reach preservation age or retire. Yes, that money is no longer earning money for me in my super account but at least I’m not having to pay out of pocket for something as mundane as insurance (and in all honesty I consider the balance of my super as dead money… I’ll look at an SMSF one day).

In my particular case since I’m not working, I wasn’t eligible for an Own Occupation policy or SCI and all of my premiums were covered by the partial rollover. My policy covers me for life and TPD.

In the wife’s case—interestingly—the advisor recommended a different insurer and she’s covered for life, TPD, and SCI. Premiums are again paid through a combination of a partial rollover and a personal contribution. Interestingly, dear wife is with an untaxed super fund so there’s the little catch that rolling over from an untaxed fund to a taxed fund will likely result in tax being payable on the rolled over amount. This is still being resolved but it sounds like a tweak to the ownership structure will sort it out.

Finally, I should mention buying this insurance didn’t cost us anything in broker fees. The broker received a commission from the insurer which is detailed to us. I didn’t think insurance was sold this way so that was a nice cost savings and, since I know nothing about these types of insurance companies, saved me a lot of research. Yes, brokers are selling products that make them a commission which may vary from product to product but WSC Group (through their subsidiary Jigsaw Financial Planning) seemed very professional and above board in their dealings with us.

Enjoy,

Michael

4 - Risky Business?

Risk is one of those misunderstood concepts that seemingly plagues everything we do: riding a bike is risky, crossing the street is risky, buying property is risky.

I’ve found people throw around the word risk in a very self-limiting way and when it’s used in the context of any random conversation they:

a) haven’t identified the actual risks that apply to that situation;

b) haven’t classified those risks in terms of their likelihood of actually occurring and the impact if they do occur;

c) haven’t identified ways of mitigating those risks or reducing the likelihood of their occurrence and severity should they occur.

Your mom or sister or brother or uncle will just say “oohhh that’s too risky for me” without understanding why it’s risky. This annoys me to no end because their ignorance suggests I haven’t evaluated risk and am therefore as ignorant and blind as they are myself—I am not!

Experience also reduces the risks that apply and time, of course, redresses many risks—especially in the world of long-term property investment.

Not taking risks could be said to be just as risky as taking managed risks! How else do we move forward as individuals and as a society and culture?!? NASA didn’t put men on the moon without taking risks.

The key to managing risk in any situation is understanding and qualifying the risks that might eventuate.

The example cited above of riding a bicycle is simplistic but the risks of riding a bike are numerous and include falling off, getting hit by a car, riding into a pedestrian, vehicle, animal, or lake, the chain falling off, getting wet if it rains, getting a flat tyre, having to shower when you get to work but having no soap. I used to ride my bike to work every day and these are all real risks!

Having identified the risks, scrutinise each risk in further detail to categorise and rate each one. Here are a few examples from bike riding:

Falling off: There’s a small chance you might fall off your bike and the result might be of no consequence if you land on your feet or it might be catastrophic if you bump your head. Maybe you’re riding over a loose surface or in the snow. Maybe you’re trying to stay balanced while you’re clipped in at a traffic light. Maybe you’ve made the poor decision to ride home after a few beers on a Friday night after work. The risk of falling off could be decomposed into several risks which are easier to think about and to manage but let’s keep things simple for now. In all cases, you can mitigate the risk of falling off by wearing a helmet and gloves, taking a safe route on bike paths and becoming familiar with the route and all of its hazards, and of course making good decisions while you ride such as unclipping from your pedals at intersections! You could also take out life insurance to cover your healthcare expenses, protect your income if you’re seriously hurt, and reduce your liability if you hurt someone else.
Flat tyre: This one’s easy: the risk is very low as it’s bound to happen every so often and is something that can be fixed on the spot in ten minutes (or worst case: call someone to collect you and your bike). Mitigation includes not riding over broken glass and fields of prickles; of course, you’ll also want to carry a spare tube or patch kit, tyre levers, and a pump and a flat may make you late for work… which might get you fired.

Don’t forget to take a moment to look at the risks in the context of what you gain, which in the case of our example include improved health (if you don’t fall off!), cost-effective transport and exercise, less stress, nice tan, etc.

In a similar vein, property investment has it’s own set of risks but it’s not inherently “risky”. You’ll want to identify the risks that apply to your situation but this is easily done and takes only a few minutes to think through the details. You’ll sleep better at night having done so—I promise: if your mind starts playing tricks, all you have to do is return to your risk assessment and you can say “nup, that’s a low-likelihood risk and although the consequences are high these mitigations are in place” and carry on sleeping.

Here’s a shortlist of property risks to get you started:

Buying a low growth property
Buying a property with expensive problems (pests, asbestos, etc)
Buying a low cash flow property
Paying more than the property is worth (i.e. buying at auction)
Sharks and dodgy investments
Problem tenants/property management
Vacancy
Unexpected repairs/shonky builder
Interest rate increases
Job loss
Hidden costs (stamp duty, mortgage lender’s insurance, council rates, insurance, accounting, management, etc)
Change in legislation (i.e. taxation laws relating to negative gearing)
Liquidity
Capital gains tax
Selling costs

It’s also important to weigh up the risks you identify in context of the reward—the gains you stand to make if the risks you identify do not eventuate. These might include income through a positively geared property, equity, and wealth.

We mitigated a number of the early risks related to buying by going through Open Wealth but I compiled a risk matrix for each of the risks that do apply in our case, specifically as we move into the post-construction phase. It’s a simple grid. I noted the risk, the criteria for that risk to be fulfilled, probability, impact, ranking, mitigation, and contingency.

Simplistic definitions for these terms are as follows:

Probability:

Improbable
Remote
Occasional
Probable
Frequent

Impact:

Negligible
Marginal
Critical
Catastrophic

Ranking:

Acceptable as-is
Acceptable with controls
Undesirable
Unacceptable

If, in future, I do encounter one or more of the risks I’ve defined, I have a ready-made framework for understanding those risks—at the very least—and some initial guidance for dealing with them in the heat of the moment. Hopefully I’ve taken steps to mitigate a risk before it becomes a big problem. If nothing else, my risk matrix is an integral part of my strategy relating to property investment and prompts me to think about things that might go wrong before they go wrong—or more specifically—how to measure my success or lack thereof.

Property investment is not inherently risky and I consider it to be far less risky than investing in stocks, where you have no real control over how your investment performs, or leaving in the bank to suffer at the hand of inflation. Many risks in the property sphere are readily overcome and the risk of losing money—or not making money—are often under your control with reasonable opportunities for mitigation.

Of course not doing anything is the biggest risk of all to building your future wealth. Time, conversely, is your biggest ally and will help to remove many short-term risks if you’re prepared to hold and ride out any lumps and bumps.

I suppose a disclaimer is also worth posting: I'm just a guy, I'm not an accountant, lawyer, solicitor, tax agent, mortgage broker, banker, financial adviser, insurance agent, land developer, builder, government agent, or anything else so I disclaim your application of anything I write here is to be applied at your own risk. What I write may be incorrect and you are best to seek your own professional advice (tax, legal, financial, and otherwise) before entering into contracts or spending your money. Your situation is unique to you and what I write here reflects my experience only. I'm learning too and expect to make many, many mistakes along the way.

Enjoy,

Michael

1 - The A-Team

When it comes to property investing, one snippet of advice I hear repeated is to assemble your own, personal A-Team. Your team may look slightly different to ours but most A-Teams will typically include a tax account (ideally with significant experience in property investment), a mortgage broker, a solicitor or conveyancer, one or more lenders, a property manager, and one or more real estate agents, buyer’s agents, etc. You may optionally pull in or need to liaise with a financial adviser, an insurance broker, and potentially land developers, builders, and councils if you’re building new.

This is the team we ended up with as we purchased our first investment property. I’ve listed team members in rough order of importance (to my mind).

A very quick note: I do not receive any incentive to mention these companies and individuals, i.e. this is not an advertisement.

Accountant

I consider myself a numbers guy so you can imagine the accountant is going to be important to me. A good accountant will help you understand why you need to do things in a certain way to maximise your tax benefits and stay clear of any trouble with the ATO.

On recommendation from Open Wealth (see below), we’ve ended up with WSC Group and I can’t speak highly enough of them. Their customer service is above and beyond and Rainer Lamb, in particular, has been instrumental in my own learning, helping us to ensure our ownership and financial structures were correct. The introductory materials provided a detailed overview of how they recommend buying investment property and they specialise in investment property. It’s remarkably clear to me they know what they’re doing.

Interestingly, WSC are based in the Eastern states and we of course live in Perth. I was a little reluctant to leave behind our local accountant but they were not meeting my needs despite being available face-to-face. The WSC accountants do travel interstate and, as mentioned, Rainer in particular has been expedient and accurate in responding to my many, many questions via email. David Shaw, CEO has also been running some webinars of late and came over to Perth for a talk about retirement planning so they’re very engaged with their clients from the top down.

We’ll rely on WSC in the near future to prepare PAYG variations, do our tax returns, of course, and apply depreciation schedules for building and fittings. Basically, their job is to squeeze out every last dollar in tax savings as this first property will be negatively geared initially.

Mortgage Broker

You can shop around to find a good lender but why bother when using a mortgage broker doesn’t cost anything? We used Mortgage Choice when buying our family home before the GFC and although I initiated a conversation directly with our current lender (which proved immensely valuable) I knew we’d likely get a better outcome through a broker. There are a few reasons for saying this: a) I didn’t want to cross-collateralise the investment property loan against our family home b) an impartial broker will almost certainly get you a good product with a good rate from a reputable lender.

We set up a line of credit and a separate main loan for this property so there were a lot of moving parts and paperwork. I knew how I wanted to structure the loans from the get go so had to be fairly direct with Mortgage Choice on that front to get what I wanted but we got there in the end.

It was a mortgage broker who also put me on to the idea that certain low-risk professionals with high-income and/or stable careers (such as my wife—a doctor) may have access to special offerings from the banks when it comes home loans. For example, we could borrow up to 90% of the property value before lender’s mortgage insurance kicked would be required (this doesn’t really matter as we used a split loan structure—a line of credit and the main loan—so LMI shouldn’t be payable even if you don’t have a fancy job title… I’ll go into this more in a subsequent post).

Note mortgage brokers get paid a commission from the lender and don’t charge you a fee. I’m told the commissions Mortgage Choice is paid are consistent across lenders so it should be guaranteed you’ll get the right product for you rather than the product that will achieve the highest commission for the broker. Mortgage Choice told me this so how true it is I can’t say.

For many people getting finance approved is hard and awkward. We originally tried to finance our family home through Wizard Home Loans who eventually came back to us, late into the finance period while the block of land was under offer, to say they couldn’t help us (for whatever reasons—I can’t remember why). We then turned to Mortgage Choice who got us sorted with a bank before the finance deadline. As very naive first home buyers we didn’t have a clue this processes is officially painful but it all worked out in the end. This time around, once finance approvals were all in place, the various members of our team called to congratulate us and my response (not uttered) was pretty much “duh”. In other words, I knew we could achieve the financing we needed, I was confident our mortgage broker would get us there, and guess what? It all worked as it should have.

Buyer’s Agent/Project Manager

This one is optional but may help you find a better buy. You can do the legwork yourself if you’re comfortable doing so to decide which suburb you’ll buy in and which property you’ll buy but if you’re a first-timer (as we are) you might get it wrong—or not do as well as you could have. It depends on your risk appetite and individual circumstances. Some of these companies will charge a fee (percentage-based) while others won’t charge you but get paid commissions (which may or may not be fully disclosed to you) from the land developer and builder.

We elected to go with a company called Open Wealth Creation for many reasons, one of which is the quality of the educational materials they provide at no charge (Cameron McLelland’s book My Four-Year-Old The Property Investor, his booklet The Ultimate Mini Property Investors Guide, and the Wealth WODs (Workout of the Day) he and colleague Al Lewison publish most days in video format). I like that Open Wealth aren’t pushing a get rich scheme but give you a reasonable, sound process (which is fully explained in the materials and backed up by common sense). Open Wealth do charge a significant fee (2% plus GST) but for that you get two things: a) an unbiased recommendation where to buy and b) a project management wrapper around the entire process of buying a block of land, constructing a new house on that land, and renting it out. If you’re time-poor they can pretty much do it all for you, if you want, but I’m choosing to be as involved as I can and have bought in predominantly for the research and experience on offer.

Some readers may scoff at the idea of paying for this service but to me, as a first-time investor, it’s worthwhile. The materials have explained the approach, with which I am comfortable, and, unlike other firms, I’m aligned to the process and believe we’ll do better in the short-term and long-term than had we attempted to do this ourselves.

Notably this is one place to be wary of unscrupulous sharks. Open Wealth will have proven themselves to me only when the build is complete and we have a tenant but they seem—so far—like one of the few legitimate companies I’ve come across. There are all sorts of sales people out there trying to unload their stock (rather than the best property) and make a commission. Be very careful to understand the financial motivations of those you deal with and push them hard to ensure what you’re being told actually makes sense. I initiated conversations with several other companies during the selection process which eventually led us to Open Wealth and as soon as I pushed these companies on really basic matters they backed away and went quiet. It was really weird but I guess they want a pushover who’s just going to open their wallet and make it easy.

Brokers or buyers advocates I’m not familiar with but they may help you find something suitable. I have heard brokers tend to push existing real estate that’s closer to the CBD, rather than new builds in the outer ring suburbs. It’s worth understanding the benefits of building new and buying more low-cost properties over fewer expensive properties.

The Bank

Interesting things, banks. They’re big (even the small ones), operate in isolation from each other (apart from overarching legislation), and are an integral part in property investment. Although we went through a mortgage broker, I started my enquiries with our current bank and the holder of the mortgage over our PPOR. I wanted to give them the opportunity to come up with a good offering even though I didn’t want to cross-securitise an investment property and our PPOR and I therefore new it was unlikely we’d give them our business for the main IP loan.

After assessing our circumstances, a free valuation on our family home was ordered. Knowing the bank value of our home was helpful in understanding how much equity we had in the property and therefore our LVR and what we can do over the next year or two in terms of investments.

The mobile lending specialist was a great help to me in understanding what options were available to us through our current bank and was able to answer many of the questions I had as we progressed with the purchase.

If nothing else, it felt like I had insider access to the bank!

Solicitor/Conveyancer

In WA I’d refer to a conveyancer for settlement but because we bought in Queensland we’re dealing with a solicitor. Again, on recommendation from Open Wealth, we went with Blaak & Associates. A solicitor will ensure contracts are in order and ultimately work with the vendor and your lender to ensure settlement goes according to plan. Being from WA I’m not familiar with the settlement process in Queensland. For that matter I’m not particularly familiar with the process in WA! Nor do I wish to be! Conveyancing and settlement is, quite frankly, a chore I’m more than happy to pay someone to do. And the costs are really minimal—a few thousand dollars at most—and are, I believe, tax deductible (or contribute to the cost base of the property at the very least).

A solicitor can also prepare your will, which is something we’re sorting out for the first time as we move ahead. Notably, I’m using the DIY couples will kit from Australia Post… for now, anyway.

Property Manager

I’ll leave this as a placeholder to revisit once our IP is built and we’ve got a property manager on board.

Financial Advisor

For some readers, a financial advisor will be very important. For us, I know we’re forging ahead with property—pretty much exclusively—and I’ve defined our own financial goals and strategy for the short-term, medium-term, and long-term. I could pay a financial advisor to help here but for now I feel it would be wasted money (they do charge a fee). WSC Group do provide financial advice if you’re looking. WSC offer a financial planning service through a company they own called Jigsaw Financial Planning.

Insurance Broker

This listing is at the bottom as it isn’t directly related to property investment. It should probably be higher up in our case. By insurance I’m referring to life insurance, total and permanent disability (TPD), and salary continuance insurance (SCI) or income protection insurance. Although they overlap to some extent they’re all different and can be bought differently. If you’re employed and receive superannuation, you’ll likely find your super company offers basic life and SCI insurance. If you still hold super but aren’t working (like me) then double-check; in my case, I’m not insured.

Admittedly, insurance bores me to tears. More importantly, we’ve considered it too expensive to worry about to date. But with mounting debts and children—and being a single-income family—it’s something we need to consider. Once again, WSC is helping us here and we’re in the early stages of getting a solution in place that will keep us financially safe if something bad happens. I have found the premiums can be adjusted in relation to the amount of cover and, more interestingly, we can pay for some of those premiums using a partial rollover from our existing super funds. I’m not clear how this works but apparently it was introduced with recent (June 2014) legislative changes.

Odds and Ends

Other roles you may need to call on include:

A justice of the peace to witness mortgage documents (thank you Queensland!)
Your employer
Your superannuation fund
Your credit card companies
Your car and personal loan financier
Etc, etc…

I don’t want to suggest you need to have all of these team members in place from day one. We built this team gradually when the need arose and I hope we can reuse team members again in the future without making any changes to the line up. You may need fewer people or have the option to rely on one or two key players to facilitate multiple functions. The communication lines can get a bit complicated (and that’s one area where I’ve already seen tremendous value in Open Wealth as the central hub around which the other functions operate).

I’ll update this list when and as needed.

I suppose a disclaimer is also worth posting: I'm just a guy, I'm not an accountant, lawyer, solicitor, tax agent, mortgage broker, banker, financial adviser, insurance agent, land developer, builder, government agent, or anything else so I disclaim your application of anything I write here is to be applied at your own risk. What I write may be incorrect and you are best to seek your own professional advice (tax, legal, financial, and otherwise) before entering into contracts or spending your money. Your situation is unique to you and what I write here reflects my experience only. I'm learning too and expect to make many, many mistakes along the way.

Enjoy,

Michael

About Me

Hi, I'm Michael. I'm a first-time property investor living in Western Australia. I'm also a stay-at-home dad and husband. Follow along with me as I recount the day-to-day activities of buying a block of land in Brisbane and building a new house for investment purposes. If you're thinking of doing the same, I hope you'll learn something from my mistakes--which I'll share openly. If we're successful this time around, I hope one will become two and two will become four and so on... as interest rates no doubt increase and the Australian economic landscape shifts and slides and evolves. Should be interesting! Thanks for reading.