There are several advantages of having a New Build investment property, as compared to buying an established property.
For instance –
– You can have input into its design and features – including colour scheme, fixtures and fittings.
– There should be less money spent on maintenance as everything is new and covered by a warranty.
– You gain maximum leverage on tax depreciation (consult your accountant or financial adviser).
However, there are sometimes challenges associated with New Builds which, if not properly managed, can negate all these advantages and start costing you financially.
Since we began operation in 2008, Solutions Property Management has taken over the management of hundreds of New Build Investment Properties. We have identified that New Builds require a different approach to other properties, and have devised a unique procedure of on-boarding New Builds and managing them.
We have a dedicated Business Development Team whose job is to take on all new Clients. You will be assigned a Management Consultant who will guide you step-by-step and be your direct contact during the whole build process.
The essence of our procedure is to be PROACTIVE. By setting up a strict process which our whole team follows, most problems are avoided – and any issues that arise are dealt with by the appropriately trained team member. The ultimate goal, as always, is to represent our Clients and maximise their financial return.
Below is a brief outline of what you can expect when you purchase a New Build Investment Property, and how we can assist you to make the process easier, less stressful, and more financially rewarding.
THE FIRST STEP –
SIGNING YOUR CONTRACT
This is the honeymoon stage – you are quite excited about building your Investment Property. You have done your due diligence about the area and the builder. You have contracted an accountant, a solicitor, a mortgage broker and a financial planner to ensure everything is set up correctly.
Unfortunately, there is one piece of the puzzle missing, which many investors neglect. You must also source a Managing Agent at this stage.
You have done your figures based on a likely rental return. There is a lot riding on the expectation of this return, and if the rental appraisal is not done thoughtfully and conservatively, you could find yourself digging into your pocket to make your monthly repayments.
Here’s the question – who has provided you with the rental appraisal? The sales agent? A third party managing agent who is engaged by the Sales Agent and is not accountable? How can you be sure that this appraisal is accurate? Have they provided you with a Comparative Market Rental Analysis showing you how the figure was attained? More importantly, was this figure deliberately inflated in order to get you to sign the contract?? Remember, your Sales Agent’s main goal is to sell you that property. It is up to you to perform your due diligence.
This is where we come in. We have no financial stake in your sale contract. We are independent, specialised, and will give you a realistic rental appraisal of your property. We perform the appraisal with the intention of managing your property – so it would be foolish of us to deliberately inflate the price as the job would fall on us to try to achieve this price.
In summary, don’t leave this vital step for the last moment – do your research and choose your managing agent from the start.
THE BUILDING PROCESS
Some Clients experience a smooth building process and everything happens on time. Others, however, can experience obstacles and delays. This seems to happen across the board, regardless of suburb, builder, or contract price – and unfortunately there is nothing to be done but patiently wait it out.
We have identified that the most important factor during the build process is communication with the Client. Most of our Clients are interstate investors and are relying on us to keep them updated. This is your Management Consultant’s job. She will check regularly with the builder and report back to you – with photos if requested. Timing is crucial for us as your Managing Agent, because we need to know when the property will be ready for us to take over and source tenants.
This is the stage of the build when the property is ready to be inspected by the Client or their representative, before the final payment is made. The property should be almost completed at this stage – pending installation of appliances or completion of landscaping.
This is the time to have your Independent Building Inspector visit the property and complete a thorough inspection report. We can recommend a couple of good companies who charge very reasonable rates. These inspections almost always uncover defect items and this gives your builder time to rectify these defects before final handover.
This is also a good time to have your Tax Depreciation Inspection done. Again, we can recommend good Quantity Surveyors who charge very reasonable rates.
Practical Completion is also the best time for us to visit the property, arrange a photographer, and start advertising your property a week or so before final handover. This is where our pro-activity reaps financial benefits for you, because the aim is to have prospective tenants lined up waiting to view your property at handover.
Once your final payment is made, we arrange to meet the builder at your property and take possession of the keys on your behalf.
Our team member goes through a detailed checklist including looking for visual defects, testing the keys and remote controls, and basically ensuring the property is ready for tenants. If something is not right, we advise the builder and immediately contact you.
6-MONTH BUILDER’S WARRANTY PERIOD
After handover, there is a 6-month window of opportunity for you to advise your builder of any building defects. The builder is obligated to have these attended to as part of the Queensland Building Code.
These defects are brought to our attention either by the tenants, or during our first property inspection. We have a dedicated team member whose job is to act on these issues immediately, advising the builder as well as keeping you informed. We also make a diary note at the 5-month mark to contact your tenants and confirm if there are any other building issues to report. This ensures you are covered under the builders warranty – even if it takes the builder more than 6 months to rectify them.
This is what we mean by being proactive. Other agents don’t do this because they don’t care, or they don’t have the staff to handle the extra work. Ultimately, it can cost you dearly if you have chosen an agent who does not have the manpower or expertise to handle New Builds.
PUT YOUR NEW BUILD IN THE HANDS OF THE EXPERTs
When you choose to invest in a New Build, your choice of Managing Agent is so crucial.
You can feel confident in handing your New Build over to Solutions Property Management to maximise your financial return.
SOLUTIONS PROPERTY MANAGEMENT
Your New Build Specialists