Interested in increasing your rental returns by up to 30%?

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What would you say if we told you that you could potentially increase your rental returns by up to 30% simply by ticking a box? You’d probably call us ‘barking mad’.

But according to new research by Domain Group data, median asking rents for pet-friendly properties are higher than for homes that don’t allow pets in almost every capital city.

Take Melbourne’s inner city, for example, where just 1% of apartments allow pets.

The median rent for pet-friendly apartments is $550, whereas the median rent for apartments that don’t allow pets is $422.50. That’s a $127.5 difference, or 30%. Think about how much quicker that could help you pay off your home loan.

It’s a similar trend around the nation, too.

In many Sydney suburbs the median rent difference ranges from 12-26%, Brisbane’s southern suburbs have a difference of 13%, and so too do Perth’s western suburbs.

Houses are no different

When it comes to the difference in house rental prices, Brisbane’s inner city leads the nation where houses allowing pets fetch 21% higher rent. Meanwhile, the Canberra suburb of Gungahlin (13%) slips into the nation’s top five among a number of Sydney suburbs.

The recurring theme seems to be that the lower the proportion of properties advertised as pet-friendly, the higher the difference in median rental prices.

“We definitely see an increase in rents when properties are pet-friendly,” one Sydney real estate agent told Domain. “Hands down it’s the biggest inquiry we get for any property.”

Here’s what a Brisbane real estate agent added: “I love to give out a property which is pet-friendly because I know I’ll have a bigger pool of people coming through and the take-up is much faster.”

Factors to consider

Ok, so not every property is suitable for a pet. Not to mention that some strata bylaws don’t allow pets.

But if it’s something you’re interested in looking into, here are some important factors to keep in mind.

– Put in place a pet agreement: Have your tenant sign an agreement that outlines how many pets are allowed, what breeds, and what rooms they cannot enter (ie carpeted rooms). It can also stipulate that the pet should not annoy neighbours, not damage the property and that the tenant should take pest control precautions to keep the property free of fleas.

– Ask for a pet reference: There’s a good chance that the people moving into the apartment have rented another property before. Therefore be sure to ask their previous property manager how the pet behaved at that premises.

– Insurance and tax implications: While the tenant will be liable for most property damage (except general wear and tear), it’s worth double checking your landlord insurance policy to see what you’ll be covered for. And when it comes to footing the bill for general wear and tear, the good news is that it can be deducted from your rental income come tax time.

Final word

As you can see, there are some pros and cons to weigh up.

Sure, advertising your property as pet-friendly when seeking a new tenant can increase your rental return, but you’ll want to ensure you’re welcoming a pet into your investment that won’t be destructive or keep the neighbours up at night.

If you’d like to find out any other tips about potentially increasing rental returns on your property, then don’t paws for thought – give us a call right meow!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Top 5 tips for standing out on Airbnb

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The short term rental market is booming. Each year, tens of thousands of Australians list their properties on Airbnb to make a tidy buck on the side. Here are our top five tips on how to stand head and shoulders above your competition.

Most people who own an investment property prefer to rent it out long term. It’s more of a set and forget approach, if you like.

But for some, such as those who own one home and/or those who travel for long periods, renting out their property on platforms such as Airbnb and Stayz is becoming an increasingly appealing option.

In fact, in 2017 more than 30,000 people listed their homes on Airbnb across Sydney and Melbourne alone.

These numbers have made the Australian Taxation Office (ATO) sit up and take notice. So much so that the ATO recently declared they’ll be ramping up their enforcement activities and will undertake 4,500 audits of taxpayers they suspect may not be declaring Airbnb income.

Suffice to say, when the ATO starts paying attention to a marketplace, you know money is being made.

Here are our top 5 tips on how to make more money than the next person.

1. Professional photos

First impressions last, and these days the first impression is the webpage impression on your Airbnb listing.

You don’t see real estate agents walking around with outdated camera phones taking dank snaps of the living room. And neither should you!

A good photographer has the skills and equipment to highlight the beautiful little details that makes your property sing, and crop out the less than desirable qualities that may turn a potential guest away.

Obtaining high quality images from a professional real estate photographer costs between $150-$300 via websites such as Snappr or Airtasker.

If they get you just one extra two to three night booking they’ll have already paid themselves off.

2. The devil is in the details

There’s no point in having a photographer take wonderful photos of your property only for the guest to show up and feel like they’ve been conned by the old bait and switch!

You need to put in that extra bit of effort to make their stay memorable. After all, they’ve chosen your place ahead of a hotel, not to mention all the other Airbnb competition out there.

There’s a good chance your guest is visiting your local area to check it out. So try and include as much (classy) local artwork, local guidebooks, decorations and information as possible.

The bathroom should also always be spotless, make sure good quality tea and coffee is available for free, and ensure all the basic kitchenware is easy to find.

Other tips include providing menus for local takeaway, tips for local sightseeing, entertainment such as books and boardgames, all necessary electrical appliances such an iron and hairdryer, and some basic cleaning equipment and products in case something gets spilled.

3. Play host, but don’t smother your guest

It’s important that you’re available to your guest should they need to check anything.

That might range from “where is the frying pan?” all the way to “where’s the local hospital?”.

It’s critical that you never show irritation, no matter how trivial or inconsiderate a guest’s inquiry might appear.

That’s because one scathing review can undo a lot of the money, time and effort you’ve invested.

It’s equally important to give your guest the privacy they require. Be on hand to offer any simple tips or suggestions, but don’t pin them down for hours on end chatting to them about your own travels.

This is their holiday after all!

4. Consider using a property management service

If you’re going to be away from your property for a while it’s worth considering taking the hassle and stress out of trying to manage your property from afar by outsourcing to a professional service.

There are plenty of options out there to choose from, including (but not limited to) Hey Tom, Hometime, HomeHost and Airsorted.

Expect to pay about a 15% to 20% (+ GST) commission to them, however most boast that they can help increase your Airbnb income.

5. Thank guests for their reviews

Taking the time out to thank every single guest for their review shows you’re a super attentive host who’s always aiming to please.

The best thing is it also gives you the opportunity to further highlight the positive aspects of your property.

For example, if a guest writes in their review that they had great ocean reviews, reply: “Thanks for the review Craig! Stoked that you enjoyed the ocean views from your bedroom!”

The best thing about this trick is that it even works for negative reviews.

That’s because most negative reviews will also mention something positive about the property. So make sure you thank them for that, acknowledge their complaint and thank them for bringing it to your attention, and advise that you’ve taken steps to rectify the issue for future guests (and actually do so!).

This shows other guests that you’re a very reasonable person who takes all concerns seriously – and will be approachable if they need you during their stay.

Guess who else is approachable?

We are!

If you have any queries or questions about your property and think we might be able to help out, don’t hesitate to get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Do you Airbnb your property? The ATO has you in its sights

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Sharing is caring, right? However, when it comes to the sharing economy, the ATO is feeling neglected and wants its fair share. Here’s what you need to know if you rent out your property on Airbnb.

If you need any more convincing that the Australian Tax Office (ATO) will be cracking down on undeclared income from sharing economy platforms such as Airbnb this year, check out the name of the consultation paper that Treasury released this week:

‘Tackling the black economy: A sharing economy reporting regime.’

Now, the number of Australians involved with “the black economy” is quite hard to quantify, but Treasury has given it a crack.

They believe almost 11 million Australians earned extra money from sharing economy services – including Airbnb, Uber, Uber Eats, Airtasker, Parkhound and many other platforms – from July to December 2017.

And while Airbnb doesn’t release any official data, independent monitoring website Inside Airbnb says listings in Australia grew from 43,610 in 2016 to 89,863 in December 2017.

No wonder the tax man feels like he’s missing out.

Consultation paper findings

It’s no secret the ATO is well aware that a lot of people haven’t been declaring income from sharing platforms in recent years. In 2016 they released this video, and more recently built this information webpage.

However this consultation paper is the clearest indication yet that a tax crackdown is nigh.

“During its consultations, the Taskforce heard that as the sharing economy grows there is an increasing risk that sellers may not be paying the right amount of tax,” the report states.

“The ATO has already begun to work with businesses on a reporting regime, obtaining information from some ride-sourcing providers and accommodation providers under its formal information gathering powers.”

In a nutshell: the ATO will be granted access to your Airbnb and Uber income data if they require it.

What to do?

Well, if you’re not already, then it’s time to start keeping accurate records of the income you’re earning in the sharing economy space. That includes platforms such as Uber, Airtasker and many other players.

Declaring the income is straightforward and just like any other form of income you earn: basically keep statements showing income from your guests, and don’t forget to keep receipts of any expenses you want to claim deductions for. That will make it straight-forward come tax time.

It might be worth checking out this information page from the ATO for further tips.

Finally, keep in mind that if the ATO is cracking down in this space they might also look more closely into some of your past tax returns. In which case, here’s what you need to know about correcting a past income tax return if declaring income in the sharing economy space slipped your mind in the past.

It may increase the tax you owe, but the ATO generally treats it as a voluntary disclosure. You’ll still have to pay any outstanding tax, but you’re likely to receive concessional treatment for any penalties and interest charges that apply.

If you’d like any further information on this new and emerging space, feel free to get in touch. We’d be happy to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Having a managing agent vs doing it yourself

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One of the biggest milestones you’ll encounter on your climb up the property ladder is becoming a landlord. Which means that one big decision you’ll face is whether to hire the services of a managing agent, or take on the responsibility yourself.

I want to preface this article by saying that there’s no wrong or right answer here. Well, generally speaking there isn’t.

Basically, it will boil down to your individual situation.

Do you have the time (and patience!) to manage the property? If so, you can probably save a good chunk of your rental income each year by managing it yourself.

However, if you’ve already got quite a few balls up in the air, then you’re probably going to want to offload the ‘managing the property’ ball to someone else.

Now, there’s a lot to weigh up here, so we thought we’d simplify it by breaking it down into two simple lists.

The main advantages of having a managing agent

If you’re the sort of person that likes to sit back and let someone else do all the hard work for you, then a managing agent will:

– Know exactly how to advertise the property to maximise the number of applicants.

– Help you determine an accurate amount you can charge in rent.

– Vet applicants through tenancy database checks, call references, and create a shortlist.

– Undertake regular property inspections on your behalf.

– Be across all the legal and legislative requirements that are in place. If you decide it’s time to evict a tenant, knowing these legal requirements is crucial.

– Act as a middleman to resolve misunderstandings or disputes.

– Chase up any overdue rental payments.

– Inform the tenant if the property is not being kept to reasonable standards.

– Organise for a handyman, electrician or plumber to undertake necessary works on the building, and may have access to bulk discounted rates.

– Arrange all important documents, such as the lease agreement.

– Allow you to live in an area not near the property.

– Finally, time is money. And it can take a lot of time to manage a property yourself.

The advantages of doing it yourself

Don’t forget, however, that there’s a certain level of satisfaction and freedom of choice that comes with doing things yourself. Here are some advantages of the DIY approach:

– Most importantly, it’s cheaper! You don’t have to pay a property agent 7-10% commission, plus other fees such as a letting fee (one to two weeks’ rent).

– You can get a Lease Pack from your local newsagent for $10-$20.

– If you are retired, or nearing retirement and working part time, the extra money you save might be crucial when it comes to your retirement.

– You get to decide how and where you advertise the property.

– You get to vet, shortlist and interview all applicants.

– No one knows your property as well as you do, so you can diligently inspect it for damage.

– A property manager doesn’t just act on your behalf. They also represent the tenant’s interests. You primarily act on your own behalf.

– If you find a great, low-maintenance, long-term tenant who you build mutual trust and understanding with, your required involvement can drop significantly.

Finally, it’s worth noting that yes, it is your property. But don’t forget it’s also their home or office.

Therefore it’s important you know how to tactfully liaise with a tenant if there’s a misunderstanding or dispute. Emotions can easily become involved for both parties so you need to ensure your workload and mediation costs don’t blow out as a result.

Final word

As you can see, there’s a lot to weigh up.

In fact, there are also many other issues that you’ll need to address, including landlord’s insurance, whether to pay for a cheap managing agent or fork out for an expensive one, and reading through the managing agent’s fine print to see exactly what they’ll do to earn your commission.

So if you’re still undecided, or simply want to know more about the pros and cons from a team that’s done all this before, give us a call.

We’d be happy to discuss it with you so that you can pin down exactly what will suit your individual situation.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Choosing the right investment ownership model

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We all know that choosing the perfect investment and getting the timing right are both critical. What people often overlook, however, is selecting the right investment ownership model.

How you own your investment – and with whom – is a decision you’ll want to nail from the outset.

That’s because the asset ownership structure you select can dictate the tax you pay, access to finance, estate planning, control of your investment, costs associated with maintaining it, and the risks you face.

Today we’re going to take a quick look at your options when it comes to asset and investment ownership.

Personal ownership – sole or joint

Sole ownership is the complete ownership of an asset by one individual. This is perhaps the simplest and least costly form of asset ownership.

You’re entirely responsible for the asset, which means you carry full liability for all debts, finances and taxes.

Joint ownership involves two or more individuals owning a share of the asset.

Depending on your situation there may be tax benefits or tax discounts associated with joint ownership. For example, joint ownership of a property by a husband and wife may qualify for a tax benefit. You may also receive a 50% discount on Capital Gains Tax (CGT).

One of the main disadvantages of personal asset ownership is that it offers little protection for your investment if you become bankrupt or are sued.

Trust ownership

A trust is an investment structure that obliges a person, or group of people (trustees) to hold assets for the benefit of others.

Trust ownership can offer additional asset protection, allow for profit sharing and tax benefits, including a 50% discount on CGT. It can also help with estate planning and reduce the costs associated with transferring asset ownership.

Trusts, however, can be costly and complicated to establish and are also associated with more reporting and administrative responsibilities than personal ownership. Depending on the trust structure you select, it can also be more complicated to secure an investment loan.

Company ownership

A company can own a stake, or the entirety, of an asset.

Again, company ownership can help protect assets from personal losses and liabilities. It can also deliver tax benefits because any income and capital gains is taxed at the company tax rate of 30% (which may be significantly less than your personal marginal tax rate).

On the other hand, companies miss out on the 50% discount on CGT that is possible through personal or trust ownership.

Your control over the asset – including when you buy and sell – may also be diluted via a company structure.

Superannuation ownership

Investing through a superannuation structure can deliver significant tax benefits as any income earned via super can be taxed at as little as 15%. CGT from investments via super may be discounted by a third.

Investing through your super is also an estate planning strategy that many people consider.

That said, there are complex rules around super contribution caps, tax treatment and borrowing arrangements when investing via super. The location, type and liquidity of your investment may also be restricted.

Get in touch

Understanding which ownership option is the best fit for you and your asset can be complex. As you can see, it’s not straightforward – there’s a lot of considerations and no two situations will be the same.

So if you want to get it right from day dot, get in touch. We can help put you in touch with professionals who can offer you reliable legal and financial advice.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.