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Thursday, 15 March 2007

Rental Property Blues (cont.)

Oh, the joys of being a landlord! Aside from having to accept a lower rent in order to find a tenant for our rental property last year ($400 a week, rather than the $410 we'd been getting from the previous tenant or the $420 a week I thought we should be able to ask based on average rent rises for this suburb over the past few years), after spending a couple of thousand dollars getting new carpet and lino laid, the new tenant had a couple of plumbing repair requests immediately after moving in, and then last month wanted the TV antenna fixed. I hadn't been expecting the TV costs as the previous two tenants hadn't complained, and the last one even had a large screen TV - perhaps he only watched DVDs? Anyhow, an inspection from the TV antenna service apparently found that not only was the cabling damaged but the existing antenna wasn't really suitable for the location (I have to take his word for it as it's not feasible to get several quotes for a job that should only cost a couple of hundred dollars max), which accounted for the poor reception the tenant was reporting. Long story short, a new digital/analogue antenna, cable run, sockets and a couple of hours work resulted in a bill for $395 - just about 1 weeks rent!

As I earn a higher salary than DW, I pay all the rates, repairs, land tax etc. on the investment property which we share equal interest in, and DW just makes half the loan repayments. So all these extra costs are starting to be a pain in my hip pocket. With the DW on maternity leave since last August, we're already having to redraw the loan payments we had made in advance over the past five years to meet the fortnightly payments (actually, I could afford to make the loan payments myself, but I'd rather use the redraw facility so we are still sharing the loan costs 50/50). Hopefully there are no more repair bills in the immediate future.

One brighter note is that after a couple of years of flat to declining house prices, the latest monthly average prices for the suburb have gone up 2.9%! There's a fair amount of "noise" in the monthly average sale data due to the mix of properies being sold, but at least it offers some hope that we may be getting back towards the long-term trend rate of around 6% pa growth in house prices for this area. We certainly need some capital gains on this property in the long term, as the rental yield is only 1.44% (before expenses), and the current interest rate on the investment loan is over 7% - although we only owe $238,000 on the property.

Enough Wealth

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