Why I hate being a landlord

After surviving the hassles of a tree falling on the roof of our rental property last year, and the drawn out saga of getting the repairs quoted, approved and completed by our insurance company and builder, I thought we were finally getting back to normal. The tenant had started paying the full amount of rent again once the repairs were finished, and we'd even negotiated a rent rise in two stages over the next twelve months. The builder had sent me the Scope of Work document to sign-off that all the required repairs had been completed, and I was about to visit the property to give it the once-over and sign-off.

Then I got an email today from the tenant. They had been sitting on the balcony at the back of the house on Sunday night when there was a loud noise and the balcony dropped several centimeters. The rear of the house sits on tall steel piers, and the balcony is therefore about four storeys above the back garden, so I wasn't surprised to read that the tenants ran inside in a panic and worried about the safety of the house. They report that one of the metal cross-braces under the house appears to be broken, so I started making arrangements for an inspection by a structural engineer this morning.

I think the damage may be related to the tree falling on the house last year, so I rang our insurer to find out what procedure to follow in regards to this latest damage. They advised that the approved builder (that had done to previous roof repairs) would need to inspect the house and decide if a structural engineer's report is needed, and if the damage appears related to the existing claim, or is a new claim.

I'll give the builder another call tomorrow to check that the insurance company has been in contact -- if not I'll call the insurer's complaints department. Last time it took many weeks to get the builder's quote approved by the insurance company and repairs commence. I don't think the tenants will be happy to stay in the house unless the inspection happens very soon, and repairs get underway in short order.

I'm hoping that the damage is due to the tree falling on the house. The house is more than forty years old, and if the damage is due to old age and normal rusting then I don't think our insurance policy covers it. In that case the repairs could end up costing us a lot.

Did I mention that I hate being a landlord? Then again, being a stock market investor isn't too much fun at the moment either ;)

Copyright Enough Wealth 2007

Repairs to Rental Property might Finally Commence

Well, it only took two months and a week, but the builder allocated by our insurance company finally sent the contract for the repair work for us to sign. The insurance company had said this was being sent out three weeks ago.

I sent in the signed "scope of work" and contract yesterday, along with a cheque for the $100 insurance excess. In order to keep our tenants happy we have had to reduce the rent by $100 per week until the roof repairs are completed, so this incident has already cost $1,100. Hopefully the roof will be fixed in a couple of weeks.

I had asked the insurance company about making a claim for loss of rent, and was adviced to lodge a "written proposal". I haven't had any response to the emails I sent in, so I'll have to spend a few more hours on hold to chase this up. If nothing else this incident will motivate me to shop around when the insurance is due for renewal early next year.

Copyright Enough Wealth 2007

Put your Digital Camera to Good Use

I've previously posted how my digital camera saves me money by letting me indulge my hobby of photography at much lower cost due to the savings made by only printing the few snaps that you want in hardcopy. It's also a lot cheaper to email photos to your relatives that sending photos by mail!

But there are also many important uses for digital photography related to personal finance:
1. Make photographic records for insurance purposes.
* I've used my digital camera to record the state of our rental property before new tenants moved in, we took several photos of the storm damage that recently occured when a tree fell onto the roof of the property
* I've often read that it's important to take photos of your valuables so that you will know what to claim on your household contents insurance in case of theft. I've never got around to this due to the hassle and expense of developing and printing photographs, but I now have this on my "to do" list as it will be free and convenient using my digital camera.
* I took several snaps of my car where I sold it via an online ad. Same goes for any other items you have and wish to sell online.

All in all, digital cameras have become an important part of efficiently managing one's finances.

Copyright Enough Wealth 2007

Retirement Funding

We're still waiting for our employer contributions to start appearing in the bank account of our Self-Managed Superannuation Fund. Apart from the intial $200 deposit I made last June nothing has appeared in the account yet. We notified our employer to direct our 9% compulsory employer contribution plus our "salary sacrifice" amounts into the SMSF from 1 July, and the payroll department has apparently made the change. The employer contributions still go initially to the company's superannuation administrator, who is then supposed to redirect it into the SMSF bank account within a couple of days. As no funds had appeared in the account yet I asked payroll in what timeframe I should expect the money to appear in our SMSF account. It turns out that although the superannuation contribution amount is printed on each fortnightly payroll slip the contributions are only sent in at the end of each month. So I should see the July contributions hit the SMSF bank account by the middle of August. As soon as I know that no additional contributions are going into the old fund we can send in the paperwork to close DWs account and "rollover" the entire balance into our SMSF. I'll also send in the request to rollover the bulk of my account balance into our SMSF, just leaving enough in the old fund to cover my insurance premiums. It's cheaper to get death & TPD cover through our company superannuation scheme as we get group rates and the premium is paid out of pre-tax dollars. Outside of superannuation life insurance premiums are generally higher, and aren't tax deductible. In contrast, income protection insurance is tax deductible, so it's generally better to obtain it outside of superannuation.

Copyright Enough Wealth 2007

How Much Does Insurance Cost?

The answer of course is personal, as it depends on what type and how much cover you decide you need. For interest I added up my main insurance costs to see how much I'm paying:

Cover $     Policy Type       Premium /mo
$400,000    Death or TPD       $89.84
 $62,340 pa Loss of Income'    $59.81''
            Private Hospital  $151.45'''
            Car CTP            $27.58
$340,000    House & Contents   $82.93
                              -------
            TOTAL COST /month $411.61

Notes:
' 2 year waiting period applies, paid until age 65
'' Premium is tax deductible
''' After government premium discount has been applied

The recent tree fall that could easily have destroyed our rental property shows the value of insurance, but I wish it was possible to buy insurance "direct" from the insurer and get the commisions rebated - most insurance policy premiums pay a large chunk of the first years premium and a considerable trailing commision to the insurance broker who "sold" you the policy.

Copyright Enough Wealth 2007