10 Jan Set And Forget Investing
Property management that includes many of the costs of repairs and maintenance – and still manages to save you money – is an investor’s dream. And it may just be a matter of looking outside the property management box to achieve this. Pauline Hatch reports
Even with a property manager in place and fees being paid, landlords still invest plenty of extra time and money in their properties. For time-poor investors or those with large portfolios, the answer may be a Defence Housing Australia (DHA) investment.
DHA is unique in its approach to property. Essentially, DHA sources and sells high-quality properties to investors, then leases them back to provide housing for Defence Force members and their families.
Not only does the leaseback arrangement give investors the security of a guaranteed rental return, even if the property is vacant or the market drops, but it also includes DHA’s all-inclusive property care services.
“When you invest in a DHA property, you get a guaranteed rental income for up to 12 years, and because DHA is backed by the Australian government, it’s secure,” explains Suzanne Pitson, DHA general manager portfolio management.
She says that during the lease term your rental income “won’t fall below the starting figure, even if the property market does”.
Included with the lease is DHA’s comprehensive property management package, which offers far more than traditional management services.
DHA Property Care gives investors more freedom and less stress by managing and even absorbing the costs of many common property expenses that would normally be handled by the landlord. For example, DHA offers the following benefits.
1. Most repair and upkeep costs are covered
On top of the standard repair and maintenance services, DHA Property Care also offers general maintenance of the property, such as upkeep of the gardens. It will also cover the like-for-like replacement cost for most fixed appliances.
“We take care of the day-to-day aspects of managing your investment, as well as coordinating and paying for most non-structural repairs and maintenance,” Pitson explains.
This service, coupled with the rental guarantee during vacancy, also means investors may be able to save money on tenant protection insurance.
2. Lease-end restoration services
At the end of your lease term you can decide what to do with your property: move in, rent it privately, or sell. No matter what you decide, DHA will prepare your property for you at no extra charge.
“At the end of the lease, we ensure the property is professionally cleaned, appliances are clean and in good working order, and the dwelling, grounds and landscaping are in a neat and tidy condition,” Pitson says.
A fresh coat of interior paint is all part of the service when the lease comes to an end, for properties on a lease of six years or more. Properties leased for nine years or more receive new carpet and – except where a body corporate is in place – a new coat of external paint too, so that your property is fresh and ready for the next move in your strategy.
“When you invest in a DHA property, you get a guaranteed rental income for up to 12 years”
3. Positive annual market reviews
With DHA, it’s not necessary to check up on your property manager to make sure they’re pricing your property competitively in the market. DHA hires independent valuers to inspect your property annually – and no matter what the results, your rent will never fall below the starting point.
“While other developers may offer rental guarantees, you’ll have a hard time ﬁnding one like DHA that will offer a long-term rental guarantee of six to 12 years,” Pitson says.
Management that saves you money
DHA’s leaseback investment model and property care service is a ‘hands-off’ solution for time-poor and risk-averse investors. And while its management fees are higher than a traditional management service, the ‘all-inclusive’ nature of DHA Property Care has been proven to actually save investors money in the long run.
DHA fees are calculated at a flat rate, dependent on the property type. Freestanding houses are charged a 16.5% fee, while properties with a body corporate that is responsible for some items normally covered by DHA are charged 13% (including GST).
“Our service fee is incredibly competitive when compared with the true cost of alternatives, when you consider our unique inclusions,” she says.
“With traditional property investments, you risk losing income due to vacancies, which is something DHA owners are guaranteed against, and our Property Care fees cover more services and costs.”
In fact, a BIS Shrapnel 2014 comparison report revealed that the full amount incurred using traditional management services costs landlords a minimum of 18.1% in annual fees and expenses, compared to DHA’s all-inclusive 16.5% fee.
HOW MUCH MONEY COULD YOU SAVE?
• In December 2014, BIS Shrapnel produced a report on DHA’s service fees.
• Despite a slightly higher management fee, the report found that DHA investors saved around 15% over a nine-year lease period compared to the cost of using a conventional property manager.
• The report calculated the typical property expenses of three rent scenarios ($300, $450 and $600 per week) for a detached house.
• DHA Property Care’s comprehensive services were found to save investors hundreds or even thousands of dollars in property costs annually.
Getting started with DHA
DHA’s properties are sold by ballot. Once you secure a property and pay a small holding deposit you’ll be able to arrange an inspection and conduct further due diligence before proceeding to settlement. To start the process, visit the dha.gov.au website.
“Our investment program and our property care service allows investors the freedom they need to enjoy their everyday lives and look forward to their future,” Pitson says.
“We are committed to providing hassle-free properties to investors, and quality homes for our valuable Defence Force members.”
Originally published as: http://www.yourinvestmentpropertymag.com.au/property-management/shortterm-rental-property-managers-what-are-the-benefits-243731.aspx