Residential Tenancy – What forms do you need?

So you’ve got an investment property and you want to rent it out but don’t know what forms to fill out and whether you should manage it yourself or try it out yourself.

Well if you’re in Western Australia and you’ve been looking for some free forms, then look no further. These are all publicly available from the Department of Commerce – Consumer Protection website.

Residential Tenancy

• Application to Rent Residential Premises (130.3 KB)
• Form 01A – Notice of Termination for Non Payment of Rent (25.2 KB)
• Form 01B – Notice of Termination for Non Payment of Rent (25.1 KB)
• Form 01C – Notice of Termination (31 KB)
• Form 02 – Notice to Former Tenant As to Disposal of Goods (57.1 KB)
• Form 03 – Notice as to Disposal of Goods (52.9 KB)
• Form 18 Notice to Tenant of Rent Increase Pursuant to Section 30 (14.5 KB)
• Form 19 Notice of Intended Inspection (119.8 KB)
• Form 20A – Notice of Breach of Agreement by Owner (111.7 KB)
• Form 20 – Notice of breach of Agreement by Tenant (111.8 KB)
• Form 21 – Breach Notice for Non Payment of Rent (21.9 KB)
• Form 22 – Notice by Tenant of Termination (119.9 KB)
• Form 24A – Fixed Term Agreement (153.4 KB)
• Form 24B – Periodic Agreement (139.5 KB)
• Property Condition Report (Version 2.0) (285.5 KB)
• Schedule 2 – Information for Tenant (194.2 KB)

The only one you really need is the Application to Rent Residential Premises and the Property Condition Report (Version 2.0)

Technorati Tags: residential property investing

When people talk about buying residential property, one of the first things to cross a person’s mind is “location, location, location”. Where is the best and right place to buy their next property? There is a very simple answer to this question and it makes sense because of the simple rule of supply and demand. Below we can see the 4 different outcomes for each combination of supply and demand.

Supply Demand Outcome

• high, high, price equilibrium (steady to strong market)
• high, low, falling prices (weak market)
• low, high, raising prices (strong market)
• low, low, price equilibrium (steady to weak market)

As property investors, we cannot control supply or demand for the entire residential property market, however we can choose a location of where to buy a property which have the forces of supply and demand tilted in our favor. For this to happen we need to understand the forces driving the supply and demand. To do this we’ll need to look at the location, location, location of properties in an area.

Most major cities are built with a central business district in the center, radiating outwards in a circular shape forming the outer city, the inner suburbs and the outer suburbs. For example, if a city had the following composition:

• inner city is up to 2km from the CBD
• outer city is 2-5km from the CBD
• inner suburbs is 5-15km from the CBD
• outer suburbs is 15-30km from the CBD

All residential properties are built on land, and land is determine by the area available

• inner cities are made up of around 12.57square kilometers of land
• outer cities are made up of around 65.97 square kilometers of land
• inner suburbs are made up of around 628.32 square kilometers of land
• outer suburbs are made up of around 2,120.57 square kilometers of land

To generalize, most infrastructures are built to service people to move them from the outer area to the CBD area for work and services. Hence, people are more likely to want to move as close to the CBD as financially possible, either renting or buying. i.e. the demand for property within the inner suburbs will generally be stronger than the outer suburbs, also the supply of new land within the inner suburbs will generally be a lot less than the outer suburbs as land is very scarce in the inner areas.

This simply means if an inner area property were to come up on the market for sale there would be approximately 2-3 times as many people from the outer areas who would want to upgrade and move in to occupy the property. Although every city is a different size, the driver of the supply and demand forces properties to remain the same throughout the world. So if you are looking to buy a property in an brand new development with vast empty land around you, you might want to stop and think about the forces of supply and demand before making your final decision.

As a property investor, you want to buy residential properties that will have the forces of supply and demand in your favor over the next 10-20 years or more. As the population grows, a city will expand and create many opportunities. This means a once unpopular inner area will turn out to be the next popular hot spot. If you’re still thinking about location, location location, then you’ll want to be shopping near the inner areas as both the forces of supply and demand will always be in your favor in the long run.

Technorati Tags: buying residential property, residential property, residential property investing

Here’s the summary of the housing affordability study done by Westpac, its worth a ready but I think the below sums it all up. I’ve attached the pdf so you can read more about it and look at the pretty graphs.

it gives an indication of what is most likely to happen and also a ‘likely worse case’ scenario. Definitely an interesting read if you have a couple of minutes

Affordability has been an issue since 2002, sitting below the 10-year rolling average, however during this time house prices have still shown periods of strong growth.

The current forecast by Westpac Economics is for interest rates to fall a further 100bps by end 2009. If passed through to mortgages this would help improve affordability further. However the improvement will continue to be driven by interest rates remaining low rather than price falls.

If, as currently expected, job losses accelerate between 2H 2009 and 2H 2010, sentiment and purchasing activity is likely to fall further. Falling sentiment, coupled with a decrease in housing activity and rising job losses, could result in house price falls as forced sales filter through from late 2009. Such a scenario in a historically low interest rate environment would provide further relief to affordability in 2009 and 2010.

However, as the economy improves from 2011 and interest rates begin to rise to a more neutral level, affordability issues will re-emerge if loan size (and thus price?) falls are not high enough between 2009 and 2011. In order for affordability to revert to long-term average levels by end 2011, the average loan to purchase a dwelling needs to fall 10%, nominally.

REIA data from 1980 suggests that national house price falls of 10% have never occurred. Current house prices are down around 5% nationally, which is the highest on REIA records since 1980.  Westpac Property are of the view that prices are likely to remain stable until accelerated job losses bring confidence down in late 2009, after which further price falls are likely to occur through to early 2010. However, as the economy and employment numbers recover and interest rates rise in 2011, house prices are likely to enter a period of stabilisation.

Despite the expectation of further house price falls, Westpac Property expects that the declines will not be large enough to assist housing affordability as the economy recovers. As such, affordability will remain constrained well beyond 2011 as interest rates revert to a more neutral level.

There is the possibility that the economy performs better than expected. As such, if job losses are limited this could potentially place upward pressure on prices in an environment of low interest rates and low housing supply. Should this occur, housing affordability would be a much greater issue than suggested above, once interest rates start to rise.

Attachment:  home-affordability-q1-2009

Free Insulation for Your Home? It doesn’t get any better than this… the Australian Government has decided to go green. One way they are going to do it is by giving people a rebate of up to $1,600 if they put insulation in their home. This will not only save us on our heating and cooling bills, but save the environment through the reduction of electricity generation and mining of coal or gas to actually generate the electricity. Maybe it’s just the Government’s way to delay building another power plant? either way, its free insulation for your home(Unless you have a huge home, then it might cost you a bit)

As everybody is affected by the global financial crisis, it is not surprising that everybody is doing their part to save a penny or two…
Remember the saying… “Penny Wise, Pound Fooling”, Well, here is an opportunity to save both pounds and pennies… so read carefully.

For people who live in their own homes:

Go get a quote or two to have your house insulation checked out by a professional to see if you are eligible for the $1,600 government rebate. This will obviously save you $1,600 (be pound wise) and also save you ongoing heating and cooling cost in your home (be penny wise) – For Home Owners

For people who are renting or land lords:

About the same as above, except you only get $1,000 rebate, so don’t miss this opportunity to add value to your investment and save your tenant future heating and cooling cost! – For Renters

Read the links above for more information, there’s actually different eligibility for owner occupiers and renters/landlords. So spend a bit of time to find out how to get Free Insulation for your home… beat’s paying your electricity bill..

Technorati Tags: Free Insulation, Home Insulation, Insulation

No, I’m not giving free financial advice today. I’m just proving a point to a friend that I can actually get this post up on to the first page of Google for the keyword: “Free Financial Advice”. That said, I don’t want any readers to miss out especially if they are looking on resources on Free Financial Advice.

• If you’re interested in Property Investing, such as how to finance a property or just to see how a property deal looks like then check out these Property Examples
• If you’re more interested in Share Trading or Investing in the stock market I highly recommend you read what Warren Buffet has been doing over the past 6 months. Personally, I think in the current market you’ll want to find out about about Value Investing
• If you’re looking for resources on personal development, property investing, share market investing, building businesses you’ll want to visit Your Success Club where you can get access to hundreds of online resources for just $1. There’s books in there that are worth thousands of dollars if you actually go to the book store and buy them

It’s not exactly Free Financial Advice here, but hopefully you’ve got some useful information that you can use. Let me know what you want me to research and write about in the comments and I’ll do my best the find the answers for you! Anyways, fingers crossed for me to get to the first page on Google…

Technorati Tags: Free Financial Advice, Investment Resources, property investing, Share Market Investing

I’m putting together a series to answer some of the hard questions in residential property investing based from my personal experiences and other investors that I have meet along the way. I wrote this one on Your Success Club so you can either click on the link below to read about it or just scroll down. I haven’t finished posting the rest up yet, so I’ll update it when I get to it.

Residential Property Investing – Barriers

Here are some of the most common questions people ask me when they are thinking about residential property investment. It’s always the same questions every time, so I’ll be linking up this page over the next few weeks with the answers and also adding extra things when I think of it. Hopefully this will help you take the next step or ideas to increase your sleep at night factor.

It makes sense to ask these questions, in residential property investment there are very limited areas to actually worry about. It’s either something to do with the income (ie. rental) or the expense (ie. interest expense)

Here are the usual suspect:

• Expense: What if interest rates goes up?
• Income: What if my property gets destroyed by my tenant?
• Income: What if my tenant does not pay or leaves before the lease is finished?
• Expense: What if the insurance company does not pay when I make a claim?
• Expense: What if the insurance company does not want to insure me?
• Expense: What if my property burns down?

Technorati Tags: property investing, residential property investing

It’s going to be interesting as more and more banks tighten their lending policy and make it harder for people to borrow. In the article below, CBA is axing their no deposit loans. I think its important to interate that the Property market is “moved” by the ability to finance the asset (ie the property).

Reducing/tightening credit policies and rules will obviously make it harder for individuals, investors and of course businesses and large corporations to finance things. Which means people will fail the credit assessments and not be able to purchase (ie. reducting in the demand of property due to the inability to finance the asset)

So keep an eye out for other signs of tightening credit which will effect the economy and all other markets!

CBA axes no-deposit loans
Prospective homebuyers will find it hard to get no-deposit loans in the wake of the global credit crisis.

The Commonwealth Bank of Australia has banned no-deposit loans and the ANZ has tightened eligibility requirements.

JPMorgan banking analyst Brian Johnson says stricter lending standards are here to stay.

”The era of getting very easy credit to buy a house is over,” he told ABC Radio, adding the move could have negative implications for house prices.

Aussie Home Loans boss John Symond says the change signals a return to sensible lending practices.

”Banks have got to have prudent lending,” he told ABC Radio.

”People buying home in Australia with little or no deposit is flawed process.”

Source – AAP

Technorati Tags: Economy, Finance, loans, Property

Last week I wrote about Depreciation Schedule – Where Can I Get One?, I realised that some people may not know what a depreciation schedule is and why you actually want to get one. So I better explain myself…

The dictionary definition for depreciation is: “A decrease or loss in value, as because of age, wear, or market conditions.”

The good news for property investors is that the Australian Tax Office (ATO) allows us to claim this “decrease or loss in value” an expense. The best thing is that we actually didn’t pay for it, i.e. we didn’t have to pay anybody for the “decrease or loss in value”, but we are allowed to claim it! People in the accounting industry call this paper loss since no money actually comes out of the investor’s pocket.

Let me help you understand with an example. I will be using a slightly modified version of my personal transaction:

• Property Purchase Price: 370,500
• Loan Amount: $359,385
• Annual Interest (8.2%): $29,469.57
• Annual Rental: $15,600
• Water Rates: $800
• Council Rates: $800
• Strata Rate: $1,000
• Depreciation (First Year): $3,000 (This is the number from your depreciation schedule – and will vary from property to property and is dependent on the age of the property and capital improvements that has been done on the property)
• Tax Rate: 30% (My Assumption)

If I don’t have a Depreciation Schedule:

• Net Income: $15,600 – $29,469 – $800 – $800 – $1,000 = -$16,469
• Tax Deduction (30%): $4,940.7
• Actual Cash Outflow: $4,940.7 – $16,469 = -$11,528.3

If I have a Depreciation Schedule

• Net Income: $15,600 – $29,469 – $800 – $800 – $1,000 – $3,000 = -19,469
• (used for tax calculation)
• Net Income: $15,600 – $29,469 – $800 – $800 – $1,000 = -16,469 (actual
• cash out flow – however depreciation does not cost you real cash and is not included)
• Tax Deduction (30%): $5,840.7
• Actual Cash Outflow: $5,840.7 – 16,469 = -$10,628.3

As you can see there is $900 worth of savings (real money). That’s potentially a short holiday, a new computer, an iPhone, 15 months subscription to Your Success Club, saving to offset your interest paid, the list goes on!

Technorati Tags: depreciation schedule, investing, Property, savings, tax deduction, Taxation

I was talking to some people who owned investment properties last week and I was astonished that even though they knew about depreciation they didn’t know they could actually buy a depreciation schedule. Most people know about claiming depreciation for investment properties, but obviously not everybody knows that you can pay a qualified valuers to get an Australia Tax Office (ATO) approved depreciation schedule which you can used in your tax return. So this post is dedicated to closing this gap!

I have used several companies to purchase depreciation schedule for my properties, this is just the ones I have personally used and this is definitely not the definitive list. Feel free to Google one or ask your friends or even go look through the yellow pages

• Deppro (full service – a valuer will come to your property and calculate the depreciation for your property)
• Tax Shield (budget service, desktop estimates are done, I don’t think an actual real life valuer actually comes on site to see your property. This is better for those older type properties with not much depreciation left, ie. no new renovations or improvement done to the property for decades)
• Local Valuers (full service – a valuer will come to your property and calculate the depreciation for your property. Its usually cheaper than Deppro and those bigger companies, you can find them in the yellow pages or Google) The service is sometimes better from local valuers compared to the big boys because they want your business. So its really up to you…

So if you have an investment property, do yourself a favour and order a depreciation schedule especially if you don’t already have one. You are literally throwing good money away if you don’t have a depreciation schedule.

PS: You can actually negotiate on the price with Deppro (for that matter, with anybody), I told my colleague about deppro and he was smart enough to ASK for a better price. I think he got $100 off simply because he asked! So the question is, are you brave enough to ask?

Technorati Tags: depreciation schedule, investing, Property, tax deduction, Taxation

This is my first approved article on ezine. It’s a regurgitated version of a previous post I did which I cleaned up a bit before submitting it… so here it is again! Enjoy!

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Income Tax Withholding Variation – Get Your Taxes Back Before the Financial Year!

Download your Free Printed Interview of Ed Chan – “Tax Matter” from http://www.YourSuccessClub.com Article Source: http://EzineArticles.com/?expert=Yong-Long_Lai

Technorati Tags: Finance, Property, Taxation, Your Success Club