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Unless your first investment property comes with a rental guarantee (i.e. paying you X amount over Y period regardless whether the property is rented or not), the first thing you would do right after the settlement is finding the first tenant for your first investment property because leaving the property vacant for a long period would be your least preferred option. To overcome such anxiety quickly, you may be tempted to grab the first prospective tenant who walks through your door, without doing a background check properly. Needless to say that a bad tenant can potentially cause you all sorts of stress – both emotional and financial. Once the tenant is entrenched on your premises and things start going wrong, it might cost you far more than just a couple of rental payments.

When you choose a tenant
You must research them thoroughly – credit checks and employment checks are a must. Assuming that you have appointed an agent to act on your behalf, you must specifically stipulate the condition in the agent agreement – ‘You (agent) must pick up the phone and speak with employers and past landlords or agents.’ The last thing you would want your agent to do is simply relying on tenant registries and the written words on the application form. Never underestimate your intuition. If you do not feel right, do not proceed.

Once they have moved in
Keep your eye on them by
1) Inspecting your beloved investment property as often as the law allows;
2) Monitoring rent payments – Never allow them to build a habit of paying late;
3) Attending to repairs promptly – They may use this as an ‘excuse’ of not paying rent or paying late; and
4) Being specific with special conditions – maximum number of occupants, pets, etc.
You must make the effort to let the agent know that you are watching closely – Never just rent and forget.

How to deal with late payments
If your tenant starts missing rent payments and soon falls behind in rent, they could potentially end up costing you a lot of money if you do not take swift action.
Please note that you cannot take action to evict a tenant for unpaid rent of less than 14 days. However, you (and your agent) must actively monitor rend payments and given a strongly worded reminder by phone, email, SMS or mail (i.e. written by your lawyer if necessary), when payment has not been received for the current payment period. You must train them early so they won’t build a bad habit of ‘it is acceptable to pay late’.

Eviction process is not easy
The eviction process takes time – beginning with the obligatory notices and ending with the tenant vacating the property. Unpaid rent can quickly accumulate during the period. In other words if you choose to commence the eviction process, you must initiate it as soon as you become aware that the tenant is at least 14 days in arrears. There is nothing wrong with being a diligent and persistent landlord. Do not let your good nature misjudge the common practice in business.

Why having a regular inspection is important
You would not want your first investment property into a state of disrepair and damage. Failure to adequately care for and maintain the premises may fall into such undesirable situation. Regular inspections can help keep on top of this situation. A tenant is under an obligation to retain the premises in a good state of repair and in a similar condition as when they took possession of the premises (excluding general tear and wear). Tenants have a duty to notify the landlord of any damages and the landlords have a duty to repair them. After all you are actually doing yourself a favour – keeping your property in good condition and the repair costs are generally tax-deductible.

Noise and nuisance
Did you know that nuisance is the ‘unlawful interference with a person’s use, or enjoyment of land, or some right or in connection with it’? In other words, in the law of tort, nuisance is a civil violation. Your tenant must not cause or permit nuisance, or interfere with the reasonable peace, comfort or privacy of their neighbours. If they continue to do so, even after receiving multiple warnings and request to cease, they can be evicted.

Multiple occupants on premises not listed on the lease agreement
This happens often if your premises are rented to students near a university. The lease agreement must stipulate the maximum number of occupants in the property, and sub-lease is strictly prohibited. In the event that such condition is violated, you can repudiate the lease agreement due to the breach of condition and evict the tenants.

An acquaintance of mine is a solicitor who loves repeating this statement whenever we meet. Two weeks ago he told us that more than 15 people (i.e. international students and working-holiday visa holders) come to him for a free legal advice every week and he said that helping others is the primary source of his job satisfaction. As usual I kept my mouth shut and listened to him (in order to assess and form my own view based on merit and fact). Unfortunately, I was not able to sustain my silence for too long because somehow I appeared to be ‘disinterested’. Hence I broke my silence by imposing the following three questions to having a moment of ‘self-reflection’.

1) If 15 clients visit you every week, then it means you can only 12 minutes per client. Is having a consultation for 12 minutes per client proven to be effective? Is 12 minutes enough for you to understand a client’s issue and formulate a strategy to resolve the issue? You seem to place an emphasis on ‘quantity’, rather than ‘quality’ here.

2) Where does your responsibility end? Giving them an advice what to do next is where your responsibility end, isn’t it? Considering the most or perhaps all of your clients are either international students and working-holiday visa holders, I believe they share something in common – English proficiency level would be significantly deficient. Don’t you hold a view that telling them what to do next may be sufficient but not necessarily adequate? Don’t you hold a view that they really want you to act on behalf of them? How many cases have you actually acted on behalf of them and resolved?

3) I respect the spirit of pro bono work but I am against using it for ‘self-promotion’. You always brag about how popular you are by referring to the articles in community newspapers and magazines. Are you trying to promote your pro bono work or are you merely using it as a marketing vehicle to increase your name value in the community?

(After a long awkward silence) I said the following quote before taking my leave. “Work for a cause, not for applause. Live life to express, not to impress. Don’t strive to make your presence noticed, just make your absence felt.”

I have an acquaintance who calls himself a ‘property investment strategist’. One day he insisted on having a catch-up session as he was dying to share his secret property ‘investment strategy’. As usual I reluctantly complied with his request and we met last week. Here is my story.

He started with an opening statement – “If you are a landlord who owns an apartment in the heart of Sydney, forget about having a long-term tenant. Let’s triple your return by converting your apartment for a short-term holiday place for travellers via Airbnb……….”

Under normal circumstances, I would have played along. Just throwing him off by asking him a few mathematical questions and watching him struggle to compute arithmetic in his head, can be quite entertaining time to time. However, unfortunately, not this time. Hence I decided to throw him a few questions that he had not contemplated. Here is how my retaliation began.

“With all due respect, I understand that you are a big fan of Airbnb and I respect that. The substance of your property investment strategy is instead of having a long term tenant, facilitating short-term ‘holidayers’ (only if such word exists) would result in better financial return. While the strategy seems sound, there are several factors that I strongly advise you to take into consideration.”

1. Who will be liable if the guest suffers injuries? Injuries caused to your Airbnb guests may be covered under your buildings strata insurance. Should the landlord take out another insurance policy for this?

2. Who will be liable for property damage and loss? Damages caused to your property will be covered under your landlord insurance? Does your policy cover short-term lettings? If not, what is the additional premium that you must pay?

3. Some building management will NOT allow short term letting of 3 months or less. Causing extra traffic of guests in the building may be disruptive to the peace and quiet enjoyment of neighbouring residents. Some travellers may host unruly parties with excessive noise causing nuisance and leaving communal facilities such as the pool area in complete disarray.

4. Does your local government allow for homes and apartments to be let for short-term accommodation? Some councils explicitly prohibits from doing this.

5. What if you are not a landlord but also a tenant? You decide to sublet a room to travellers and what if your tenancy agreement does not permit subletting? What if you get evicted due to the breach?

As soon as he called me a ‘cynic’ I decided to abruptly end the conversation by saying “Let me tell you this. I have known you for more than 4 years. To date I have been listening to you because I value our partnership, despite the fact that your investment strategies seem hardly credible. As far as I am concerned, I would be more convinced if you actually have one investment property first at least. I say we are done here.”

6시에 변함 없이 기상 그리고 6시 30분에 아침 식사를 마치고 가방을 꾸리기 시작 했다. 중요한 것을 챙겼다고 생각을 했는데 아이폰 케이블과 충전기를 놓고 왔다 어이쿠…..싱가포르행 비행기는 12시 5분 그런데 공항은 9시에 도착 어이쿠….. (호텔 직원이 1시간 정도 걸릴것이라고 했는데 20분안에 공항에 도착) 다행이 라운지에서 스리랑카의 고유의 차인 실론티와 함께 이메일을 읽으면서 탑승 안내 방송을 기다리고 있다.

싱가포르까지 4시간 또 시드니까지 8시간….. 막상 비행기를 오랜 시간동안 탈 생각을 하니 끔찍하면서 집으로 돌아간다는 생각에 벌써부터 기분이 좋아진다. 어젯밤 꿈속에서 내 양복 두벌이 사라지는 악몽에 시달려서 이번에는 들고 타기로 했다. 가멧 백을 하나 가지고 와서 다행이다.

스리랑카 공항에서 아이폰 케이블 구입에 실패 했으니 싱가폴까지 가는데 50% 베터리 남겨 놓고 시드니에 도착하면 지인들과 가족들께 연락할수 있게 최대한 남겨 두어야 되는 스트레스 때문에 벌써부터 머리가 지끈지끈 아프다. 비행기 탑승전에 항상 이렇게 멍한 상태가 지속 된다. 해외 출장을 많이 다녔음에도 아직까지 이런 촌티를 벗지 못했다 🙂

와이프가 꼭 읽으라고 부탁한 책을 손에 끼고 이제 게이트로 이동한다. Farewell Sri Lanka.

교육 마지막 날이다. 오늘의 교육은 오전 7시 30분부터 오후 12시 30분까지로 잡았는데 개발자들의 질문이 생각보다 양이 적었고 논리정연 했기 때문에 오전 10시경에 교육을 마칠수 있었다. 그들을 격려하고 앞으로 이 프로젝트에 위해 그들이 얼마만큼 중요한지에 대해 여러번 강조를 했다. 앞으로 그들이 맡은 책임이 무거워 약간 버거워 해보이는 느낌이 들때 가벼운 농담으로 그들의 긴장을 풀어주곤 했다.

이제 내가 가르치고 전수할것은 다 마쳤다. 이제 남은 것은 그들이 내가 가르쳐준것을 바탕으로 새로운 프로그램을 개발하는 것이다. 내가 시드니에 있는 동안 그들과 계속 통화를 하면서 어려운점이 있으면 도와주고 같이 고민하면서 문제를 해결할수 있는 방법을 찾는데 최선을 다하겠다고 약속을 하고 마지막으로 작별의 악수를 건냈을때 뭔지 설명하기 힘든 동지애를 느꼈다. 이번 교육을 통해서 생각의 폭과 깊이가 넓어짐과 자신의 삶을 돌아 볼수 있는 값진 기회였다고 감사의 인사를 건내는 직원도 있었다. 아직 output은 없지만 그들의 생각을 바꾼것만으로도 이번 출장은 성공적이다.

이제 일정을 마무리하고 호텔로 돌아와 이메일을 확인하는 동안에 긴장감이 서서히 풀리더니 슬슬 감기기운이 느껴지기 시작했다. 아니다 다를까 샤워를 하고 난후에 그냥 침대에서 누웠더니 콧물 기침 재채기가 시작 됬고 출장 오기전 컨디션으로 다시 돌아 왔다. 그래도 오래간만에 스리랑카에 왔으니 애들에게 작은 선물은 준비해야 되니 Barefoot (스리랑카의 손으로 만든 특산품) 카페에 가서 덩치 큰 필통 3개를 구입했다. 이것이 지난 5일 동안 첫 외출이였다. 항상 사무실과 호텔, 18층의 라운지와 1층의 레스토랑 그리고 헬스장 이외엔 출입을 하지 않았는데 이번 외출의 총 소요시간은 30분이네. 피곤한 몸을 가누면서 슬슬 짐정리 시작. 내일 드디어 집으로 간다.