What landlords can learn from the Rio Olympic Village disaster, and how to avoid costly property defects.
Imagine this: After months of waiting, your brand new investment property is finally ready to settle. Upon settlement your property manager lines up a new tenant and you feel relieved because you got it rented without any fuss – but as the tenants are about to move into the property, you find out there are all sorts of problems with your new investment!!! Phone lines aren’t connected, there is bad wiring, broken plumbing and the place hasn’t even been properly cleaned!!
This sounds like a complete nightmare, but unfortunately it is the reality for landlords settling on new properties almost every week and, not to mention, for the Australian Olympic team! A statement from the team called the Rio apartments “uninhabitable” and said there were “blocked toilets, leaking pipes, exposed wiring, darkened stairwells where no lighting has been installed and dirty floors in need of a massive clean.”
As a landlord you don’t want to be settling a property, starting to pay interest on your loan and not having tenants move in – this is the worst case scenario. In the case of the Australian Olympic team, the properties were completely uninhabitable and they had to relocate to a hotel while the apartments were being repaired. For a landlord, lost rent = lost income so here are our top 4 tips on how to avoid defects in your new property.
Tip 1: Do your research on the Builder & Property Developer
Knowing the experience and background of both your builder and developer can put you in a better position because the experienced and reputable businesses not only have obligations to the owners of their complexes, but sometimes to the shareholders plus the brand damage it would bring to have a dodgy development.
David Laverty, an experienced off the plan property investor and Director of Red & Co’s Property Management division, says it is “imperative” buyers do their homework on both the builder and the developer.
“Knowing the type of projects developers have done before and that it isn’t their very first development means they have a pipeline of well completed stock. I would suggest to any would-be investor to go out and see unit complexes which the developer and builder may have previously constructed. See how they have held up over time. Are there cracks in the walls, for example?”
Tip 2: Get a qualified expert involved
How to get the best outcome with your new property or unit?
Handovers.com provide peace of mind for all new investors, they are experts who ensure you get what you paid for and are entitled to.Handovers.com were the first to specialise in new houses and units over 20+ years ago.
“We work for you to get the best quality for your new property”. Handovers.com Director and Founder Paul Corn has been in the business for over 47 years, and says “It is advisable to have qualified and experienced inspectors who only specialize in “new” properties when your builder advises that your new home or unit is ready for handover. You want a report that is straight to the point that either a novice or builder can understand. Often buyers see what they perceive as defects or imperfections where a builder sees common building practice or standards. We conduct an average of over 10,000 house or unit inspections per year throughout Australia providing our certificate stating a house meets industry standards when it meets our criteria”.
“Never rely on word of mouth when dealing with your builder and ALWAYS put everything in writing. If you don’t have a paper trail you can’t win the fight. E-mails work best with this”
Tip 3: Flick, prod, poke and flush
It is imperative to physically check any new purchase before settling. If you live interstate or overseas, then you can use services like Handover Report, but if you can physically visit the property then it never hurts to run the magnifying glass over it.
David Laverty tells his property owners to “look up, down, sideways and under the sinks” to make sure it has been properly finished. He tells his landlords to check, “do the windows get caught? Do the doors open easily? Are there cracks in the bricks outside? It is all these simple things that can be caught by eye and can be sometimes quickly and easily fixed up, even before you have a tenant in the property.”
Tip 4: Get legal
“Legally, your residential contract will stipulate what are considered defects and what the timeframe is for the defects to be remedied. These clauses are usually written in favour of the developer so it’s important that you develop a relationship with the developer and your property manager to ensure your defects are their top priority to remedy.” David Laverty, Director at Red & Co.
Overall, it is important that as the landlord you maintain access to the developer and builder over time. In all properties there are going to be small problems over time, but you need to start with the biggest problems first – like the leaky toilets in Rio – and then finish with the smaller cosmetic problems which won’t ultimately affect you renting out your property.
Stay tuned for more articles during Red & Co’s Renovation Month, where we will be featuring industry experts and professionals that will give you ideas, starting from “Why even Renovate”, to “Renovating for Cashflow, Capital Gains” and finally looking at major renovations, and Property Development. Put on your overalls and get ready for a big month here at Red & Co – Finance, Rentals & Development Management!