It’s hard to believe that several weeks ago the Sydney property market was on a fast paced “recovery” trajectory and 2020 was looking to be a promising year with strong capital growth predicted.
Since the initial cases of Covid 19 were diagnosed and the unprecedented decision taken to shut down the country, the impact on the economy and particularly the property market has been devastating.
Many investors with long term jobs and small business owners suddenly found themselves in an alternate world, either with a reduced income or completely out of work or business, with no prospect of a return to the norm any time soon.
Worried investors, trying to come to grips with the raft of changes to tenancy agreements, landlord responsibilities and Government subsidies have for the most part, been left confused as new and at times conflicting information abounds.
The first step towards making some headway in these uncertain times is to understand what can be done on a practical level to help reduce the anxiety around rental income.
Tip 1: Contact your Insurance company and confirm what their “loss of rent” means and if you have been requested to reduce the rent by your tenant (outside of the current tenancy agreement) and whether this will impact your “loss of rent cover”. While you are there, request a review of your policy and ask for a reduction in the cost of the policy. If you have several properties with the one insurer, you may achieve success with a policy fee reduction.
Tip 2: Keep your current tenant at all costs even if you have to reduce the rent for the next 6 months or so. The likelihood of getting a new tenant who will pay you the current high level of rent is slim. This action will ultimately save you a lot of money in the long run. If you are experiencing financial hardship yourself, it would be worthwhile conveying that to the tenant so that a compromise in rent can be met.
Tip 3: Make a budget. Cut back on any unnecessary expenses and cancel any subscriptions you no longer use. Contact all your current providers – electricity, gas, phone, bank etc and request a reduction in your current premiums or mortgages. Most will want you to provide a competitors price/ quote so do your homework before calling them and be ready to substantiate the reduction. There are potentially hundreds of dollars to be saved by doing this simple exercise.
Tip 4: Be in touch with your accountant who may be able to provide some additional tips on how to manage your investment property portfolio through this time of crisis. No one knows your financial position better than you accountant and they can not only provide you with some tips to save but should also be able to advise you on the various payments/ subsidies that you may be entitled to receiving right now.
Tip 5: Explore other ways of making money that could help others during this crisis. Such things as yard maintenance (where you can mow lawns and tidy yards, paint, and do small handyman jobs) without needing to be in close proximity to anyone. Using your skills in areas such as graphic design, IT help or delivering goods will provide some additional income.
Above all, let’s remain positive through this very tough Covid 19 time, and show compassion and kindness to one another.