Asking The Real Estate Agent For Details Regarding The Property (Day 21)
Asking a real estate agent for details regarding a property (such as council rates, body corporate fees, water rates etc) is important to understand the cash flow of a potential investment property.
Hi and welcome to the 30 Day Property Journey. Over the next 30 days I am giving you little activities that you can do to improve your skills as an investor and to make investing a little bit easier.
When you are inspecting a property or considering a property there are some important things that you are going to need to know and some details that you are going to need to get from a real estate agent.
The things that I’m going to talk about today are finding out the details about:
- Council rates
- Body corporate fees
- Water rates.
We have previously talked about contracts of sale and asking more questions about the property and now we’re going to be specific into things that will potentially affect the cash flow of a property.
You can do this in a number of ways…
When you are inspecting a property you can ask the real estate agent for those details.
However, I find that the simplest way to ask this is to simply email the agent and to ask for these details.
When it comes to council rates they should have details and know exactly what the council rates of the property are. The owner should be able to provide the historic data of what the council rates have been so the agent should know how much they are.
Body Corporate Fees
If you’re investing in a unit or a townhouse or a villa or something with common ground then you are likely going to have a body corporate and need to pay body corporate fees. You are therefore going to want to ask the real estate agent what the body corporate fees are and also how much money is in the sinking fund of the property.
They should be able to find this out and should be able to share it to you.
(This is probably an article for another day but) if you’re actually really considering buying a unit then I would also ask for the minutes from the last 12-24 months of the meetings of the body corporate. When people meet together they need to take minutes (which are notes about the meeting) and they will discuss potential issues with the property, whether they are going to fix those issues or just leave them.
So if you are actually buying a unit ask for the minutes because you can read through them and you can actually see what have they done, what haven’t they done, what’s left to do or there any upcoming major expenses that are obvious. That’s a good little tip for you but in this circumstance we are asking for body corporate fees only and we want to find out about the sinking fund.
We also want to ask them what the water rates are for the property and they should be able to provide maybe the last 3 months or the last 6 months or even the last 12 months of what the water rates have been for the property.
If you’re going to be living on the property then this will be a good indicator for you and you can use this information in your cash flow analysis.
If you’re going to rent it out then you may have to pay these water rates, unless you get it written into your tenancy contract that the tenant actually pays the water rates.
The other thing you might want to ask them what is an estimate on insurance on the property. They probably won’t be able to give you an exact figure on this but they might be able to give you an idea.
If you are renting out the property and you want to get landlord’s insurance then you can simply ask them “how much do you think landlord’s insurance is going to cost?”
To ask these questions and get this information all you need to do is go to the property listing at realestate.com.au or domain.com.au wherever you are and simply fill out the form and email the agent and ask for these details.
You can then use these details in a cash flow analysis to work out whether or not a property is going to be positive cash flow, negatively geared or how much the property is going to cost you. When it comes time to actually look at a specific property you know these details and you will know how it’s going to affect the cash flow.
Until tomorrow stay positive.