It’s usually when a big ticket item fails – the most common being your Hot Water Service – that as an owner you will feel some very real financial pain unless you do some planning.
Unfortunately, the legislation does not ever have any regard for your financial position on any given day.
Your obligation is quite clear and non-negotiable: to provide your tenants with clean, safe and habitable premises 100% OF THE TIME WHILE UNDER CONTRACT. After all, you expect the Tenants to pay you 100% of the Rent every week – in return, they should expect to have 100% of the use of the property.
There are steps you can take to manage these obligations and the best approach is always to be Proactive rather than Reactive.
If your Hot Water Service, for example, is more than 7 years old, you are into overtime on this appliance.
You can wait for it to give up the ghost on a very cold Sunday or a Public Holiday long weekend and pay way over for it to be replaced, or you can take control of when you feel this financial pain and PLAN TO REPLACE IT AT A TIME OF YOUR CHOOSING.
From a tax depreciation perspective, this appliance is now also worth NIL i.e you have already written off its full value, usually in the first 3-5 years of its useful life. (Speak with your accountant)
If you know that your Hot Water Service needs to be replaced on average every 7 years, you can actually plan to have that money set aside.
Approximate replacement cost in today’s money is around $1,800 including GST for an electric storage tank system.
That means you will need to set aside $257 per year or $4.94 per week. When you break it down like that, I think we can all agree that you could find $5-$10 per week to squirrel away for when you inevitably get “that” phone call.
You can use this predictive model for any other appliance or fixture in the property eg air conditioners, dishwashers, ovens, cook-tops, lights and ceiling fans etc.
As the smoke alarm legislation will change again for 1 January 2022, and the cost of installing the additional alarms will be at a similar price point to the Hot Water Service scenario.
It’s never too early to plan ahead.
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If you have a property in Brisbane that you would like to consider engaging a new property management team for, please feel free to contact Paul Tooze directly on 0414 037 007 or the friendly team at All Properties Group (07) 3800 0988.
Otherwise, we hope you have enjoyed these insider tips.