Recently I had an Insurance renewal arrive in my letterbox. Normally, these sorts of things are a simple matter of review and pay and I would say I’m similar to most investors. This time however, I was shocked to see what my Insurance Company had done to the premium.
You see, last year I was charged $644 for Building Insurance on a property located in Point Cook, so in my mind I expected to see a similar amount. Imagine my surprise and shock when I saw $1,250 on the Renewal Notice! I hadn’t made any claims the previous year, nothing had altered on the property so I was at a loss as to why I was being asked to pay almost DOUBLE the previous year’s cost.
Naturally I called them to find out what was going on and eventually spoke to a consultant who calmly informed me that the main reason was “forecasted weather pattern changes”.
Now I don’t know about you but I was not impressed by that response at all and I told them so in no uncertain terms. I called another Insurer and was given a quote of $1,370 for the exact same policy. Ouch!
Still not convinced I called another one and was quoted $550. Now we’re talking! I’m saving money from my previous premium rather than paying out an exorbitant amount of EXTRA money for the privilege of staying with the same insurer and all the conditions are the same.
It’s not hard to guess what I did then.
Anyway, at the end of the day, my experience convinced me that we, as investors, have to be on top of things all the time. In fact, building insurance is just one example of a whole range of fees and charges that we could be reviewing when they fall due. In fact rather than Renewal we should be substituting Review.
“Review before Renew” should be your catchphrase.
Here’s my point though. We should be checking or reviewing all the costs of our investment property. How much extra money could you be paying out simply because you paid things automatically? This is another reason why automatic direct debiting of your Bank account should be avoided. It takes out the responsibility part of your expenses and makes it too easy. So easy in fact that you can pay more than you need without realising it or having the opportunity to review it.
When did you last check on your property costs? I’m talking about all those fees you pay like Landlord Insurance, Finance costs such as interest rates or fees. I’m not saying you have to change, there may well be valid reasons for staying, just review what you are paying and check with what else is out there.
On the back of that, I’m going to ask the Finance guys here at Investors Direct to see what they can do about my interest rate and you know what, it isn’t difficult to do at all. This sort of scrutiny is what can be built into your routine so you are maximising the surplus money from your income every year.
You don’t have a leaking tap very long before it gets the attention it deserves. You should treat your ongoing investment property expenses like that leaky tap.
But there is more to consider. Why stop at your investment properties. Review the costs associated with your family home too. What insurance fees are you paying? How about your electricity bill or your water bill? Are they more expensive than you thought?
What all of this comes down to is money management. We all work hard for our money so doesn’t it make sense to ensure its being used in the most efficient manner possible. Besides, if you don’t spend as much each year you have more left over as savings, right?
As soon as you finish reading this article, make a list of all the things you can review. Take a close look at what you pay now for insurance, then check out your electricity and gas bills. Make a few phone calls to compare what is out there. Taking action and responsibility for where your money goes will give you more control over where you are heading.
Procrastination can set in very easily if we don’t pay enough attention. Are you where you want to be at the moment? Maybe you can review your position at the same time you review your costs. Perhaps that purchase you were thinking about making is exactly the kind of action you know you should take?
Why not call me today on 1300 663 836 to talk over all your property needs?