After several years of working hard to hold his six investment properties, Julian Lancey seemed to be on the right track towards achieving his financial goals, until, only a year and a half ago, he came face-to-face with his worst property investment experience—renting his place out to 'ice addicts'.
Like many people in the business of creating wealth through property, Julian feared long vacancies on his properties, so he was always hurrying to get someone new in every time a tenant’s contract expires.
The property investor shared: “I didn't know what a junkie really kind of looked like and I rented out my properties myself. I was kind of desperate to get someone in [because] I didn't want the vacancy factor, so I had a couple of people come through, [and I said], ‘Sure, you can have it.’ ”
“The rent never came in [but] they knew all the legal side [to the rent] … Suddenly, before I knew it, I was speaking to solicitors and booking in tribunals and it ended with the sheriff.”
Eventually, the Ice addicts were evicted—but not without a commotion.
According to Julian: “I was waiting outside, very nervous, [and] one of the ... person[s] with an addiction … brought in a couple of jerry cans of petrol.”
“I'm thinking, 'My God he's going to bomb the apartment block.' [Then] they contacted the police or the King's Cross bomb squad ... A couple of minutes later, there were at least eight coppers there, all in black with the bulletproof [vests].
“They burst in. It turns out, in the jerry can there was petrol, but I think if you're addicted to ice ... you don't think rationally, and you think, ‘Oh, I've got to put this in the car or take it upstairs to my apartment … ’ ” he shared further.
While the horrible experience definitely took an emotional toll on Julian, he was grateful that it did not put a dent on his finances—thanks to his landlord insurance.
Why property investors should be insured
A property investor can be as careful as he could, but there will always be unexpected issues to face, especially in rented properties.
Julian said: “I've had probably the worst thing that can happen, which is renting your place out and it being trashed by people that don't care … [Luckily,] I had landlord insurance, which I recommend everybody getting.”
“If you don't have it, it's not even much, it's a couple hundred bucks, you know?” the property investor said.
According to him, the insurance guys basically told him that “everything that falls that is not attached” when the apartment is “shaken and turned upside down” is covered by the landlord insurance. The insurance policies vary depending on the service provider, so it is important for a property investor to understand exactly what his policy entails.
Julian reminds his fellow investors: “Get insurance before people move in … Get it now," he said.
“It's a nice peace of mind … I've been in situations where I've had to call on my landlord's insurance when I haven't received rental repayments … and also when they've created damage to the property—that gets covered.
“[Most insurance firms are] pretty good, to be honest with you … They'll challenge [your requests and demands], [but] that's what insurance companies do, but stay firm.”
Tune in to Julian Lancey’s episode on The Smart Property Investment Show to know more about the challenges of the market dynamics that he faced, how he tried to overcome the restrictions placed on him by renovations and refinancing, and why he thinks “property is the best”.