BMT’s new app helps Property Managers and landlords search and find the depreciation rate and effective life of any depreciating asset normally found in a residential property. The new app has proven to be effective in helping Property Managers to resolve disputes over damaged assets and with maintenance and replacement scheduling.
We’ve all heard the horror stories about tenants who damage parts of the building structure or assets contained in an investment property and the disputes that arise over who will pay for this damage.
Whether deliberate or not, disputes over damaged assets often escalate, leaving the Property Manager in the middle trying to bring the situation to a peaceful resolution.
Terry purchased a property two years ago. Before renting the property he installed brand new carpet at a cost of $3,155. After owning and renting the property for two years, Terry’s tenants decided to end their lease. On the exit inspection, the Property Manager discovered substantial damage to the carpet in the property.
As the carpet needed replacing, a dispute arose over whether the costs for the damage should be covered in part by the tenants and if so how much they should pay.
The Property Manager conducted a search on Resi Rates to find out the effective life and depreciation rate for carpet. From their search, they discovered that carpet in a residential property has an effective life of ten years, which works out to a rate of ten per cent per year using the prime cost method.
The Property Manager was able to calculate that based on the effective life of carpet as set by the Australian Taxation Office there was still $2,555 of value left in the existing carpet.
Below is the formula the Property Manager used to calculate the remaining value the property owner would lose due to the exacerbated damage to the carpet.
This information shows that the tenant had destroyed a valuable asset. The Property Manager was then able to use this information to form a case for the tenants to be responsible for paying the remaining $2,524 as damages to the property owner.
Property Managers can download BMT Resi Rates app by clicking here.