Landlords, Tenants, Property Managers & COVID-19

What else could my Blog be about right now.

I was going to post about depreciation & had a few other topics I wanted to put out but as you all know; life is on pause right about now.

These weeks have been tough.

Property Managers everywhere are struggling to get through the mass of information and ideas on how to manage this crisis.

I realise, first and foremost that this is a Health Crisis and I’m yet to come across anyone that doesn’t agree with the Stage 3 lockdowns and overall need to #stayhome.

But what about the tenants that are staying at home but are worried that they can’t pay for their home. Yes, they’re struggling and I hear their stress and sympathise with them. Let’s also not forget that landlords have also lost work and like everyone, the bills keep coming in.

We need to find some happy mediums, even if these aren’t necessarily happy outcomes, but outcomes that everyone can live with.

So, I’m giving some tips to all on how we can ALL get through this. It may be obvious and it may be common sense but here goes;

Tenants

  • Look into what assistance is available; there are ample links and fact sheets available. Get them from trusted sources i.e. Government websites
  • Rest easy, there is a moratorium on evictions but, it’s been made clear, that doesn’t mean rent won’t accrue a debt if you don’t pay and also don’t approach your Property Manager or Landlord. If you can’t pay the full rent, pay what you can to keep any balances of rent owing low. Reach out for help!
  • Property Managers are trying to help where we can to negotiate good outcomes, we’re still waiting on further advice and information from the Government though. It is coming!
  • Speak to your Landlord or Property Manager, let us know your situation so that we can get back to you as soon as we know more

Landlords

  • If you don’t have landlord’s insurance by now, it may be too late with most providers having already cut off new policies
  • Speak to your agent and let them know your financial position, so that we have the complete picture
  • Our recommendations, as Property Managers, are just that. You will have the final say in any negotiations but you need to be open to them and compromise where possible
  • If your Property is for Lease or Vacant, it is time to align to the current rental market ASAP. Tenants are still out there looking. People are downsizing, economising and looking for the perfect Isolation pad.

 

And finally, to my fellow Property Managers. We’re having a tough time, seriously. Long hours, countless calls / emails and counselling sessions.

All the while we are taking a slight battering by the media and I’ve also been hearing of many pay cuts, cuts to working hours and layoffs in our industry.

 

Property Managers

  • Listen & be compassionate to all
  • Follow trusted sources and keep up to date & informed. Things are changing rapidly, almost hourly
  • Don’t be hasty and make rushed decisions; National Cabinet updates are coming
  • Follow your regular procedures until we know more
  • If you haven’t heard, don’t give anyone Financial Advice
  • Take serious precautions when you do have to go to properties, i.e. Physical distancing, masks, sanitizer & gloves
  • Adjust, adapt & Innovate as the way we do Property Management will be changed forever
  • Now is the time to go out of your way to help our landlords, tenants and tradespeople – Go the extra mile. How we perform during difficult times can cement and build long term relationships

Shoutout

A Huge Thank you needs to go out to the REINSW, REIA, Tom Panos, Jemmeson Fischer, Leanne Pilkington and the team at Novak Properties for the regular informative updates and webinars you are running constantly. You’ll all be remembered for your efforts during this time.

I greatly appreciate you all taking the time to generously share knowledge, your insights and practical advice simply to just help others and ensure we are all doing the right thing.

Keep your head up everyone, we’ll get through this.

Antonio

NSW Rental Reforms & Renewing Leases

5/3/2020

As a Property Manager, we spend a lot of time negotiating Lease Renewals as tenants’ leases come up to expire. My opinion is that it is ideal for both owners and tenants to have the security of having a lease in place.

With the recent NSW changes to Residential Tenancy Laws, I’m already seeing landlords reconsidering this and opting to have their tenants remaining on continuing agreements.

This is largely because of the changes relating to the costs incurred by tenants when they need to Break their Lease.

These changes are likely to see increased instances of vacancy periods and therefore loss of rent where the current lease arrangements provided landlords with much more security. For a landlord, being told that their property is vacant with little “compensation” being the Break fee, leaves them open to unpredictable and unforeseen vacancy periods.

“The question now, is it worth renewing a Lease, when they’re so easy for a tenant to break?”

Whilst a fixed-term lease provides tenants and landlords a period of security, with new legislation coming in on 23/3/2020, it’ll be easier for these leases to be broken by tenants so we might see more and more tenants leaving before the Lease expires simply because it’s more affordable to do so.

 

Close to a Lease expiring your options are to either;

  • Not renew a Lease and have continuing agreement where tenants provide you with 3 weeks’ notice to vacate at any point

Or

  • Renew a Lease where tenants can break the agreement by paying a set break fee as outlined below

New mandatory set break fees for fixed-term agreements

Mandatory set fees when a tenant breaks a fixed-term agreement early will apply to all new fixed-term agreements that are 3 years or less. This applies to agreements that are entered into from 23 March 2020 onwards.

The break fees are:

  • 4 weeks rent if less than 25% of the lease had expired
  • 3 weeks rent if 25% or more but less than 50% of the lease had expired
  • 2 weeks rent if 50% or more but less than 75% of the lease had expired
  • 1 week’s rent if 75% or more of the lease had expired.

Using the example of a 12-month tenancy agreement, a tenant would only be required to provide two weeks’ rent to their landlord (that is, an amount equal to two week’s rent) to end their agreement early, if seven months (or 58%) of the agreement had expired.


I’ll be speaking to my clients on a case by case basis as Leases come up for renewal throughout 2020 but already, I am hearing “What’s the point of a Lease”.

The consensus is that at least getting 3 weeks’ notice on a continuing agreement gives you more lead time to advertise and show the property to secure new tenants, it’s all about minimising vacancy here.

As a Property Manager, it’s my job to maximise my landlords investments, and where leases are renewed at a cost to landlords it might not be the best investment to all clients when you consider a lease can be broken in the last 3 months and all the owner will receive is 1 weeks rent as the set break fee.

While there are many other changes to legislation coming in, which I’ve covered in my posts, I feel this change will have the greatest impact on both landlords and tenants.

Landlords face uncertainty in terms of the higher probability of lost income and Tenants face not having the offer or opportunity to renew their lease and get some long-term security in their homes.

My opinion is that there are no real winners here, unfortunately.

While it may sound advantageous to tenants being able to more affordably break their lease and move, long term investors may simply be turned off investing and may simply not offer the tenants that want to secure longer leases, the option.

As an investor, will I be renewing my tenant’s leases? Probably not, unless I’ve got tenants that really demand it and where I feel they’ll give me the courtesy of some notice of their vacating rather than none.

“What’s crucial here, is keeping good working relationships with tenants. Relationships where tenants will communicate any changes in circumstances to their Property Manager. So that we will get the heads up and some notice, even though the tenant doesn’t technically have to provide it.”

As Property Managers, it’ll be in our, and our client’s best interests that we keep our eyes and ears open and are attentive to our tenant’s movements and their circumstances.

Antonio @ The Management Agency

A Quick word on Professional Photography

6/2/2020

You might have read a recent post I did about preparing your Property for Rent. After that’s said and done you need to consider marketing.

There was a time where agents snapped away on their camera, or iPhone, and those photos were loaded online to advertise a Rental Property.

Sometimes we’d even make a half-hearted effort to lighten them up using whatever software we had already pre-loaded on our Desktops.

Those times are dead and gone though, see for yourself. Scroll to the bottom of Domain.com.au or Realestate.com.au and you’ll likely see the listings that have sat online for weeks and weeks, the ones with the dodgy photos.

Sorry fellow Agents, I realise your landlords really don’t want to pay for Professional Photos.

Would you, as a landlord want your property to be among those?

“Professional Photography should be the bare minimum because Virtual Tours are becoming more and more common.”

Vacant or furnished, get professional photos. It might be that you can reuse the same set of photos time and time again if the property remains largely unchanged.

My professional photographer, for example, will take 5 amazing shots for $150.00, such a small investment for the difference it makes to your advertising, reach and ultimately, number of enquiries and then Prospective Tenants through the door which is the aim. Getting as many prospective tenants as you can through your property increases the likelihood of getting applicants. Keep in mind that the cost of photography is a tax-deductible expense.

Whenever I am with a potential client, I won’t push or do the hard sell to list with me because that’s not my style. I will, however, push when it comes to professional photography because of the benefits.

There are also benefits of listing your property with me, but that’s another conversation.

So potential landlords, say yes and be proud to say “that’s my investment property” when it goes online remembering that you’ve got to spend money to make money.

“Remember that with the right photos, correct pricing and ad placement on the major portals your property may not stay For Lease for long, that’s the point. The photos were not a wasted expense or effort especially when they can be reused”.

If you’ve read this blog, mention it when you list your new property with me and I’ll even go ½ on the cost.

Antonio – The Management Agency

 

NOTE:

If professional photography is going to capture any tenants’ furnishings or belongings, permission from the tenants must be sought first.

Preferably confirmed in writing, This is a new requirement included in the changes to the NSW Residential Tenancies Act which come into place in March 2020.

Preparing your Property for the Rental Market

10/12/2019

Over the years I have met with many potential clients in the process of turning their primary home into an investment property.

These homeowners don’t always necessarily know what they need to do to get the property ready for the Rental Market and in many cases, they’re planning to go well beyond what is actually needed.

While there are some improvements worth focusing on, a lot of work and expense can be avoided when remembering that not every addition or improvement will translate to a good return on investment. Especially where it won’t appeal to prospective tenants who we’re trying to attract.

“My MAIN takeaway advice from this post is to get a Property Manager through your property, any property manager. Have them do a walk through and point you in the right direction as you prepare to list your property. Get thier reccomendations as to what you need to do and what you don’t”

What you need from them are some practical ideas, suggestions, and recommendations and for them to really guide you as to where to concentrate your efforts if any is needed at all.

Bounce your ideas, and what you’re thinking of doing off of them, they’ll know whether it’s worth doing or not.

So Many of these new investors come with horror stories that they’ve heard from family, friends or colleagues about the difficulties of being a landlord so this is a good time to get to know potential property managers at the same time.

Let’s be real, not every tenancy runs smoothly but start off by doing these three things then you’ve covered your bases and you’re setting off knowing you’ve done as much as you can do in preventing any possible issues.

  1. Learn a little about being a Landlord here

  2. Get Landlords Insurance i.e. there’s a blog on that too here

  3. Prepare the property for rental i.e. You’re reading it now, well done you.

 

So, you’ve packed and ready to go and you’ve got your Property Manager lined up, sure they’ve given you their recommendations ahead of this stage, but here are mine.

  • Paint, Carpet & Blinds

Nothing gives a property a refresh like these.

Even just a coat of paint helps to appeal to tenants when they come through the property. Nothing takes away the appeal of a property like marks, peeling paint, cracks and worse of all any signs of mould.

Consider a fresh coat of paint as a bare minimum and the rest as needed.

The advantage of providing new paint, carpet or blinds is that it’s easy to document the condition that property was given to a tenant. Like starting off with a clean slate.

  • My word on Improvements

What does your property need? Well, that list can be endless so don’t think about it. Saying that though, tenants want:

– Storage so linen and built ‘ins do the trick

– Dishwashers, they love these just remember you’ll have to maintain it

– Ample kitchen bench space and storage

– Fresh paint

Most of all… Cleaning. Up next, because this stands out even just during your open house inspections.

The list can be endless here but do your best with the resources and time you have on hand. I will say though if you’re not good an DIY stay away because something done poorly is obvious, and then detracts all appeal to the property.

 

  • Cleaning

You can and should expect to get your property back similar to how it was handed to tenants less some wear and tear. Be sure that it’s clean and ready for your future tenants.  If needed hire a professional as that also proves the property was cleaned prior to the beginning of a tenancy, so hold on to any invoices.

You should ensure the property is left free of any rubbish or unwanted items.

If you’re anxious, take your own photos of the condition of the property when it’s ready to hand to the agent.

 

  • Repairs, Smoke Alarms & Keys

If you’ve been putting up with an oven light that doesn’t work or a leaking tap, now’s the time to sort these out.

Make sure all your repairs are done before putting a tenant in or you can promptly expect a call requesting this repair once tenants are in.

Make sure all of your light globes are working.

This is also the time to be Replacing smoke alarms or their batteries as well as making duplicates of keys so you can have sets ready for the agent and future tenants.

 

  • Photography

 

You might consider putting this step first if you’re happy with the presentation which you’re living there, alternatively, you can get your property photographed vacant or with Virtual furniture set up.

Either way, professional photography is a must these days.

Your advertising will appeal to so many more tenants. Professional photography is relatively inexpensive these days and a set of photos can be reused again and again until any major changes are made to the property. Definitely a must to get noticed.

If you have a floor plan from when you bought the property, this is always handy too.

 

Get a quote for a set of photos from your Agent, I find 5-7 shots do the trick.

 

  • Pricing your Rental Property

 

You should be provided with a refined guide of how much rent you should expect when listing your property, a Rental Appraisal.

Ultimately you want a range that’s been refined down within $20 – $50pw.

If you’re getting a few opinions, as you should, then be concerned if an agent is appraising your property a lot higher than any others.

Some do overprice their estimates in order to secure the business but this can lead to a longer time on the market and therefore a vacancy period where you’ll likely need to drop the rent as you go.

 

If you really want to “test” the market at a higher rent, do it for a week or two at most and then reduce! Your agent should be able to gage the interest and get feedback on price from prospective tenants, they’re usually spot on after having seen many properties!

 

If you have to test the market that’s fine but your properties advertising listings will go stale in the meantime and your ad placement will fall further down on the major sites.

 

A couple of tips;

  • Keep your power on and connected until new tenants are found.
  • Make sure you or your agent isn’t letting mail pile up while the property is vacant

That’s keeping it simple in order to get your property ready to go live on the rental market, your agent should be able to guide and assist with all of these steps and make sure they’re getting ticked off along the way inline within your deadlines

If you’re in need of opinion as to what your property might need, feel free to reach out for a Free Appraisal where I can Inspect and assess if you really need to make those improvements you’re thinking about and what they might mean for your bottom line.

Lastly, if you want to know what a Property Manager does well I’ve got a blog on that too here, might help convince you that you need one.

All the best and reach out if you need me 🙂
Antonio @ TMA

Changes to Residential Tenancy Laws – Read here for Updates

25/03/2020

Amidst the current Corona Virus climate, we’re adapting to the changes to the Residential Tenancies Act.

Whilst some of the new regulations surrounding Agents licensing won’t be enforced for a grace period of 6 Months, most agencies have already implemented new procedures surrounding their tenancies being compliant.

What are we hearing so far:

  • Owners not particularly liking tenants having their contact details, privacy concerns and the reasons why they have enlisted a Property Manager
  • Less emphasis on wanting fixed term leases, a lose lose for all maybe

The positive:

  • Tenants can sign electronic leases without needing a witness, a streamlined process for all

We’ll all adapt and innovate, as we must in these times.

Stay safe, Antonio


The latest release of up to date information issued by the Office of Fair Trading can be found here.

More information to follow here below as it comes to hand.

Antonio @ The Management Agency


9/3/2020

Further information is coming to light with regards to the changes coming into place on 23/3/2020 with many Property Managers hopeful we’ll have the complete outlook within the coming weeks, especially when it comes to the time frames in which all of the changes need to be in place, where some of these are immediate and others won’t be.

Here are some points I’ve been reading about;

  • New Leases from 23/3/2020 will need to list one of the Landlords points of contacts, whether it be an email address or phone number, this is set to be a requirement and a non-negotiable.
  • All Landlords will need to read and sign a “Landlord Information Statement” this will ensure that all landlords are aware of all of their responsibilities when a Lease is entered into, we are yet to get our hands on a copy of the prescribed form.
  • Similar to Smoke Alarms, properties will need to be tested and certified for Water Efficiency at the beginning of tenancies where Water Usage is being charged and recouped from tenants.

More to come as we approach the commencement date of these reforms,

Antonio @ The Management Agency

Read more

What does a Property Manager do?

1/11/2019

 

Ask any Property Manager that question and you’ll likely get a “What don’t we do” as a response, and in most cases they would be right.

Whilst many might think that a Property Manager’s role is simply monitoring and collecting rent, which let’s be honest, technology helps us a lot in that sense, there’s a lot that we do consistently behind the scenes that Owner’s do not always know about.

The bulk of my work, managing properties for my clients, is carried out behind the scenes, working on the finer details to ensure that their investment interests are always being looked after. Therefore, a lot of the workload is not always obvious or even seen.

If you’re weighing up if you need a Property Manager, consider what you would have to do yourself and if you would be prepared and have the time to do it effectively.

This post will also give investors a good idea of what the value is in having a Property Manager and hopefully dispel the theory that a Property Manager only springs into action when something goes wrong.

So, here’s a behind the scenes snapshot, of what I do for my clients.

 

All things Rent & Accounting Related

Collecting rent is not as simple as just that, there is accounting and a lot of compliance requirements that come with it not to mention the regulations regarding record keeping.

A lot of conversations had with tenants are surrounding rent, particularly due dates, status and the changing of payment frequency.

Reconciling missed or part-payments, following up on rent or tenant invoices, and then there is the allocation of these funds to the relevant clients. Also managing payments for client’s outgoings such as rates and bills, monitoring due dates for these payments to avoid interest and/or penalty fees.

When it comes to rent, we can’t forget regular reviews where all factors are taken into consideration to determine if and when a rent increase can be justified. Communication and compliance requirements come into play when reviewing and increasing any rents.

As an agent, a Trust Account must be in place to hold all monies collected on behalf of clients. In order to hold a Trust Account, legislation requires an agency to undertake on-going and regular self and outsourced auditing in order to be able to operate.

The technology I employ allows me to access records, documents, ledgers and transaction history from everywhere and anywhere.

This information and documentation, such as statements and ledgers need to be easily accessible and easy for all to understand.

 

Compliance

The one that scares most Property Managers is ensuring that their properties are compliant with the many rules and regulations across the Acts that we’re subject to, namely the Residential Tenancies Act (RTA) as well as the Property Stock and Station Business Agents Act (PSBA).

The RTA, for example, is reviewed every 5 years and amendments are made at this time. At times amendments may be made within the 5-year period and a Property Manager must know where all parties’ responsibilities lie within the Residential Tenancy Agreement at all times.

An agency and/or agent must ensure the Agreements used are compliant as well as our internal Practices, Policies, and Procedures.

Moreover, we need to ensure our landlords and tenants are complying with their responsibilities within the terms of the Residential Tenancy Agreement, communication and consistent follow up is needed here whilst educating landlords and tenants of their obligations.

There is also periodic compliance required for Smoke Alarms, Water Efficiency and Swimming Pools. These three areas alone need to be certified regularly by outsourced professionals.

It is imperative as a Property Manager to have a system in place which allows for regular monitoring, auditing, and record-keeping to ensure 100% compliance of the properties under management. Some aspects of maintaining records can be the keeping of notes, email records, compliance certification, etc.

In order to renew a Real Estate License, a Property Manager must undergo regular Educational training each year. However due to the nature of the role we are always learning whether it be via conferences or webinars, in order to keep up to date with changes within the industry.

 

Marketing & Securing Tenants

We always have to be at the ready when a tenant gives the notice to vacate to get started on our search for new tenants, and for me, this takes priority whether it’s a new listing or re-letting a currently managed property.

Preparing and editing our marketing to get a property online and Inspections arranged cannot be delayed regardless of the rental market as time is of the essence.

Pricing, Photography and Property Description all need to be on point.

Rental Properties need to be on the major portals in order to gain the most exposure to prospective tenants.

I aim to ensure that my listings are given a high priority with prominent positioning on the major portals that gather the highest levels of traffic.

From experience, landlords looking to self-manage, find that advertising is not that easy or inexpensive on the major portals. These landlords can also find it difficult and overwhelming to manage rental enquiries, let alone the process of securing the right tenant.

On a Recent Listing, I was receiving an average of 25 emails per day for over a week plus text messages and phone calls. Of those enquiries the end result is securing only one tenant for the property. The workload during this period can be demanding.

Beyond the initial Marketing, there are the showings, application processing, and tenant selection and therefore declining unsuccessful tenants. Then comes processes for collecting bonds, rent and preparing the Lease, Condition Report along with supporting documents and fact sheets, ensuring that all of the compliance measures have been covered for each and every property leased. Without missing any steps, they are all crucial in their own way.

 

At the Property

Regular inspections of Rental Properties are a must.

These are an opportunity to identify issues, whether they are concerns raised by tenants, potential issues that pose a risk and to forecast improvements.

Doing so is with the view of being proactive when it comes to ensuring that the property is well maintained and identifying maintenance before or as it arises. These inspections ensure that landlords are aware of what needs to be done and what will need to be done at the property, in order for it to maintain its value as an investment.

All of this needs to be communicated to the landlord within a report that is concise, detailed yet not too overwhelming. These reports document how a property is being maintained by the tenant and at the same time allows a landlord to plan ahead for any future upgrades needed.

Outside of these set inspections, Property visits can be for anything from allowing access for tradespeople, checking completed repairs, valuers, owner visits or anything that needs prompt attention.

I find it valuable to sign leases and lease renewals at the property itself as this provides another opportunity for me to view the property as well as discuss any concerns with tenants then and there.

Being mobile, available and willing to get up and go is a must. A Property Manager is the owner’s eyes and ears and that can’t be undervalued when considering the value of the investment.

 

Working with Tenants

Property Managers communicate with tenants a lot more than their clients might realise. They are essentially working for the client as their middle person. Most of the time, landlords won’t know or need to know what these conversations are about if it doesn’t require their involvement or input.

It could be a query that is easily resolved, a problem that can be solved directly but it’s a regular occurrence in any case throughout a tenancy.

My aim here is to be the client’s problem solver.

I believe in creating a courteous and open relationship with tenants so that I am always in the know about what is happening at a Property.

Therefore, being approachable and available is a must.

This is all of benefit to the owner and they can choose to be in the “know” as much as they like or opt to authorise me to use my judgment as they’re assured that I am keeping their best interests in mind.

It also goes to say that Property Managers have to have all of the difficult conversations. The rent increase and the I’m sorry the property is being listed for sale conversations etc.

 

Repairs, Maintenance & Improvements

Repairs and Maintenance are a significant part of the role. Although most are straight forward such as repairing and replacing fixtures and fittings within Rental Properties, occasionally they can be quite involved and ongoing.

For example, today it was an oven not working, a request for a Pest Treatment (standard as it warms up) but the day is not over yet.

I of course deal with Urgent Repair calls, but The Management Agency has the best tradespeople on board that has been tried and tested and will go above and beyond for me.

 

“A common misconception is that our tradespeople will charge our clients exorbitant rates, I find this is often the reverse. The trades I use are always mindful that Property Managers are the source of a lot of their work and for this, they wouldn’t jeopardize a long term and good working relationship by burning a Property Managers client.”

 

Property Managers coordinate the tradespeople, property access and expenditure whilst communicating options and approvals with clients. At the same time providing tenants with updates as well as dealing with any grievances that the tenants may have.

 A Property Manager can oversee complete overhauls of a Property and essentially become a Project Manager, to budget and time constraints.

More on that in another blog to follow.

If your property is within a Strata Complex, there are certain repairs that will be covered by Strata and your Property Manager should pass these onto your Strata Manager and liaise directly with them.  It is a Property Manager job to know whose responsibility certain repairs fall under.

 

Miscellaneous

Phew! This one could go on so I’m going to list a few odd jobs I’ve done in the last month;

  • Changed light globes (quicker and easier than claiming from a tenant’s bond)
  • Changed a Smoke Alarm Battery, beeping like crazy when I was inspecting a property
  • Multiple locksmiths trips to cut extra keys, particularly letterbox keys that always go missing
  • Ordered and installed spring pins for Plantation shutters, $5.00 on eBay instead of a min $100 call out fee. Thanks, YouTube tutorials.
  • Helped a tenant move Lounges out of a property after the owner ran out of time, arranged council to collect them
  • Left over floorboards in a Property, delivered to the owner’s workplace
  • Surface cleaning & vacuuming, yeah no one should really have to do this when they’re suited up for work but time constraints sometimes mean these things need to be done
  • Disposing of left-over unwanted items, vacating tenants can leave a lot of bits and pieces around after a move

Now!

I’m not advertising that I’ll do any of these odd things as part of my role, but when you’re tight on time or owner’s funds and something needs to be done then sometimes it’s just easier to do it yourself, then and there. Hence why the boot of my car is packed with spares parts and supplies.

 

So, it leaves me to wonder, how many Investors want to oversee, manage and generally deal with all of this and the other one-offs I haven’t touched on?

 

“Property Managers are essentially problem solvers and we use our knowledge and our many past experiences to come up with solutions for our owners and tenants.”

 

You might think, as some people have said, “How do you do that job, I could never.” Yes, I’ve made it sound tough because that’s the truth, but it is also a rewarding career and like most, it has it’s good and bad. For the most part, we’re out and about, free to move around and meet people, and when it’s fine-tuned and working efficiently it is manageable.

Similarly, to how we don’t service our own cars, some things are better off outsourced. Just saying!

If you’re weighing up if you need a Property Manager, consider what you would have to do yourself and if you would be prepared and have the time to do it effectively whilst meeting all of the legal requirements.

This turned out to be a very long post but I hope you’ve found this to be insightful and informative.

Thanks for reading!

Antonio

Sydney Rental Market Update

22/8/2019

A slight climb in Vacancy Rates is always the norm around June coming into the winter months but this June up from 2018’s 2.8% vacancy rate for the same month.

The figures don’t lie and it does represent a shift where there’s been much more supply to meet similar demand levels. Time on the market is what’s been most frustrating as tenants take their pick of what’s on offer and then making offers on rentals their interested in.

The winter months do mean a seasonal time for hibernation in a sense with not many tenants wanting to make a move unless they have to or really want to.

On the front line, I’m seeing less enquiries and fewer prospective tenants through properties overall. With some one-off offerings, that look like great value, tenants are turning up but many turn away when the offers been too good to be true.

The Key has been to keep your rent in line with other similar properties or pay the price in Vacancy, tenants will still apply if it’s the right fit but they’re looking at so many more properties than ever before looking for the best value for money, quality properties, position and access to amenities. Rent reductions have been key to getting properties occupied quickly otherwise they risk getting stagnant on the market.

Whereas usually you would see slight rent reductions done over weeks, many owners and savvy agents wanting to cut to the chase offer significant reductions knowing that some Income is better than none!

If you need any advice or want my opinion on your Vacant Property feel free to contact me.

Hoping for a more positive report next time with a little less on the market, though I know many tenants that are hoping it remains in their favour, obviously!

Personally, I feel it’s on the up much like the sales market where things are showing positive signs of improvement as is showing in July’s Vacancy Rate Survey Results, down to 3.0% from June to July, so just in time for some warmer weather. Yes the property markets are cyclical but also seasonal and Spring is just about here!

Residential Vacancy Rates (Inner Sydney):

Jan 2019        3.2%

Feb 2019        2.9%

Mar 2019       3.7%

Apr 2019        3.2%

May 2019       3.1%

Jun 2019        3.4%    June 2018      2.8%

July 2019       3.0%

Things are looking up just in time for Spring.

Antonio 🙂

 

How easy is it to Change your Managing Agents?

6/8/2019

Firstly, let me say it’s not like the daunting task of refinancing your home loan to another lender but we all associate with that task as being a huge undertaking. I wouldn’t know about changing banks though because like you, who has the time and patience for that.

BUT Changing Property Managers, isn’t that hard from the landlords, or even the tenant’s perspective which I’ve found is a real concern for a lot of landlords. They don’t want their tenants to be concerned or inconvenienced. Fair enough, but it’s a pretty simple process and one that’s largely undertaken by the new agent you’ve chosen to manage your property.

What does it mean for Tenants?

As an owner you might be concerned about the inconvenience caused to your tenants but this is it.

  • Tenant does need to change where they pay rent to, most agencies offer similar payment methods anyway and all need to provide a fee free payment option by law
  • The tenant has a new point of contact should they need anything
  • An inspection will be needed after the changeover for your property manager to familiarise themselves with the property and assess any outstanding or new issues your tenant might want to raise
  • It would also be fair that the new agent gives the tenant a brief explanation as to what initiated the change to give them some peace of mind

Not hard at all right? If anything, maybe your tenant will like the change and dealing with someone new or even more attentive. Who knows?

And for Landlords?

Three simple steps and these can be found by clicking here on my website.

Because really after these steps it’s up to your new agent to carry out a physical inspection and collection of your documentation relating to your property and its tenancy.

It’s that simple and straightforward that this is my shortest blog post to date.

If you’re thinking of making a change or would just like to have a chat about anything and everything Property Management feel free to contact me here.

Look forward to hearing from you.

Antonio 🙂

A Landlords Rights & Responsibilities – the brief run down

25/7/19

At some stage in the near future it will be a requirement that all landlords read and sign a disclosure that they have read and understood their rights and responsibilities – BEFORE – a lease can be signed but ahead of that I’m going to outline some of these as briefly as I can keep it.

I would be confident in saying that the majority of landlords would be well aware of their responsibilities and even their rights as a landlord and where I’ve come across that don’t, I feel it’s a Property Managers duty to educate and inform their landlords along the way. This ensures landlords are not unknowingly breaching their responsibilities as well as protecting their rights.

I think it comes down to a Property Manager looking after their clients Best Interests which in turn also ensures the property and its tenants are looked after as well.

TIP: Ask for a copy of a Blank Lease Template and you’ll be able to read everything that you’re technically agreeing to as a landlord.

So, I’ll keep this post really simple and lay out what an owner should / needs to be doing to look out for themselves first and fore most and for any tenants reading, this applies and assess who’s looking out for you!

  • Be Selective with your Property Manager, do not base a final decision purely on fees. You get what you pay for- always. You need to pick someone that’s efficient and communicative.
  • Present your property in the best way you possibly can to attract the best possible tenants
  • When selecting a tenant, you can choose the best applicant for your property, but you cannot discriminate purely religion or race.
  • Each and every repair is your responsibility (aside from standard light globes) try and have all repairs up to date before tenants move in.
  • Leases can be for 6 or 12 months, longer leases can be negotiated though
  • Landlord Insurance is highly recommended, with a bond consisting of 4 weeks rent it’ll do little to cover your financial losses in many possible scenarios
  • All repairs should be action as soon as possible with express requirements of Urgent Repairs. In any case, all should be acknowledged and tenants informed along the way. Your agent should be given your instructions on how to act should they not be able to contact you.
  • Smoke Alarms should be checked annually, an owner’s responsibility, all agents will recommend outsourcing this for a small annual fee. Invaluable for peace of mind!
  • Pets are more common than not these days so be open to the possibility; many apartment buildings have an approval process in place but you have the ultimate say. Give Pets consideration in order to open up your property to so many more prospective tenants
  • Your agent will do periodic inspections of the property, you should think of these as monitoring the condition of the property and how it is being maintained. These inspections are not necessarily to check the tenants living habits unless they are damaging or causing excess wear and tear.

Landlords, It’s not always fun. I called an owner the other day and had to promise her next time I called her I’d give her good news because it’s been challenge after challenge of late. So I called her and gave her my own personal good news, my wins for that week.

I get it, sometimes we just need to hear something positive and not just be thrown issue after issue.

And that’s what you have to do, roll with the punches. It’s not always satisfying to have tenants because of the rental income. The income goes straight away to mortgages, rates and bills, but having a happy tenant and a smooth-running tenancy can be very satisfying for many landlords.

You don’t always reach that point where all parties are consistently happy but if everyone is meeting their end of the agreement then that, is the bare minimum we should always all expect.

If you have any questions about this Post or anything else Property Management reach out to find out more about my services or simply if you just need to know where you stand!

Curious to see a copy of a Draft Lease, Email me and i’ll flick one straight back at you.

Antonio

Buying into ANY Strata Building

27/6/19

I recently posted a blog covering what to look for when buying into a NEW Strata Building and I had promised a more general post about buying into a Strata Complex that’s existing.

In light of the recent Mascot & Opal Towers matters I thought it needed to be written, aside from all that we’re hearing in the media, there’s a lot here but it’s worth noting all of these points!

I’d really recommend reading this and as much as you can before going out to look at apartments, you simply can’t afford not to. We now have in Mascot, uninhabitable properties where leases are easily broken and owners paying mortgages and extra levies with no income and a property they cannot occupy. I can not imagine the toll this is taking on peoples lives.

One thing that sticks with me is that we as Australians have more consumer rights and guarantees for an appliance than an apartment. Think about that for a second.

FACTS:

  • In NSW alone about 15% of the population live in Strata Apartments that’s over 1.1 million residents in NSW  according to the Australian National Strata Data 2018 report carried out by UNSW and Strata Community Association
  • A massive 48% of these are occupied by tenants
  • Nationally it’s 2.2 million so NSW holds a huge portion of Strata residents

As a Property Manager, property in Strata titled complexes i.e. a Strata Plan, make up the majority of rental properties managed for many agencies and many investors specifically choose to buy into a Strata Plan for their investment property.

So why do I invest and think others invest in apartments specifically?

When you buy into a Strata plan, you’re effectively buying allocated airspace, aside from what’s affixed to the floors and walls those structural floors and walls are owned by and therefore maintained by the Strata Plan.

So, if you get your airspace and fit it out well and maintain your fixtures and fittings then you essentially have less maintenance and easily lettable space, for everything else that’s a common area issue you can report that to your Strata Managing Agent but be aware of all of the following!

As an investor, your property manager should know what’s what and do the liaising on your behalf with Strata.

Essentially, I believe that if your property in a Strata Plan is in a good location and that the complex itself appears to be well maintained then you have a good investment but there are a few things to look out for and be vigilant about before committing;

Check the By-Laws              

Each Building has a set of By-Laws, rules to live by, that apply. A lot of these are standard but you need to know what’s allowed and what isn’t. Look for things like Pets, when you can and can’t move in and out, smoking etc. Definitely read through them all. Tenants MUST be provided a set of the By-Laws when they move in.

Carry out a Strata Search with Budget Forecasts included

Any Strata Building has running costs as well as forecast future upgrade costs. Make sure that the building has built up a healthy fund known as a Sinking Fund, that shows a decent balance for what the building will need down the track. New lifts, painting and sprucing up. Low balance and when necessary upgrades come up all owners will be hit up for some quick fund raising regardless of when you bought in. These searches will also show how good everyone else is at contributing or do are the arrears huge. Your conveyancer / solicitor should be able to seek and assess a Strata Search.

You’ll need to check some of the past meetings, you need to know what’s going on and that there is an owners committee that cares about the building.

I’d also be looking through as many common areas as you can, look for cracks, signs of damage or poorly maintained areas. It could be an indicator for a building where not a lot gets done!

Check if there are any capital works proposed or that might be needed.

This should be highlighted in the Strata Search and noted by your solicitor or conveyancer but you want to question and know if any major projects are in the works that might be at your expense. Things such as dealing with upgrades or concrete cancer involve a lot of work and long-term expense. They also highlight that the building may have issues that you don’t want to be part of or that won’t make it worthwhile investment. If you’re set to lease this property then you want to make sure that there’s nothing in the works that will be an ongoing inconvenience or turn off to potential tenants.

Any other planned developments in your area

Is your view going to be obstructed or street parking set to be lost due to a new complex going in? These are all things you need to know and can find out by filtering through Development Applications via your local council online or by calling. Take a walk around the area and try to pin point land that might be slated for redevelopment, this can effect infrastructure down the track and the availability of local resources. We’re also hearing a bit too often of damage to existing buildings when a new one goes up close by

How much are your Strata levies?

Now this directly affects your bottom line, each and every quarter. The more amenities the building has the more the levies. Do you need or want access to a pool or onsite building manager? Those costs go up over time and not down as does the upgrade of elevators the more a complex has the more it’s going to cost to upkeep and that’ll come down to how the sinking fund looks now and is maintained. Lots of Strata plans need to enact Special levies to raise money when necessary upgrades occur so you need to be aware of what the building will need down the track and be prepared to contribute. You therefore can’t always budget on the current levy amount as some buildings see that rise year on year, to one of my investments there’s been a 45% increase in 7 years.

Design & Appearances

Appearances, you know, can be deceiving. You need to have a thorough look at the building  and look at it as an outsider. Ask yourself:

  • Impression as you walk up to and through the building
  • Is it well presented and maintained, lawns and gardens tidy
  • Do the exterior, internal or common area walls have any issues like cracking, peeling or running paint etc.
  • Pay attention to the materials used internally and externally as well as the overall quality of the construction. If in doubt take someone along to inspect with you
  • If possible, research the developer, check out their other sites, their overall build quality and reputation. Good to see how other builds are holding up down the track, They NEED to have a good track record.
  • Is the car park well lit and dry? If it’s not dry then find out why

Internally you want to make sure the apartment itself has a good layout, light throughout the day and air flow are specifically important. Tenants look for these things. Make sure bathrooms have some form of ventilation preferably a window or at the least an exhaust fan. Not all apartments are the same, you want to make sure the bedrooms are reasonably generous and the living room. An internal laundry or fixtures for a washing machine at the least are valuable additions.

If parking is a feature then check its location and accessibility as well as the carpark generally, is it well lit, laid out and reasonably maintained.

Lastly on this point. You need to consider your ideal tenant that you’re seeking and it needs to appeal to that demographic, families, couples and singles all have differing needs so consider that when factoring in the location, size and layouts.

And FINALLY

Don’t look at an apartment and fall in love, really look around and ask questions. Do all of your due diligence and one would hope that you buy into a (hopefully) hassle free strata complex. Ask agents, ask Strata Managers and people in the area for advice on building history.

There’s a lot to think about, along with financing your purchase but these are valid points you need to consider before committing. If it will essentially be an investment property then you don’t need to be able to live there yourself and you personally don’t need to live it but it needs to be attractive to future tenants and have the right layout and management behind it, to make it a worthwhile investment in the long term.

It’s obvious that with the recent events impacting Opal & Mascot Towers that reforms are needed when it comes to Building Regulations which are finally being looked at. You can read the latest here on what’s being proposed by the NSW Government to step in and get involved on this important issue.

Happy to help with any advice you might need.

Happy Buying- Antonio