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A beginner’s guide to depreciation

Property depreciation is a complex topic for Property investors and a topic that’s best covered by going straight to the Specialists, being BMT  Tax Depreciation. So here’s their beginner’s guide to Depreciation. What it is, how it works and how investors can use it to take full advantage of the deductions that they’re entitled to. Of course, shared with their express permission.

Depreciation is the natural wear and tear that occurs to a building and the assets within it over time.

Property investors are entitled to several taxation benefits however many fail to take full advantage of the depreciation deductions available to them.

While most investors are aware of claims for expenses such as interest on their loans, council rates, property management fees and repairs and maintenance costs, depreciation is a hidden factor often not considered.

To help you better understand property depreciation, here are the answers to some of the most frequently asked questions.

What is property depreciation?

As a building gets older, its structure and the assets contained within it wear out – they depreciate. The Australian Taxation Office (ATO) allows owners of income-producing properties to claim this depreciation as a tax deduction.

What can you claim?
Depreciation deductions are split into two distinct categories:

  • Division 43 capital works allowance
  • Division 40 plant and equipment depreciation

The capital works allowance relates to claims for the wear and tear that occurs to the structure of the property and any fixed items. Capital works includes items like the roof, walls, doors, kitchen cupboards, bathroom tubs and toilet bowls.

Generally, any residential building where construction commenced after the 15th of September 1987 will entitle its owner to capital works deductions. These deductions can be claimed at a rate of 2.5 per cent per year for up to forty years.

Owners of buildings constructed prior to 1987 should still find out what deductions are available, as often these buildings have undergone some form of renovation which can result in capital works deductions.

Plant and equipment depreciation can be claimed for the easily removable fixtures and fittings found within the property. There are more than 6,000 different depreciable assets recognised by the ATO, including items like carpet, blinds, air conditioners, hot water systems, smoke alarms and ceiling fans. Each plant and equipment asset is assigned an individual effective life and depreciation rate.

Under current legislation, owners of second-hand residential properties who exchanged contracts after 7:30pm on 9th May 2017 cannot claim deductions for previously used plant or equipment assets. Investors who purchase brand-new residential and substantially renovated properties, commercial real estate or add new plant and equipment assets to a second-hand residential property can still claim substantial depreciation deductions.

How will claiming depreciation help an investor?

As the owner of a residential investment property, claiming depreciation deductions can make a big difference to your cash flow.

During FY 2018/19, BMT Tax Depreciation found residential clients an average first year claim of almost $9,000.

A BMT Tax Depreciation Schedule covers all deductions available over the lifetime of a property to ensure you maximise your cash flow and is 100 per cent tax deductible.

What is involved in completing a tax depreciation schedule?

BMT Tax Depreciation start by collecting the basic information needed to prepare the schedule. This includes simple details like the name you would like to appear on your depreciation schedule, the property address, purchase information and your property manager and accountant details.

Then, a property inspection is conducted. To make this as easy as possible, BMT can contact your property manager or tenant directly to arrange access to the property. A property inspector will count, measure and photograph all depreciable assets such as the flooring, light fittings, tapware and other items. All the depreciable assets found within your property will be recorded during the inspection and reported back to your local office.

From there, the depreciation and specialist tax team will review the information gathered and prepare your tax depreciation schedule. BMT can even forward your schedule to your accountant directly, saving you time.

Property investors who would like a quote on the deductions available in an income-producing property can Request a Quote online or contact one of the expert staff at BMT on 1300 728 726.

Article provided to The Management Agency by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit 
www.bmtqs.com.au for an Australia-wide service.

I hope you’ve found this post helpful and that it’s cleared up some of the questions you may have had about Depreciation.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, A local and Property Management specialist offering a one on one and end to end service for his Property Investor clients. For more information visit; https://themanagementagency.com.au/about/

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

Hello! A Blog about me, Antonio Mesiti

10/10/2019

A little blog about Me

I thought a proper introduction was well overdue. Considering I’m blogging about everything and anything related to Property Management I felt it was time that those reading know a little bit about me, my business and my experience in Property Management.

So here goes, and to keep me from boring you all I’ve enlisted my partner Nelson, to get this done Interview Style.

But first some facts for those of you that don’t know me;

  • I’m Antonio the Director and the Property Manager at The Management Agency
  • I’m 35 and first started in Property Management back in 2003
  • The Management Agency commenced trading in July 2018 after having taken long service leave at my past employer

Why is your Business called The Management Agency?

There are so many agencies out there and most offer Sales and Property Management services.

I wanted it to be clear that my agency is all about Management (Property Management) and in my case the Director is the Property Manager. It’s the Agency that’s just about managing investment properties and that’s what a Property Manager does.

What differentiates your agency from other Property Management Providers?

I offer a traditional Property Management Service but with a One on One approach, where the client’s Property Manager oversees everything from end to end. My clients don’t speak to my accounts department for account enquiries, Leasing team regarding the Leasing of a property or a Principal or Department Manager when they have issues.

They come to me and all of their questions are covered in one call, whether it’s about Leasing, Maintenance, Accounts or anything else, I’m across it because I run a smaller portfolio than most other agencies and know what’s happening at all times. It’s my job to be in the know.

“I use all the latest Tech available to me but my business isn’t just about that.

The Management Agency is more customer – centric focused than anything else.

People want access to tech but they still want service”

What made you leave full time employment to operate your own business?

My main motivation was the flexibility and level of responsibility that this role provides me. Unfortunately there’s only so far that your career can take you within an agency working for an employer in this field. In my experience Property Managers are, for the most part, undervalued until the moment they go to resign from an Agency. This and the pressure of the role contributes to the high turnover of staff in Property Management, it becomes quite detrimental to the overall working environment for those remaining. The loss of staff and therefore loss of knowledge has a flow on effect to clients and their properties where, for a time, everyone’s playing catch up. I have seen first hand the impact of this occurring many times over in my career.

What do you enjoy about Property Management?

Simply put, how my week is broken up into days where I’m either out on the road and days in the office, so no two days are the same and I’m never really confined to an office environment. I like to get out and about even though sometimes it feels like I’m on The Amazing Race.

I don’t think there are many jobs where you have the freedom to set your own week up and run it as you see fit, to be office bound but have the freedom to get up and get out as much as you like and when needed.

What do you NOT enjoy about Property Management?

At times, the uncertainty of the leasing process can be frustrating. You can price a property appropriately and although the feedback is positive, sometimes prospective tenants still don’t apply.

It is all part of the process and the only reason I don’t enjoy it, is my impatience in wanting to get properties occupied ASAP, securing the best possible applicants as I’m always striving for the best outcomes for my clients. Seeking as much feedback as possible though and taking it on board can help this process along but when you’ve done all the right things sometimes it’s a waiting a game to get the right person to turn up and fall in love with the property.

Why did you set up The Management Agency?

Initially to create a role that is flexible for me personally and professionally where I have the end say in how the business operates and with whom I work with.

Over the years, working within other Agencies, I found that staff (myself included) were always limited as to the time, effort and resources that they could devote to their clients and this along with other shortfalls results in Property Managers feeling as though they’re not servicing their clients effectively or to expectations. Unfortunately this does little for one’s confidence or job satisfaction.

It really made sense to operate a business where you’re addressing the concerns that clients have which are simply things like, the high turnover of Property Managers, dealing with multiple people and getting differing answers. Along with calls and emails not being returned, assurances not being met and the poor filtering of information to owners where there are multiple people involved in what can be the simplest of processes. I feel that The Management Agency eliminates all of these issues and grievances for both Landlords and Tenants.

So really, addressing these concerns and getting rid of limitations was behind my reasoning and more than one year in I’m seeing how this is benefiting my clients and am certain that I’ve made the right move.

What are you most Proud of?

Simply being a small business that’s doing well!

Where so many small businesses fail, which was a great fear of mine, I’m on track and kicking my goals ahead of my initial 3 year forecasts. I’m very proud of how far I’ve come in just over a year and that I’ve been able to learn so much in this time.

I’ve learned many aspects of operating a business that I had absolutely no knowledge of prior. So yes, I’m simply proud that I beat my fear of failure and have just put my head down and done whatever I have needed to do to get started and keep the business consistently moving forward.

What do you like to do in your down time?

A lot of nothing but lazing at home with my partner and our two cats. I mostly enjoy gardening which sometimes becomes more of a need to do than a want. At the moment spending a lot of time at home in the Southern Highlands where I do most of my admin work on the days when I’m not needed at the properties I manage.

Otherwise I love food, so cooking is huge for me and of course trying new cafes and restaurants as much as possible. I love to get out of Sydney and head into the country where my parent’s have a farm and really switch off, so at the end of a Saturday showing properties, you’ll catch me on the freeway.

Where do you see yourself in 5 Years?

I see myself still in this role with The Management Agency, however my goal is to obviously grow The Management Agency whilst retaining my core principles, business structure and ensuring the service my clients receive is the one they were promised regardless of whom it is servicing them from within the business.

I’m confident that I will require support as the business evolves but I do aim to always remain at the forefront of the business, meeting prospective tenants and clients and doing inspections. I just can’t be office bound all week long and believe a Property Manager must always be at the forefront and available to their clients.

Hopefully you’ve learned a little bit more about me. I think I’ve covered some good questions here but as always open to any questions you might have!

Thanks also to my very supportive partner!

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