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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 🙂

 

Buying off the plan and into a New Development? Read this!

26/4/2019

With so many New Developments being delivered in and around Sydney many of these new properties are being bought as investment properties, I’ve heard estimates of 200,000 new properties being completed this year alone.

It’s likely that this trend will continue, having been the first property manager to oversee the hand over, leasing and ongoing management of several new properties I thought it’d be useful to share my experiences of some common occurrences when buying new.

This is also a post that maybe a few of my clients would’ve liked to have come across before they had purchased, they’re Investment property off the plan or in a Newly completed building.

This isn’t to say in any way that they’ve made a bad decision but there are somethings that a developer or selling agent won’t tell you. I don’t sell so have nothing to lose!

Further to that, as a Property Manager it’s on us to foresee these issues where possible but some have been new and surprising, even to me.

NEW BUILDINGS MEAN, NEW…

  • …Defects

A new building is not and never without some form of defect or defects but owners and agents will be provided with a guide on how to deal with these and they should be reported as soon as possible to the appropriate person.

New Buildings are increasingly improving their procedures and the information they provide at handover.

Defects can be anything from patchy paint work, doors that don’t line up, appliances not connected (it’s happened) leaks or any number of teething issues.

The first tenants will likely pick up on these as they start to settle in so it is crucial to make sure tenants are assured that you want these issues reported and as soon as possible so that these defects do not become the owner’s responsibility down the track.

 

  • …Rules

Move ins (and outs)

Many newer buildings now require that tenants pre book they’re physical move in date along with a timeframe, some even require that tenants leave a deposit in case of any damage to common areas.

For the most part it’s to ensure that there aren’t an excessive number of move ins at any one time, or that the move will disturb other occupants. It also allows the building managers time to put up protection curtains within the elevators or assign a lift for the tenants use.

It’s also important to know if the building doesn’t allow moves over the weekend- have been caught out there, and never again. Weekends are tenants preferred move in dates so new tenants need to know well ahead of time and generally book well in advance is as they will decline requests where there are other bookings already set.

 

TIP: Make sure your agent has the appointed Strata Manager and/or Building Managers details so that they can obtain all the information they need.

 

Keys

Security keys, swipes and access cards are strictly limited in newer buildings where the aim is to really ensure the building is only accessed by those that need access. Definitely something to be mindful of if you have 3 Tenants, and your access limit is 3 security passes per apartment- this means no spare set available. See Costs sub-heading to follow!

 

By-Laws

Every building has its own set of By-Laws, these always need to be reviewed but especially within a new complex so things like I’ve mentioned above can be picked up.

New Properties should come with an Owners Guide which will include;

-By Laws

-Contacts for Developers, Builders, Strata and Building Managers

-Instructions relating to appliances and fittings

-Procedure for reporting issues, defects

 

Worthwhile sharing with your tenants as well!

 

  • …Costs

You’ve paid for a brand-new property but are there hidden costs? Well there may be.

If you have more tenants on a lease than you have security keys these need to be provided to all tenants listed on the lease, some buildings limit how many they’ll issue to each property- that limit could be just at settlement or a limit imposed permanently.

With a new building, will come a New Development Charge if your tenant wants to be connected to the NBN. Currently $300.00, as to who’s responsibility it is to pay is highly debatable. While the lease will state it’s the tenant’s responsibility, a lot of advice on this leads to fact that owners “should” reimburse tenants as that connection will remain with the property long after the first tenants have moved.

Does your property come with Blinds?

A worthwhile question asking at the point of purchase or you’ll need to provide these for tenants and arrange them once you have possession. From my experience most New Developments don’t come with any window coverings.

Repairs are inevitable with all rental properties and one would think that with a new property there would be little to maintain, and you would be right as most repairs would come under defects so reporting these are crucial in the first weeks.

 

  • & Look out for!

When doing your Pre-Settlement Inspection, which should be the time you’re looking for defects is to take a close look at the finished paint job.

Not only obvious patchy paint work but it’s sometimes obvious that new apartments are only given one undercoat and one coat of paint, you’ll be able to tell by the appearance and it is especially obvious on any internal door frames.

Have a feel of bench tops surfaces and floor boards, while everyone loves the look of raw materials in many cases, I’ve seen unsealed surfaces that are no good when it comes to every day spills and these materials will soak up stains. While the builders may not rectify this it’s something that should be detailed at the time of purchase, specifically materials and finishes. Whatever assurances or inclusions are promised- get it in writing!

 

TIP: Agents need to make sure that the Strata & Building Managers know who is managing the apartment and ahead of any tenants moving in. They need contacts in order to resolve any issues.

 

  • …Competition

When a new building gets its final tick of approval, AKA an occupation certificate, new owners will rush to get their keys.

Then the individual properties will start to surface on the rental market and where the properties are all new and appearing online one after the other, pricing is everything.

Your pricing really will be based on how your property sits against the others. Is your floor plan more practical and spacious? Do you have a better aspect?

What I did in a recent situation was unashamedly attend the competitions inspections, being upfront about who I was of course to see where we sat compared to other properties and priced it accordingly.

Thinking as a tenant though, if you’re looking in a new building, you’re also likely to have a look at as many available properties as possible and they’re likely to have their pick based on preference.

 

TIP: If you’re paying for professional photography, have your photos watermarked with the agent’s logo- or it’ll be a free for all to use- at your expense.

 

Up Soon –  I’ll cover some General Tips for Strata Buyers

My Take on the 2019 Rental Market

17/12/2018

This late in the year it’s now most likely that a lot of property owners, unfortunately, will be seeing their properties sit vacant over the Christmas period until significant numbers of prospective tenants hit the streets in mid-January and onward.

This is not from a lack of trying as seeing first hand, properties being offered with incentives such as rent-free periods and some significant rent reductions offering good value to tenants that are willing to move just before Christmas or start their year off with a pre-planned move. I’m also noticing properties listed for Lease with multiple agents, prospective tenants notice that too and sometimes find that a bit off putting.

Come 2019 several new high density developments are set for completion and continuing development will be adding onto an already constant and ample level of supply.

Tenants typically have the rental market in December but mid to late January and into February typically does see an increase in demand for properties.

My thoughts are that we’ll see a slower than usual January with only properties with the best offerings and value for tenants being snapped up first.

Predicted Growth Areas / The one’s to watch:

Several suburbs are being eyed as the ones to watch in 2019 for both an increase in rental demand and interest from investors, touching on a few of these areas where we manage property there are also other suburbs being closely watched on the North Shore, areas such as Brookvale and Millers Point.

-Eveleigh

+ Carriage works developments

+ Growing and evolving Commercial Technology Park with several notable occupants

+ Proximity to Arts / café scene i.e. Erskineville, Newtown & Redfern,

+ Ease of access to transport & the CBD

-Waterloo

+ New Apartments

+ Danks Street precinct

+ Metro / Train line under construction (Raglan & Cope Streets)

+ Proximity to CBD & Airport Access

-Maroubra

+ Affordability where compared to Coogee & Bondi

+ Beach side lifestyle

+ Gentrification continues

+ Access & infrastructure improvements in the works

-Breakfast Point

+ Walking Tracks, Parks on the Waterfront

+ Quality development of well designed communities

+ Easy Ferry commute along the Parramatta River

What do I see ahead for the New Year?

  • Amendments to the Residential Tenancies Act coming into place, read what this means for you in my Tenancy Reforms Blog Post. Changes will impact tenants, owners and agents alike and change the way many of us do business and what we as Agents and Owners offer to tenants
  • Reforms and changes to licensing rules and training requirements for Registered and Licensed Real Estate Agents
  • Very slight rent increases with more owners opting to secure and retain good tenants, owners will be more conscious of minimising vacancy and prioritising keeping their tenants’ content especially considering more flexibility for tenants to be able to Break their leases down the track and fluctuating vacancy rates
  • New rental supply from developments nearing completion in growth areas such as Mascot and Green Square which will see rents in these areas flatten out due to competition
  • Increase in Vacancy Rates due to new apartment development stock
  • Landlords holding onto their rental properties and holding back from selling where they can buffer for vacancy and rents that aren’t increasing
  • Influx of first home buyers which could spell and increase in investors as well as tenants moving to purchasing in a down Sydney market. A third of first home buyers are said to be rent-vesting instead of buying their first home.

And with certainty, much media hype about the doom and gloom of the Sydney Property Market so definitely a lot of attention will be focused there throughout the year. So in that regard nothing is unchanged from 2018 🙂

As the New Year and its cycle take us where they will, there’ll always be the need to navigate through new legislation, ensuring compliance and working through an ever-changing rental market and I’ll keep on blogging about it all.

Next year i’ll be bringing you some new blog posts regarding Depreciation Schedules, yields and return on investment and hope to have some guest bloggers on board from the world of finance and buyers’ agents in the New Year as well as well as some worthy content to my clients in my E-Newsletters.

What do you want to read about though?

If you have any suggestions as to what you’d like to read about in 2019 feel free to reach out, I am always open to thoughts and suggestions!

Best Wishes ahead of the festive season and thanks for your following this year 🙂

Antonio

Sydney Rental Market Update – November 2018

21/11/2018

Meet the Market, Instead of Testing It

Within the last week I’ve read conflicting reports about the state of Sydney’s rental market one quoting vacancy rates are down and the other stating the opposite. So what am I and fellow Property Managers seeing on the front line?

Amidst the doom and gloom of a weakening Auction Clearance rates and Median sales prices, for Property Managers of late it’s been business as usual when considering this time of year typically does slow down in terms of availability and lettings.

Looking at the Inner Sydney Market Vacancy rates:

November          2017 – 2.1%

August                2018 – 2.9%

September         2018 – 2.4%

And most recently October 2018 upwards to 2.8%.

So whilst this is a fluctuating market we are at the end of what is typically known as a property boom especially in the Sydney and Melbourne markets.

Despite all of the negative media attention (doom & gloom) I remain quite positive about the assets we manage within Sydney.
There is always a fair bit of hype surrounding vacancy rates but look at the supply that’s coming to the rental market but remembering that the type of supply is not typically suited to all. We still have tenants wanting character filled terraces and art-deco style apartments over new, off the plan high density housing.

Speaking with other Property Managers they feel that properties that good quality properties with attractive features are leasing and especially where the rents reflect the market.

In terms of rents I personally haven’t carried out any increases or tested the market when re letting simply because the market isn’t reflecting an increase. In these cases, it’s seen that minimising vacancy is the highest priority with clients wanting to meet the market instead of testing it. From my conversations with other agents, many are not reviewing or recommending rent increases for current tenancies.

In many cases, first hand and as discussed with other Property Managers, properties can take a week or two longer to lease but it’s not all about dropping rents. Investors can still thrive in this market where logical decisions are being made and the agent does all that they can to ensure every opportunity has been explored.

Just as it is in the sales market, it’s not all about putting a property on the market and opening the door, agents must work harder and go out of their way to achieve results.

A good test of the Sydney rental market and vacancy rates will be in the New Year where rental properties are typically in higher demand, we just need to get through the festive season and later judge if 2019 can bring about any rent increases, otherwise it might be best not to rock the boat.

EIGHT FEATURES THAT WILL BOOST THE RENTAL RETURN OF YOUR PROPERTY

9/10/2018

Considering that Sydney experienced some unusually high vacancy rates over the past 3 Months I can say first hand that savvy tenants have had their pick of properties, locations and the amenities on offer.

In good news though, things have picked up over recent weeks with properties being tenanted quickly but it’s got a lot of Property Owners thinking and planning ahead to make sure they’re well placed ahead or amongst of the competition down the track.

We all know renovations and improvements don’t happen overnight so planning ahead or at the least keeping in mind that new kitchen down the track is something owners can do to prepare for reletting their property next time around.

I’d add to Kate Farrellys’ article below is, but maybe it’s a given that, there’s nothing like a fresh coat of paint!

”It’s never been more important for investors to understand which features deliver the best rental return” writes Kate Farrelly for Domain.

  1. Generous outdoor space

For Castran Gilbert BDM Andrew Rowland, big courtyards and balconies – those measuring 20 square metres or more – are paying dividends for investors.

In recent weeks he fielded above-average interest in a Mordialloc (Victoria) ground-floor apartment with a 25-square-metre courtyard on title. It leased at the asking price ahead of three upper-storey apartments in the same block, which are still on the market.

“Tenants are willing to pay a good amount more to have a good courtyard, particularly if they can have pets there. People go nuts for a big courtyard,” reports Andrew Rowland. A large private outdoor area will always appeal to tenants, who will pay a premium for such space.

  1. Pet-friendly

Michael Matusik, independent housing market analyst and director of Matusik Property Insights, says investors can achieve a rental premium of up to 20 %  for a pet-friendly apartment.

“Being able to have a small dog or certain animals is a real plus in the rental market,” he says, pointing out that owners who would otherwise be forced to give up their pet are often happy to pay extra rent to keep their animal.

My own experience shows there is more and more demand for pet-friendly places.

  1. Ample storage space

We find that a storage cage is an important feature with new apartments, as they sometimes lack internal storage – a cage allows for the storage of large items such as spare furniture, bikes, etcetera. Downsizers frequently have overflow belongings requiring storage, as do those with sporting equipment such as golf clubs and skis.

  1. Secure parking

Drive-in, secure parking is a definite plus for tenants.  Tenants prefer the ease and security of their own parking space and will pay extra rent for one or two spaces. It’s best to steer clear of stackers and car lifts, which might offer off-street parking in busy areas but can be a big turn-off for (particularly older) tenants.

  1. A nod to current trends

Timber floors are really popular, but if not then new carpeting is a major plus for tenants. Let’s add staying away from some trends! Think long term.

  1. A pleasant outlook and a northern aspect

While not everyone can afford a new apartment with a water or city skyline view, our experts agree you’ll always attract a better rental return if your property has a pleasant outlook from the living spaces and balcony.

“Tenants want to feel a sense of space, to see some sky, to see some trees. They don’t just want to look at a wall or panes of frosted glass,” states Andrew Rowland. We find many tenants look for apartments with a northerly aspect to maximise light and sunshine, and in the absence of these features the property can have a longer vacancy and a lower return.

  1. A size to match the demographic

“The returns are absolutely better on one-bedders in the inner-ring suburbs close to the city,” says Melbourne-based Rowland. “But once you get to the middle ring, two-bedders take over.”

Michael Matusik says one-bedders deliver high returns in locations where they attract premium professional tenants, giving the example of a doctor wanting to live close to a hospital. But elsewhere, Matusik says, apartments with two bedrooms and two bathrooms that allow share households generally deliver the best rental dollars.

  1. Location location location

Of course, real estate’s golden rule of location remains critical for securing a top rental return.

And when it comes to apartment living, Matusik says the increased density needs to be offset by quality outdoor and lifestyle amenities. “You’re trading your inside space for your outside space,” he says. “So, you need to ask the question: Can I go for a run, can I walk the dog, are there decent restaurants and coffee shops nearby?”  Matusik reports apartments within a five to 10-minute walk of transport will attract a higher rent, as will properties within walking distance of employment hubs, the beach and thriving shopping districts.

Source: Domain.com.au Article by Kate Farrelly

Established in Winter with remarkable growth and results

28/8/2018
The Management Agency springs to life in Winter!
Cold and dry pretty much sums up this past winter with colder days then ever before and little of that much needed rain. Throughout this season though I’ve felt that The Management Agency has already grown and hit some major goals.
Winter saw inner Sydney vacancy rates rising by 0.4% to 2.8% while outer Sydney areas experienced even higher vacancy rates.
In the Industry there’s been nothing but talk amongst Property Managers of reduced enquiry levels, open home inspections with no prospective tenants turning up and agencies doing up to 40 open homes of a weekend! I’m sure some have fared worse.
Here at The Management Agency and just two months since having established we’ve had little share of the vacancy but tough times have a way of making agents more resourceful. Well speaking for ourselves anyway.
I find I’ve been more inclined to go that extra step to securing tenants, Inspections outside of working hours and additional inspections outside of normal open home times.
Updating our owners as the inspection finishes and much to the surprise of other agents – my calls to them seeking advise on pricing, advertising and seeing how they’re travelling. Nothing wrong with some networking surely.
Some of our properties have still managed to lease on their first showing having been updated and presenting nicely along with being competitively and realistically priced from the outset. Most valuable to me has been meeting prospective tenants first hand and getting some great feedback about what they’re seeing in the Sydney rental market. It’s been an ongoing education and invaluable meeting future tenants first hand for myself.
Tenants have by far been inspecting more properties on a Saturday than most agents would be and they seem genuinely happy that they their fair pick of properties.
So it’s been a busy winter really ensuring that all bases have been covered in leasing and managing properties that are new to The Management Agency.
We’ve listed properties from new investors, enjoyed some great referral business and taken over managements from other agencies. We’ve therefore been busy inspecting them all and ensuring our new clients are seeing a difference for themselves.
The Management Agency is growing organically and at a great pace, so far the feedback from our tenants and owners has been nothing but encouraging.
I am very excited to see what Spring holds for us, no doubt some new challenges and projects and as always an interesting rental market.

What to do when your property is sitting vacant

24/7/2018

With all this talk  and truth behind Sydney Vacancy rates, we look at what property owners and agents should be doing to get prospective tenants through their doors.

Settle in this might be a long one!

Every Property Manager and Property Owner, I’d expect, will start getting a little anxious at some point when the weeks and open for inspections are passing by and a property still is not leasing or in some cases, not even attracting prospective tenants to turn up, let alone apply for the property.

This is always a bit of a tense time. The property is not bringing its owner in any income and therefore the agency isn’t collecting any fee’s either.

How this period is handled though on the agencies part can decide though how long the property owner will stick with their current agent. If the relationship has already been fraught with other issues then this could be the deal breaker if the agent is not being as proactive as possible, making the right recommendations and genuinely trying to “sell” the listing as best possible.

Basically, it’s time for the agent to work to secure your business.

Property owners rely on the agent to pass on feedback and make these recommendations but if time is passing and there haven’t been many people through the property or any applicants then someone needs to get proactive, owners get involved or ask your agent to if they’re not already across this.

Let’s be positive and seize some opportunity with my:

5 P’s to get Prospective Tenants through your door.

Presence

There is always room for improvement, check over all of the details, text and photos of your online advertising. The key being to Rewrite and refresh headings and text to make sure it flows and is clear to prospective tenants.

Photography

If you’re photos are dark, unaligned or you’re reusing obviously old photos then it’s time for a photo shoot. Professional photography is a great investment, inexpensive and keeps your ad in line with the majority. Done well they can be reused for some time. If professional photography is not an option then your own photos will do but check them and check them again, making sure the lighting is right and you’ve included your properties best features. Leave out anything that’s unnecessary and it also helps to ensure the order is appropriate e.g.) Bathrooms should not be the first and feature photo!

Placement

If your property has been sitting online for some weeks then your placement online has likely dropped well below any new listings and it’s likely the Ad itself has shrunken to a smaller listing when searching by area and amenity. Sometimes it’s worthwhile paying to upgrade your listing with domain.com.au and realestate.com.au. A small investment to get your, once refreshed, Ad back in the game and to get prospective tenants to click on your property.

 Property Presentation

Your property is vacant so something that’s not an issue is gaining access! If your property is sticking on the market then as an owner it’s an opportune time to go and inspect it, take your spare keys, collect the agents copy or meet the agent there. Now is the time to add value, and by adding value I mean adding to give value to prospective tenants. Have a walk through as a prospective tenant would view the property and attend to anything that needs maintaining. Think of it as an opportunity (however inconvenient the timing) to refresh, improve and update.

An important part of presentation is how your property is shown and by that, I mean the bare minimum should be being carried out by the agent showing your property. It’s obviously not the hot rental market it has been and we as agents need to do more than just open and stand at the door. Be early, open up blinds, turn on lights and welcome questions and feedback that prospective tenants might have. Agents should be finding out what other properties prospective tenants are seeing and get their feedback on your price point.

Pricing

Of course it comes down to this in many cases. Scour through similar listings online and place your property up against others that offer the same number of bedrooms, bathrooms and amenities. Compare locations, presentation and decide which you would prioritise to go and inspect on a Saturday.

Price is everything so if you’ve covered all of the other P’s listed here and are sure you’ve covered all bases then it’s time for the asking rent to match or beat the market. Rental price achieved is never a permanent thing but as many smart investors know, weeks and weeks of unnecessary vacancy can be much costlier then not meeting the market at the time.

Agent’s should be making recommendations and suggestions in terms of pricing along the way, not an ideal conversation but one that must be had! Don’t let it sit too long trying to achieve a rent that the market just isn’t there for.

(Picture source)
0% Vacancy Picture a Screen Grab of our portfolio #humblebrag

Need suggestions or an obligation free review of your properties online advertising, feel free to give me a call!

Burr, it’s Cold in here!

1/7/2018

Winter is well and truly here and with that it’s typical of most rental markets to be slightly quieter meaning more properties available and less prospective tenants wanting to make a move during this hibernating period. So, it’s not generally a great time to be Increasing rents depending on supply and demand levels in your area and it’s more so a time to be ensuring that owners are on top of their maintenance.

For most this means ensuring gutters are clear and any roofing works are taken care of. Property Managers fear heavy downpours and subsequent roof leaks. Roofers willing to jump up on a roof in wet weather are more than rare!
Tenants should be encouraged to report any signs of dampness or full gutters to their agent or owner, don’t forget tenants are our eyes and ears and we rely on them to report maintenance.

Spending a couple of hundred dollars on scheduled gutter cleaning for houses and terraces can save thousands in the long run and have your roofer check for any minor repairs whilst up there so you can aim to be proactive instead of reactive.