Friday, December 12, 2014

The 'staying put' effect... positive signs for investors.

It's looking like a great time for South Australian property investors. 

In property investment news this week we saw articles such as 'Australian Landlords take record debt as rent yields fall'. From reading the article, this headline is based on there being an oversupply of rental properties in the market. Sydney and Melbourne produced the lowest yields across the country for investors but this 'oversupply' combined with escalating prices may be isolated to those east coast markets, and not affecting the entire country. It certainly is not the case in South Australia – rentals are very strong in our market.

As a result, our leasing teams are seeing increasing numbers of tenants who are deciding to renew their lease due to the extremely competitive market. Tenants are even offering a higher rental amount than they are currently paying to ensure they secure a place to live. It is very competitive at the moment. 

Toop&Toop saw this trend start late October and reported it to you with my Inside Story headlined 'Fear of missing out has hit the rental market!'. What we are witnessing is a new cycle of rental increases under way, and once this cycle starts, it's hard to stop the momentum! Landlords are happy and tenants are no longer feeling the control they've previously enjoyed in the market. There is a much healthier balance between tenant and landlord now. As tenants see less stock on the market and become worried of not being able to secure something else, they are opting to renew. This behaviour fuels the whole rental market... and the 'staying put' effect starts to infiltrate. This is what is happening right now.

This December, we are seeing the full effect. Last December our stock level was up 180% (to the date, 13th December 2013) from what it is now. This is an incredible statistic and this 'staying put' effect is having a direct, positive affect on securing returns for our landlords.

Chatting to other agents earlier in the week, this firming of rents is happening across the whole South Australian market. Some smaller operators have just a handful of properties available... others have none! 

According to data from SQM, Adelaide currently has one of the lowest vacancy rates of 1.5%. Compare this to Sydney at 1.6%, Brisbane at 2.2% and Melbourne at 2.5%, Adelaide is in a rental property shortage. Sydney's 1.6% initially seems odd, but the headlines of yields falling is a direct consequence of rapid rises in property values and a lag in rental increases. 

Across our Toop&Toop portfolio, our vacancy rate is currently sitting at 0.66%. This is phenomenal news for our landlords. It is clear the current investment market is extremely tight. We expect to see 28.7% of our total stock become available between now and March next year – yet we are seeing this extremely low vacancy rate. It is apparent that rents will be under a lot of upward pressure if this trend continues.

Tenants are opting for shorter leases to 'get them through' until more properties become available, but those properties as of December have not eventuated. Other tenants are seeking a rental property as a stop gap while looking to purchase a property as they have been unsuccessful in this strong selling market. It's certainly a hot market right now, for both buyers and renters, and investors are finally beginning to experience the inevitable flow-on effect.

What do the official stats say? According to RP Data, Adelaide recorded the strongest annual growth in house rents at 2.8% in the September quarter review. 

Looking ahead, we no longer expect the severity of the seasonal flood of stock to hit the market in January, and given stable prices in South Australia, we're definitely not feeling oversupply nor a dip in gross yields.

Investors, this is as good as it gets! 

Thursday, December 04, 2014

December Distractions... It's an industry thing.

In our real estate world, December marks the start of 'trading' season. Traditionally across Australia this is the time where many real estate agents re-assess their business and contemplate any career moves. It also happens to be the time competitors traditionally step up their hustling for sales representatives to defect and move to their 'amazing' businesses.

While on the surface this 'trading' season may look like it has nothing to do with buyers and sellers, it can actually impact them a lot more than you would think.

If not managed extremely well, there is an immediate impact to vendors if a sales representative leaves a company. Some moves happen quite suddenly and 
if a real estate agency doesn't have smooth processes in place to transition vendors to a new agent, the disjoint can impact negatively on their sale process. 
In other cases the moves are planned to a tee whereby the agents have all their sales agency agreements expiring in sync with their planned move, and many vendors are faced with conflicting loyalties. This is a terrible burden to impose on clients.

Changing to a new sales agent within the same company is not necessarily a bad thing, in fact it can actually be VERY beneficial for your sale. We find that it brings a fresh energy and sale strategy to the table and re-invigorates a campaign. But the agency has to be geared up with a seamless process to get the best results.

A company's recruitment strategy can also give vendors a key insight into how the business is run and the type of service levels they could expect to receive. In the marketplace for example, some businesses have 'a numbers game' strategy around sales recruitment. This group will typically hold large scale career nights to attract big numbers of people to the profession... knowing that realistically, only a small percent of these people will work out. This type of strategy is not suited to Toop&Toop because it can directly affect clients and their property sale. With large influxes of new industry recruits, sellers may (without even knowing it) be allocated a sales representative who is not adequately experienced or skilled to get your property the best result possible.

The way we operate at Toop&Toop seems unique. We appear to be one of the only real estate agencies in Australia who do not run a head hunting program for staff. We are proud to have one of the most stable and experienced sales teams in the country with 50% of our team working with us for over 10 years. As a consequence we are seen by many as being exclusive and hard to get into as a company. 

We don't see this as a negative. We are proud to be exclusive in our sales recruitment. The role of a sales person should be hard to get into and come with high levels of accountability. Given we deal with people's largest assets, only the highest level of trust, knowledge and performance should be expected by clients from a premium agency like Toop&Toop.

We currently have the unique position in the market with so many experienced, time proven and knowledgeable team members blended with younger passionate sales partners who bring energy, excitement and their own experiences to the table. This creates the perfect mix for our business leading into the next generation.

We work with sales people who have some runs on the board and who have the proven drive to go to the next level. We want to work with agents who are excited to do things differently and thrive on getting clients the very best results. We equip them with the best tools available anywhere in the world, and we train non-stop. 

Just like Harvard, our benchmark and expectations on our team are high and it's because of this the Toop&Toop brand is known for excellence in the industry.

What's in it for our clients? For potential sellers and buyers, this means you can have peace of mind when you call Toop&Toop and that you are only dealing with passionate, experienced and knowledgeable agents.

Anyone wearing a Toop&Toop name badge has earned it. 

Thursday, November 27, 2014

Three topical subjects today.

What is the market doing?

So how is the market tracking right now? It's been amazing. Vendors and buyers are still in full swing and the race is on and being run right to the end of the year! Sales and rental activity have been simply incredible. We think it will continue right up until Christmas Day.  So we want more listings right now, today... of properties you are looking to rent or sell. 

2014 is finishing in spectacular fashion. It isn't a boom in the traditional sense. Prices and rents are not leap-frogging and buyers and tenants are generally remaining rational. However, it has been fast and furious particularly in the prestige and trendy more-affordable space.

For example, if you have a character property in the Parkside or Prospect areas around the $600,000 to $800,000 price range, or a rental for $500-700pw, you are likely to see true boom-like behaviour.

Conclusion: Toop&Toop want houses to sell and to rent for December and January. Ring any of the team right away. Let's get moving on it.

Toop&Toop's new press ad layout... what do buyers say?  

Now onto Toop&Toop's new press ad layout. Genevieve initiated and drove this with Matt Kenny, who heads our advertising studio. They consulted with external experts, The Advertiser and focus groups and the layout was built on the 'new age' way readers engage with the paper. I love it! Bold? Yes. Strategic? Yes. Like any industry, when you do something different that is challenging the norm, your competitors vocalise about it. It seems our industry is no different, and they have been very negatively preaching about it. But for us, who know the research and logic behind it, we have been pumped over the sales results we are getting from its power! It took us to the number one position in The Advertiser real estate lift out, and has been a hit!

Buyers are hungry for big, beautiful images, and for fast easily-digested information. Buyer behaviour has changed enormously... we all know that. For us, the purpose of having press advertising has changed, it is there to capture the casual looker. It is no longer focussed on attracting the hard core house hunter. This is why newspapers all over the world are dramatically changing their formats and changing their mix between press and on-line. Those in the know understand the changing behaviours and research supports fast consumption of information followed up with effortless access to detail rich online. Toop&Toop understand that your very best buyers are the 'unintentional' buyer. This is the spontaneous emotional buyer, not the house hunters who hunt relentlessly for property and love researching online. The classic example has been properties we have sold from SA Life. Most haven't even been looking for a property, or have been referred from friends who spotted it. With the new large format Advertiser Real Estate Lift out, the power is in finding unintentional buyers, house hunters no longer need it. All credit to The Advertiser, it is working. Our results are undeniable.

Conclusion: Competitors, instead of gossiping ignorantly about our marketing, why not concentrate on your own? The way buyers behave has and is changing fast and we need to move with this, not ignore it. Buyers and sellers, enjoy the uncluttered elegance and our beautiful pictures. 

Be sure to use your smart phone to go directly to any Toop&Toop property that catches your eye. All our client's properties' have exclusive web addresses, where you get to see up to twice as many images including video's not available on any other portal... Members of our get to see properties that have not yet been released. It's so easy, type in the street number and name followed by (eg. and you are there... you can even type in a specific feature like try it! 

My Maintenance – ground breaking innovation for Landlords and Tenants. 

Finally, to INNOVATION. Tenants and landlords will be rapt to finally see their service levels take a big step up, and running costs down. We end 2014 with the launch of My Maintenance (MM). It will initially help our 2,000 Tenants (we call TenantClients) to report any maintenance issues that they are experiencing and it's available 24/7 in a clever, simple and painless way. It has the smarts to solve many common issues instantly.

Suzannah and her team have developed a solution for the frustration and complexity of providing cost-effective maintenance for investors. Initial feedback is that tenants and trade suppliers LOVE it. This is a breakthrough. As a technology solution for organisational reform with suppliers, it's a project management system which will cut costs, while dramatically increasing service levels, and a communication hub for TenantClients and LandlordOwners. It's very, very cool.

We are certain this is the first of its kind in Australia, possibly anywhere. It is an entire maintenance system. 

Our TenantClients were all invited to drinks and a movie Tuesday night to celebrate a new era and to hear and see My Maintenance technology first hand.

All Toop&Toop TenantClients can now access this service as we are running a Beta version for December and then the full launch is set for late January. It's live now, and Suzannah will be talking much more about this as it ramps up.

Congratulations Suzannah, our Property Management Team and our IT gurus. This is your baby guys and I only wish I had been clever enough to think of this. My only excuse is that the technology wasn't available.

"The biggest breakthrough in efficiency in managing investment property since the computer." These are my words not Suzannah's... I am a very proud Dad!

So to wrap up: Sales and Leasing has been at near-record levels. We have reinvented and modernised old fashioned paper advertising; we are rolling out the 2015 version of the VirtualAgent selling system in the coming weeks; and this week we upped the ante in managing properties with the launch of My Maintenance.

Exhausting but exhilarating...

Anthony Toop

Thursday, November 20, 2014

Property investor secrets... create the right 'feel'.

Australia is making its mark globally for the level of accommodation offered to tenants. Chippendale (a suburb in Sydney's inner west) headlined in the media this week as the 'World's Best Tall Building'. The address is One Central Park... if you haven't checked it out you definitely need to Google it... what an amazing building! 

Boasting the largest vertical garden with 35,000 irrigated plants which cascade down 1,100 square metres of the buildings' exterior, Executive Director of Council on Tall Buildings and Urban Habitat and a competition judge, Antony Wood said, "Seeing this project for the first time stopped me dead. Nothing on the scale of this building has been attempted or achieved."

An interesting discussion flowing from the articles is, "What impact does a building like this have on those who live in it to make it so attractive to tenants?"

One of the residents in an article titled 'Why I love living at Central Park' commented on the 'feel' of the building, how the greenery and 'earthly' vibe of the property is what makes it so unique. Other features the resident raved about are the amazing 'outlook' and the 'vibrancy' and 'energy' of the building – no mention of bedrooms, bathrooms or built-in robes! 

I was a tenant myself for seven years, and the comments from the resident of One Central Park are spot on. A building, or property, can have a great vibe and so often it is the 'feel' that a tenant is looking for – whether they realise this or not. The vibrancy or great vibe can be all it takes to have tenants who rave about your home. Some properties we just 'have to have' and they trigger an emotional response immediately upon walking in the front door.

Our team are finding increasingly that tenants are looking for neat and tidy properties with simple features and lots of natural light. Items such as new carpet, bright white walls, new tapware, high ceilings and new blinds or curtains can go a long way to securing your rental returns. These are very small investments to create big returns. 

As an emerging active investor, the question I'm now asking is, "How can I create that 'feel' in a property?" If I am able to unlock that secret, it will enhance my investment returns. 

Naturally, the usual number-crunching is critical. With my own investments I have ticked the typical boxes – I chose property close to public transport, amenities, schools etc. But what about that next step... creating a property that tenants are emotionally attached to and simply don't want to leave? Maybe that new coat of paint, upgrading bathroom finishes and replacing the shrubs in the courtyard (that I have been putting off) could be all it takes to create this 'feel'.

What is the unexpected flow-on effect of all of this? Tenants who love your property are less likely to move, effectively removing any down time created between tenancies, while treating your property like it is their own home. Remember, your tenant is your biggest asset and your most important client. 

As one of South Australia's largest residential property managers, we can learn a lot from the architectural professional on the changing needs of tenants and embrace those things that can trigger positive emotional responses to your property. Create that special 'feel' and you will have a property that creates raving fans and importantly long-term premium rental returns. 

Thursday, November 13, 2014

Will Auction outbid Private Treaty?

When I was growing up, real estate terminology such as 'going to auction' and 'setting the reserve' were everyday phrases in our household. 

The first experience I remember with the auction process was when we were selling our family home of 13 years. Auction day arrived and I was so excited as crowds gathered on our front lawn, staring at the front door, waiting for the auctioneer to appear. Suzannah and I had prime position near our rose bushes, ready to watch the auction unfold. It was fast and furious and ended with everyone clapping and congratulating us on a fantastic result!!... Well that's how I remember it!

Over the last 5 years, I have studied the auction technique; I have been to countless auctions and have seen hundreds of clients go through the auction process.

As agents, it is our job to explain the sale process and educate clients on the pros and cons of each method of sale. We make sure before we market our clients home that they feel extremely comfortable and confident with whichever method of sale they decide on.

For me, the auction process is something that I whole heartedly believe in, and everything my marketing degree taught me backs this up. Having a concentrated marketing campaign with a set point in time to encourage action and leverage competition is exactly how you get the best results! Especially in a market like we are operating in at the moment because we are finding buyers can be so flippant. 

The auction process protects vendors from this as much as possible as you are only dealing with the serious buyers, the ones who are in a position to purchase the property free of conditions and with no cooling off period.

RP data stats also back this up as they state that not only does an auction help achieve premium results, properties sell on average 19 days faster under the auction process than properties listed for private sale in South Australia.

Serious buyers also benefit from this process as they can utilise their financial position on auction day to have an advantage over conditional buyers in the market.

South Australians seem to be slowly realising the benefits, and as a result are becoming more confident with the auction process. We are seeing this trend happening right now on the ground and the stats seem to be backing this up too.

There are approximately 741 properties going to auction in South Australia right now (this is up on the same time last year) and 97 of these properties are being auctioned this weekend!

So with all signs pointing to auction, why is it that only  8-12% of South Australia's property sales are by auction? Well the last few weeks have given me a pretty good insight to this...  

Last week I  sold my house through the auction process and despite believing in this method 110%, it didn't protect me from the emotional roller coaster vendors go on when they auction their home. The anticipation of how many people came through each open; the competing property auctions throughout the campaign; the negative feedback; the worry that no buyers are interested... all building up to auction day, is stressful. To top it off, the goal posts for the sale can seem to change daily.

What became clear to me throughout the process was just how important it was to have an agent who communicates with you and who can help take the emotion out of your decision making.

In my case, I received an extremely strong offer before auction (something we are seeing a lot of right now in the market). However if my Sales Partner didn't help me work through this and help me look at the situation objectively it may have been a very costly decision. 

So while I didn't get to experience my auction day, I now fully understand the power of emotions in the process...thinking back to that auction day by the rose bushes with Suzannah, I am positive that looking at the day through mum and dad's eyes the story would be very different! Selling property is personal, you can't help but ride the emotional roller coaster that comes with it, but as agents we see it as our job to help smooth out the ride and make it an enjoyable one!

Friday, October 24, 2014

Are agents in the business of selling property or personal information?

Companies right now seem to be ducking and dodging real estate and privacy laws to sell or provide confidential information. While it technically may be legal, to us, it sure doesn't pass the ethics test. I imagine a lot of people would not be aware that information privy only to your real estate agent is worth a lot of currency in both profile and hard cash and many agencies today are being paid to hand it over.

This week I learnt an interesting lesson... confidentiality and privacy are two very different things in the eye of the law, and this 'technicality' is now creating serious implications in the real estate industry for both our clients and real estate agents.

Privacy is governed by law (The Privacy Act 2014) whereas confidentiality refers to personal information shared with a professional, which generally cannot be divulged to third parties without the express consent of the client.

With the online and data-capturing war in real estate running hot around the country, we are witnessing large third party companies putting pressure on real estate agents to disclose private/confidential information to them. The hot potato at the moment is the push toward instant access to property sale details and in particular sale contract prices.

Naturally, buyers want to know this information instantly. Third parties recognise this and want to use agents' intel to enhance their own products. They want this information so badly, that they are now offering real estate agencies incentives, including preferential agent profiling along with substantial payments, to those who will supply it to them. Some companies are pushing new rewards agreements however these come with a number of obligations such as providing 'first to market, all of stock information' on the one hand and 'first to know immediate sale and contract information' on the other. Essentially, agents are being expected to provide extensive and complete property information, from listing to sale.

Apparently third parties who receive this type of information from the agent are not technically breaching any law... By not receiving client names, they believe there is no privacy or confidentiality issue.... But here is the twist – the issue lies with real estate agents. You only have to look to the agreements that agents sign in order to get paid, to see the disclaimer putting the confidentiality issues right back with the agent.

The scary thing is, we believe many agents do not understand that handing over this information to third parties, without both vendor and purchaser consent, is breaking their ethical duty and contractual relationships with their clients. Most agents do not obtain the parties express approval for publication or sale of this valuable information. Most sellers and buyers are unaware that this information that starts popping up everywhere is sourced from the agent.

Until a property settles, details of a sale (sold data) is actually confidential details of the clients contract between the vendor, purchaser and agent and we strongly believe clients need to be asked if they consent for this information to be disclosed (or sold by their agent) to become public. The exception to this is a sale at public auction.

While all property sale information becomes public at time of settlement, in our experience, clients do not necessarily want it highlighted in such public ways, straight away. 

With pressure mounting from big influential companies, vendors and purchasers are unlikely to be aware that their information is being supplied to third parties, let alone know it is being SOLD without their permission! 

At Toop&Toop, we take our clients privacy and confidentiality extremely seriously. In our line of business, confidentiality, trust and professionalism is non negotiable and our clients can feel confident that management do not support this new income stream. We refuse to capitulate to the pressure. We believe providing confidential information to any external party without express consent, is wrong. Our experience is that most of our buyers and sellers would be very upset if we did this without consent.

It's very clear that information and data is the new currency of business and we will protect our clients interests and treat their private information with the upmost respect, regardless of how big of an incentive or pay cheque is on offer or how much pressure is brought to bear.

Data is our passion; we know it is the future of real estate, but so too is the responsibility for agents to control it with respect for privacy and confidentiality.

Let's get the debate started! Is an agent selling clients' confidential contract information OK?

We say NO!

Thursday, October 16, 2014

Awards... every player wins a prize.

Last week the Real Estate Institute of SA (REISA) held their annual gala dinner to announce who the best of the best in the industry are and provide the feeder into the National Real Estate Awards.

As a casual observer you could feel like 'every player wins a prize' – there seems to be so many. Nothing could be further from the truth in reality. REISA has again changed the awards structure and implemented an entirely new criteria and audit process. This is just like the changes to the rating system in the media and all the players were holding their breath to see where it would land.

Now at the risk of being seen as bragging, egotistical or self-serving, seriously Toop&Toop have pretty much always blitzed the big categories. This has reached a point where it becomes difficult to really promote the wins, as we risk turning people off. We were 'Hall of Famed' for so many of our key categories, but we are out of the hall and back in the competition... nerve racking but we are up for it.

To be judged and audited against your competitors in such a competitive industry is both confronting and is completely public.

This year was particularly scary.

While the awards night was unfolding, I was up north on Tickalina sheep station, this side of Broken Hill. Tickalina Station belongs to an old school mate (Andy) who was getting married. 
I had the honour of being Andy's best man and couldn't attend the awards night. Team Toop was well represented at the gala awards with four tables; Sylvia, Genevieve and Suzannah all went. There is extremely patchy reception at the Station and I was standing on the bank of the dam close to the Homestead with one very unreliable bar of reception (dropping in and out) getting SMS updates throughout the evening.

Well, the upshot was that Toop&Toop won all 
four of the biggest categories (again); Large Agency, Large Property Management Agency, Marketing & Communication and Innovation... plus two individual Sales Person awards. Six awards – an amazing result for us, especially under totally new judging criteria and processes. 

I must say, I thought we would comfortably win one other award close to our hearts. Community Service, I thought, was such a big part of Toop lives in recent years, and so many of the team have been amazing at giving back.. but all credit to the Industry – we didn't win. That simply means that as an industry, we are doing fantastic things for others which makes me feel very proud indeed. That's a real positive for the way our peers are seeing the world. I find it inspirational and a great sign for the future of our profession. 

Innovation and Marketing certainly are our core strengths that enable us to achieve great results for our customers. The work we are doing in innovation across the business right now, is world class – Silicon Valley stuff. Not surprisingly, those two key categories then help us drive both the sales and property management sides of our business.

We are a passionate group, and are proud to be recognised as State REISA winners. We are looking forward to giving the rest of the states a run for their money in the 2015 National Awards.

So while 'every player' to the casual observer looks to 'win a prize', rest assured the BIG award categories are extremely hard fought.

South Australia has a right to be proud of their real estate profession. Intense competition is driving excellence, and we do operate at the highest level, setting new standards across the country.

Very exciting... go SA!!

Anthony Toop

Friday, October 10, 2014

Top 20... How did SA place?

This week Australian Property Monitors (APM) released the top 20 suburbs list for rental growth in houses and in units across Australia... and only Victoria, New South Wales and South Australia made the cut! Oaklands Park (houses list) and Glenelg (units list) made the top 20 and at number 6 on the list, Oaklands Park has made its mark as the top performer in SA!

Depending which way you view this list, Oaklands Park arguably could have taken out first place! Looking at the estimated asking rental yield, Oaklands Park achieved 4.9% ahead of every other suburb on the list! It is clear, South Australia is still a great place to invest in property and our suburbs are performing well on a national level.

The fundamentals that make Oaklands Park an attractive investment stack up, and at present these principles apply to a number of suburbs across South Australia. It is for this reason, that historically, fund managers in property remain attracted to our state. This is due to the reliable and consistent capital growth and rent history that we enjoy. 

So let's take a closer look at our star performer, Oaklands Park. It's affordable and it's accessible; located just ten kilometres from the CBD and within two kilometres from the beach. The western corridor between the beach and city is really taking off and tenants are seeing value in being a stone's throw from the beach and less than a ten minute drive to the CBD. With an asking median rental of $375 for a three bedroom home, Oaklands Park remains an affordable option. With the median rental price increasing by $45 per week (or 12.9% from this time last year), tenants are still seeing value in this area, and this is being reflected in the rents. 

Our Leasing teams at our Glenelg and Hyde Park offices are experiencing first-hand the increase in demand for these areas. A classic example from last week; two of our properties were leased before even hitting the market! This is no longer uncommon and is a dream run for landlords. We can secure a quality tenant quickly, minimising any downtime on the property cash flow, while also eliminating marketing expenses on re-advertising the property. These are the signs we look for in assessing market strength.

Whilst it is unrealistic that the level of growth in Oaklands Park will be repeated year on year, there are still suburbs ready to take off. These are 'up and coming' or 'trendy' areas that tenants are shifting to as they can rent quality homes with space, but are at a more affordable level than typically seen in the East or inner city. 

The golden question on every investor's mind is... which suburb will be next? 

Tenants are savvy and are looking for value for money. Now more than ever, we are seeing value to be the priority, rather than previous markets where the focus was entirely related to a set suburb or area. If the infrastructure is there (for example they are close to shops, caf├ęs and transport), and the property is neat, tidy and presents well – tenants will shift to where they see they get 'more house' for their money. Emerging suburbs and properties will first become popular, then hard to get, and this demand will then drive rental prices.  

So investors... here is my Toop Tip: Take a drive around Adelaide and see first-hand where the 'buzzing' or 'hot' spots are emerging. This is the best indicator of which suburb will be next.