Friday, September 19, 2014

The New Property Management Investor Food Chain

We are seeing a growing trend in the property management market at the moment and unfortunately, it is the consumer that is often being eaten up and will ultimately be paying the price. 

The average size of an agent's property management business has grown from 375 in 2009 to 508 in 2014, which is an increase of 35%. New agencies are jumping on the investing bandwagon and through the use of specialised banks are obtaining the relevant funding for acquisition of rental businesses. This is making it easier than ever to acquire, yet these businesses are harder than ever to run!

This latest trend has created two distinct types of agencies in the market. 

'Size matters' agencies are borrowing big to buy rent rolls and are 100% focused on obtaining mass numbers of rental managements in the market. These agents are new entrants, who want size, quick.  

Then there are those that can best be described as the 'sandwich board agent'. These are opportunistic real estate agents who are advertising unsustainable low fees on sandwich boards, billboards and even neon signs. These agents are emerging across the country taking advantage of the 'size matters' agencies, who are buying up big (and paying top dollar). They are proactively drawing in clients with incredibly low fees to list quickly, ready to be packaged up for sale. It is made to look very attractive to investors, who are unaware of the actual game plan.

Dan Evans, national head of real estate in Macquarie's business banking division, has said in an interview with the Residential Property Manager online, that "the growing importance of property management to agencies is leading to greater demand for these  properties, causing downward pressure on management commission rates as agencies compete for business". What has failed to be mentioned is that many of these real estate businesses are being forced into taking short cuts, reducing the quality of management. 

The piece of the puzzle that isn't obvious to investors is that the emerging 'sandwich board' agencies are looking purely at the capital sale of those investors managements. There is no sustainability in the 'managements' but the resale is very lucrative indeed.  

With 30 years' experience in residential real estate, we have seen trends and fads come and go. So what does this one mean for the consumer?

Tread carefully.

A standard clause of Residential Management Agreements is 'Assignment'. This provides the agency with the ability to assign their interest to another party in the event of the sale of the rent roll, liquidation, etc. Should a client not wish to go with the new agent, standard restrictions on termination applies, such as a minimum notification period or termination fees.

With the lowest vacancy rates in the country, currently at 1.65%, Adelaide's rental market is holding strong. Investing in residential property is becoming more and more popular, and ensuring this is done correctly, is increasingly important. 
When looking at your agent, longevity is key to survival.

Suzannah Toop

Thursday, September 11, 2014

From phone book to Facebook... How social media sells houses!

Times are changing in real estate, and fast. If you think about what's happening right now, we are all totally connected 24/7... just ask three Facebook Friends! 

There are now instant videos on world events and everyday people reporting news in real time, from war zones to charity fundraising. What about real estate??!!

Just 20 years ago there was no internet, no mobile phones, no websites, smart phones, text messages or email. Communication was limited to window displays, newspaper advertising and word of mouth from agents and vendor. Fast forward to today, and the communication channels available are phenomenal. And, they are increasing every day! Apple's newest devices launched on Wednesday and set to be released within the next few months, will change the rules AGAIN for real estate agents. It's moving at lightning speed!

Some real estate agents are panicking, some are in denial, others, like us, are excited. 

The biggest stand out... The Social media revolution! Social media has been the biggest game changer for every business and it's growing at an extraordinary rate. In 2010 there were .97 billion people using social media. Today there is now 1.82 billion users world wide! 

Facebook is by far the biggest with 1.28 billion users! QZone, a Chinese social media network comes in second, then Google+, followed by LinkedIN and Twitter. 

So how does the biggest communication movement in history impact real estate here in South Australia? If you break these statistics down to a local level, you can see that 70% of South Australians are Facebook users! 

With so many of us in South Australia on numerous social networks, real estate agencies need to completely understand these platforms and help vendors leverage their networks to create maximum exposure for their property and optimise the sale of their home. 

Your social networks, combined with your agencies' social networks are one of the most powerful tools to market your home!

Social networking has flipped the traditional six degrees of separation on its head. Facebook have calculated, with social networks the degree of separation is now at 3.74! Meaning, you are connected to the whole world via three friends! It seems crazy, but you only have to look at a very recent campaign that captivated the world by storm to see this... The Ice Bucket Challenge. This challenge asked you to nominate three friends to continue the challenge – the campaign reached a global audience almost instantly. The Ice Bucket Challenge highlighted just how powerful and cost effective social media marketing is. It's raised over $111 million dollars for the ALS foundation in a matter of weeks increasing donations by over 3,500% compared to the same time last year!

When choosing an agent, it is now vital to ask them about their social media strategy and how they leverage social media platforms such as Facebook, YouTube, Twitter, LinkedIn, Instagram, Pinterest and blogs to help your sale. Finding out how they can support and guide you in broadcasting your property to your own networks is just as important.  

We know that for many of our clients, social media can be quite foreign. Clients may be on Facebook but may not necessarily understand how to make the most of it to market their property. So in 2012, we created a social media wizard that helps our clients do exactly this. With a few easy guided steps, we help you broadcast your property out to all of your social media networks reaching thousands instantly. 

Broadcasting your property video and website links from your own social media account, to your own 'friends' increases the engagement with your property post dramatically. Posting your property to your social network is the easiest way for them to spread  the word to their friends and family who could be interested in your home.

By utilising your social media networks, you will also be tapping into the best type of buyer – someone that may not even know they are in the market for a new home! Like the newspaper, social media captures people who may not be actively in the market, but seeing your home sparks an emotional connection which then leads to the idea of moving. From our experience, buyers who are emotional, are not driven by statistics and they often pay more for a property to secure the one they want...

Word of mouth now has a new face... Social media. So if you are thinking of selling make sure your property is the one everyone is talking about!