Thursday, November 26, 2015

A fundamental shift for investors... what will 2016 bring?

Since coming back from the World Business Forum in New York City, I have seen first hand 
a noticeable shift in property management. 

We are approaching our typical 'busy season' and activity in the market has ramped up another notch (our vacancy rate has halved in just two weeks sitting now at 0.59%!). Whilst we absolutely love this time of year, it was a different shift that has really intrigued me.

An Information Paper from the Consumer and Business Services has proposed changes in the tenancy sector on the issue of domestic violence. 

What really resonated with me was the fundamental shift of what it means to be an investor in 2016. Tenants' safety is at the forefront of these changes. In 30 years of our business, we have never seen such emphasis placed on this. 

Frankly, I feel it is for the better. But the added responsibility on the owner increases the need for agents to be more than just rent collectors. Real estate agents need to have more involvement in safety, legal obligations and the law, building maintenance as well as response times and audit trails. If not, then everyone is at risk. 

As a property investor myself, achieving optimal returns on your investment(s) is absolutely essential, but cutting corners and taking cheap options do not optimise your investment. You get into the investing space to make money, and increasingly that involves spending more on maintaining a safe well-maintained living environment. The fact is that tenants also have key objectives, and top of the list is for them to feel safe in their home.

If you understand this you will attract quality tenants who want to stay in your property... for longer. Quality tenants who are loyal and long-term will have a significant and positive impact on your bottom line, far outweighing the replacement cost of a faulty light switch or smoke alarm. Our seasoned investors are also giving us this direct feedback.

As managing agents, our role is to help landlords ensure their property is a safe place for their tenants. This goes to the very core items such as the faulty gas stove being repaired urgently or offering Compliance & Preventative packages at the best prices. And if things are not acted upon swiftly, there is absolute accountability.

Further changes are in the pipeline, and it's only a matter of time before they enter the residential investment space (asbestos is one area that immediately comes to mind). 

Consumers do expect more. But it's the way you go about addressing these changes that makes a positive difference to your bottom line.

The good news is that there are agents operating ahead of this change. Well-managed investment properties are performing financially and this is set to continue for medium and long term investors. 

Suzannah Toop

Thursday, November 19, 2015

Some of the world’s best minds all have a very similar story….

Suzannah and I recently attended the 'We are Story Makers World Business Forum' in New York, the result of winning Nova Entertainment's National Leadership competition.

We were fortunate to hear from a wide variety of inspiring guest speakers including: Sir Richard Branson, a hostage negotiator, the Vice President of Global Marketing Solutions at Facebook, and Academy Award winning actor Kevin Spacey.

One massive area that all leaders talked about was innovation. 

At Toop&Toop innovation has always been at the core of our business, so for me this was so exciting to hear this discussed in detail. It wasn't until I started talking with some of the other business leaders that I really understood how daunting it is for companies who haven't 'grown up' with this innovation mindset.

In the past, innovative ideas have been very costly, slow and expensive to develop and as a result, came attached with large business risks. Now technology is cheaper and hundreds of ideas are flowing out of Silicon Valley and around the world every day. The choice and ways of implementing technology into your business is cheaper than it has ever been before... however, this doesn't mean that the risks are eliminated.

With so much choice and availability, all the top business leaders we heard from agreed that the definition of innovation is shifting. It is no longer enough for something new in a market to be 'innovative'. The key to innovation is asking the question, "Is this new product or service valuable to your customer?"

Technology is now outpacing our needs, and for the first time, technology is the one waiting for us as consumers to catch up.

Kevin Spacey talked to us about 'immersive reality', technology that potentially can give children access to the best teachers in the world and make them feel they are in a live classroom, or seeing an ocean seabed when learning about geography or enjoying a history lesson in the thick of the action at The 1066 Battle of Hastings... it will be incredible.

At Toop&Toop we have been looking at this type of technology for over a year. However, until we as consumers catch up and want to embrace this type of technology, it has very little value to us in real estate or even to Hollywood movie studios.

Innovation in the old sense of the word is everywhere you look - but it needs to be relevant to customers and what they want right now.

My key learnings from this week are that the best innovations make life easier, frictionless and free up our team so they are able to spend more time on what matters - people - and making sure as a team we are providing our customers with the best experience and results possible.

Thursday, November 12, 2015

New York... A simple case of supply and demand.

The Inside Story this week is coming to you from Manhattan, New York City! Genevieve and I are in NYC to attend the World Business Forum Conference at the Lincoln Center with headline speakers, Sir Richard Branson and Kevin Spacey (a huge thank you to NOVA Entertainment for this amazing opportunity!).

Exploring the streets of SOHO, East Village and strolling the beautiful tree lined streets of the Upper East Side, residential property in Manhattan is so intriguing.

Bordered by three rivers - the East, Hudson and Harlem, Manhattan is the text book case study of economics, restricted supply and significant demand.

Of the 8.4 million people that call New York City home, 1.63 million New Yorkers choose to live in Manhattan, a total land size of only 59 square kilometres. This area creates an amazing and unique mix of culture, business, tourism and history, unlike any other city in the world.

But it also has an affect on property demand. A staggering 99% of the apartments and homes available for rent across Manhattan are occupied (according to The Guardian).

This is having a significant impact on pricing across the city. According to the Manhattan Rental Market Report for September 2015, a two bedroom apartment in Tribecca, the most sought after rental suburb right now, achieves average rents of USD$1,895 per week and a two-bedroom rental in SOHO and Greenwich Village sits around USD$1,203 per week!

These are huge dollars... any way you dice it. To put it into perspective, locally in South Australia, a two-bedroom property in Norwood (the most searched suburb in SA according to achieves an average of $385 per week.

So if I had $500 per week to spend in a trendy part of Manhattan, I would find myself in a 
37 square metre studio apartment with basement, or non-existent, laundry facilities.

In an equivalent, popular suburb in Adelaide, I would be in a two storey, 223 square metre townhouse with three bedrooms, two bathrooms and two car parks... not to mention the sensational penthouse apartment we currently have for lease for $1,600 per week in the Air Apartments. It's 434 square metres of absolute luxury with views of the city... for the same price as a unit in SOHO?

This is incredible. 

It's no wonder apartment prices become the topic of conversation when New Yorkers and Australians get together. They simply cannot fathom the level of accommodation we have available to us.

Manhattan is an extreme example, but investing well and picking the next hot spots, always comes back to the laws of supply and demand.

Thursday, November 05, 2015

They're off and racing...

While Melbourne Cup stopped the nation this week, in real estate we are currently running a race of our own. Many buyers are feeling the race is on for them to find and secure a property before Christmas. We find at this point in the year many buyers are getting tired of missing out and desperate to find a property so they can be organised and start the new year in a new home.

While for those thinking of selling, some people feel like it may be cutting it fine to put their home on the market right now, with Christmas party distractions, and the festive season creeping in earlier and earlier each year, I can see how it may feel like that... However, our statistics actually prove the opposite.

We are finding each week the number of buyers subscribing to hear about our properties are increasing - last weekend our buyer bank grew again by 60 people and the trend is following through to inspections.

The buyer numbers through our weekend inspections are increasing substantially. Two weeks ago buyer numbers were up 191 groups from 645 the week before, and then last weekend we were up 51 groups again with a total of 861 groups through our properties.*

With buyer demand still very strong, and with the urgency to purchase increasing daily, an Auction campaign is a great way to leverage this momentum and achieve a premium price. Over the last two weeks we have sold 22 properties at or before auction which have achieved very strong results.

Auctions can be unpredictable and emotionally charged, but we have found these often produce our best results and often exceed client expectations. We are blessed to have some of the best property auctioneers in the state, including the South Australian Auctioneer Championship Winner, Bronte Manuel.

If you are wanting to sell before Christmas and leverage these market conditions, there is still time! Having our own full in-house marketing and advertising department allows us the flexibility and speed to achieve this. 

If you call one of our sales team over the next week, we will be able to deliver and run a solid Auction campaign this side of Christmas and capture the attention of the current strong market.  

*Toop Virtual Agent, proprietary software - Oct 17 and 31, 2015