Thursday, April 30, 2015

Investors: Attracting a quality tenant... it's more than simply property features.

There is endless debate on what makes the best tenant. So let's dig in a bit and see...

Consider this: There are a vast number of checks and balances that a prudent property management agency completes before accepting any tenant. Checks include extensive reference checks, due diligence research on the tenants' rental history and naturally, checks to be sure that they can afford your rent, as well as the income threshold test – just to name a few.

So what is it that makes your ideal tenant? What's the verdict?

In my view a quality tenant is someone who: 
1) pays their rent on time, 2) cares for the property and looks after it like their own (not just a quick clean before an inspection) and 3) is not unrealistic 
in their demands (like property maintenance). 
A terrific tenant treats a property like it is their own and takes pride and responsibility.

So as an astute investor, how do you attract these quality tenants?

If you rewind 10 years, the best tenants based their preferences solely on the attributes of your property. A renovated kitchen or a large master bedroom would have done the job.

How things are changing. Now what we find are these same quality tenants are looking at things differently. Respect, and being treated well and fairly has become the differentiator. The best tenants now demand high levels of 'good customer service.' They want fairness and understanding, and they want a reasonable landlord. The agent attitude and professionalism has become a serious consideration and a critical factor in their decision to stay or go.

What else has changed? The profile of a tenant.

There are increasingly more young professionals who have high expendable income or families testing out the local area before they purchase their next home. It is also common for 'renters' to be landlords themselves. Many are making the most of the market – buying at a lower level as an investment and using the additional income to rent a property that better suits their needs. These are excellent people to place in your properties.

And finally, tenants are savvy! Across the board, they are looking for an enjoyable living experience and property features alone are no longer the key driver to attract quality tenants to your property.

The obvious question follows...what makes a good landlord? What makes a great agent (from the tenant's shoes)?

The best landlord and best agent is someone who allows their tenant to enjoy and engage with their property; one that is happy to leave them to their own devices, yet should an issue arise, respond quickly and decisively.

Think about it: Customer expectations and business practices are changing, and for the better. Customer service, respect, landlord attitude and agent reputation are now determining factors for today's best tenants when it comes time to renewing their lease. Get the right balance between an agent being professional and decisive and you will add dollars to your bottom line.

Call me if you want to chat about your investments. Our team is passionate about investing and looking after you, your tenant and your property.

Suzannah Toop

Thursday, April 23, 2015

Adelaide... the nation's good news story!

This week Dr Andrew Wilson, Senior Economist for Australian Property Monitors (APM), visited Team Toop to present the latest statistics and trends which are impacting the Australian Residential Real Estate Market. 

It was a very interesting presentation, which was part of a national tour looking at the wider Australian housing market. The presentation also drilled down into how the Adelaide property market is fairing compared to the rest of the country. 

With Dr Wilson's first slide titled: 'Adelaide rises – and rises' I was very excited to see what was to follow... 

Out in the field we have been feeling this rising buyer momentum over the last six months. Demand from buyers is high, interest rates are at all-time lows, property is moving quickly and our ToopVault sales are on the rise. This all means that properties are selling before they are even publicly released.

Every weekend our team captures information through our sophisticated live open inspection tool (VirtualAgent). It was comforting to see that the Team Toop intel we had captured for the same period of time was very similar to the data and trends that were recorded on the larger scale by APM. We believe that with our large sales team and our wide coverage across Adelaide that this information we are capturing each week is really valuable to share with our clients, and these similarities in findings have really backed this up. It demonstrates that our live intel allows us to provide our clients with a really good finger on the pulse of what is happening in our market right now, without the delay that comes with gathering and distributing these national statistics. 

Looking at both our intel and the national findings for the last quarter, one thing is clear... Adelaide's growth is very promising! 

Our property prices are rising modestly, but consistently, and it is grabbing the attention of investors across Australia. According to the National APM figures, currently 40.2% of purchasers are investors, which has increased from last year! The stable solid yields are making property in Adelaide more attractive than the current deposit rates, and could be a contributing factor as to why Adelaide investors are turning to property. On the ground our team is seeing the effects of this and in some pockets, such as Norwood and Adelaide, investors are making up 75% of the buyer interest at some properties.

Adelaide's high end market has been the standout over the last year with the largest growth in property prices. The high end market has risen 9.7% in the last year and is expected to rise even more with the stock market, as well as consistent high demand from buyers wanting to move into this area of the market. 

Property prices are rising in Adelaide and this is set to continue. We are still the most affordable mainland capital city in Australia providing Adelaide buyers with some great opportunities. Looking into the next year, experts are predicting Adelaide prices will show solid growth again, with a 5% increase. All of these factors are getting the economists excited and nick-naming Adelaide as 'the nation's good news story' right now! 

Thursday, April 16, 2015

Outdoor living... adding to your bottom line.

In residential property there are always new trends that come out or 'must have' features that we read about in the home and style magazines – things like a breakfast bar in the kitchen or open plan living.

Having somewhere to entertain friends and family has always been a strong feature of a home, but over the past six to twelve months our team are finding that it is often becoming THE key feature. In the past, buyers or tenants have wandered through the home looking at the bedrooms, bathrooms, kitchen etc. and then briefly glanced out the window to see the backyard. Nowadays, our team are finding buyers and tenants are wandering through the home, eagerly waiting to reach the back of the house to see what the outdoor area is like. It's quickly becoming as critical as the kitchen or master bedroom!

With home renovation shows on TV, new (and very clever!) ways of using this space are showcased 
to the public. It is becoming increasingly popular to transform this space to a prominent feature of the home.

For the townhouses and inner city living we are seeing outdoor spaces being completely converted into an extension of the main living quarters. With new features being installed such as bi-fold doors, decking and bar stools, we are seeing outdoor living being taken to a whole new level. Some home owners are going all out equipping outdoor living areas with fireplaces, inbuilt kitchens (with range hoods) and surround sound systems... just to name a few.

One thing is certain – home owners are embracing the outdoor living environment like never before.

So what about tenants?

Our Leasing Team are finding that properties with an outdoor entertaining or 'funky' outdoor space are attracting 200 percent more enquiry that the homes which don't offer this feature. We are not talking about anything lavish – just a few small touches that allow tenants to utilise the space when friends visit. Tenants love having the option of creating their own outdoor space – a veggie/herb patch or vertical garden is all the rage! And they will pay for it.

Our team are finding rental properties attract anecdotally five to ten percent higher rents, lease easily and create a distinct competitive edge for our investors. For example, typically an additional $20 to $40 per week is achieved in the $400 to $600 range if a property has an interesting outdoor living feature! This is a staggering trend! Given our job as a property management business is to optimise our Landlord's returns, these trends need to be considered. 

We provide professional assessments to improve returns for existing clients and are happy to extend this service to potential new clients. It has been very rewarding for our investors.

Having an additional usable space is key. This is one of many trends Team Toop are seeing out in the field, so if you want to find out more, we're here to help make your home stand out to potential buyers or tenants when they wander through your property. We are here to increase your bottom line.

Suzannah Toop

Thursday, April 09, 2015

Online trends result in buyers wanting an offline lifestyle!

There is no denying that today we live in a fast paced world. Technology is moving at a rapid rate which has made us globally connected, 24/7 in the palm of our hand. The Apple watch will be launched later this month and will change the rules yet again – just like when the iPad was launched, but only more profound. Accessibility will shift up another notch, as we will actually be wearing this global access on our wrist. Information will be instantly pushed through to us via vibrating notifications and Siri's voice alerts. 

With the way the world of communication is changing, it is interesting to see the impact on the real estate market. We are in the business of helping people buy and sell their homes. When you ask people what their idea of 'home' is, you will receive many different answers... the common theme is that 'home' is a feeling rather than a physical dwelling.  

So as our pace of life quickens, and with global connection everywhere, what we are seeing in the real estate world is that buyers are looking for a 'home' as a place where they can switch off... a place to be 'offline' and relax on their own or with their closest friends and family. 

In Adelaide, we are seeing this trend impact our market, like the increase in demand for hills lifestyle property. The Adelaide Hills market is showing great value for buyers and it offers what so many people are now craving – large blocks of land with the convenience of still being close to the city, and a retreat from the connectivity of modern living. Adelaide is unique in many ways but especially, offering affordable getaways close to the city. Most capital cities throughout Australia simply cannot provide this. To live a similar lifestyle in cities such as Sydney or Melbourne, you would need to be willing to commute four to six hours each day. We are lucky in Adelaide; we can have the opportunity to live on acreage as well as only taking 20 minutes to drive to our CBD. 

With buyer's views on what they are looking for in a 'home' starting to shift, we are seeing suburbs such as Stirling, Aldgate and Crafers receiving huge buyer demand. Value for money is at an all-time high and the ability to have space and privacy, yet the convenience of still being able to enjoy a cosmopolitan lifestyle is what 'living' is about. With everyone's hectic daily lives, escapism on a personal level is high up on the agenda. Realistically, who wouldn't want to live in the hills? World class wineries at your doorstep, space for the kids to kick the footy and restaurants within walking distance are just some of the things drawing people to the Adelaide Hills.  

Looking to the online statistics, the average South Australian property on the market attracts 495 website visits, our hills lifestyle suburbs are attracting on average over 1,100 visits per property! That is over double the amount of buyers looking at these areas! Property prices are now also starting to grow as a flow on from the increased demand for the area. The median house prices for suburbs like Aldgate, Crafers and Bridgewater are now at the highest we have ever seen!

So for those who have realised what many are just catching onto now, the Adelaide Hills is a great place to call home. Demand for executive rental properties in the hills is just as strong too. So, if you have been thinking about selling or leasing your property, it would be worth talking to our Hills Specialists – Arabella, Sarah and Anita to find out exactly how leveraging these buyer and tenant trends can help you achieve a premium result. 

The hills are well and truly alive, and why wouldn't they be... in a world that is moving at such a rapid pace, they truly do offer the best of both worlds!  

Thursday, April 02, 2015

Hot and Cold.

We are seeing two sectors of the market starting to emerge... one is running hot, and one cold.

From what I'm hearing and seeing first hand, the suburbs surrounding the city such as Eastwood and Parkside and the western pocket of Mile End and Bowden, in the $400,000 to $600,000 range, are attracting huge enquiry. Chatting to our clients, these areas are in high demand and as for my friends, for some reason they are amongst the most active group right now. Six have purchased property in this sector and price band last week! To hear how active the under 30 buyers have become just shocked me!

So things are definitely hot in this section of the market where buyers are taking advantage of affordability in SA, and low interest rates, while it lasts. As a result, we are seeing new challenges emerge for purchasers to overcome.

A new dynamic is emerging as this part of the market ramps up demand. Buyers and sellers are being faced with the possibility they may be caught out having sold their property and are yet to find their next one. It is actually not a bad problem, as the opposite is far more traumatic... where buyers end up with two houses, two mortgages and no sale. In this sector, there is greater demand than supply, and active buyers in the market outnumber sellers. As a seller, they are thrilled with the speed (and price) of their sale. But when it's time to look for their next home, they are faced with the reality of being a purchaser, and the shoe is on the other foot! It is a good problem, but a problem nonetheless, unless handled correctly. 

Let us not forget that this is not across the whole market – it is happening in this easily defined hot spot of the current market.

We have seen buyers looking to purchase 'subject to' their own home selling, which seems like the best approach but has some big disadvantages too. One particular example earlier in the year that we were involved in had five parties, which were all contingent on the other! In other words, like dominoes; if one fell over, all sales in the chain after will fall over. This is logistically tricky and quite technical from a legal position. Everyone is required to be ready and able to settle on the one day. This is where the expertise of your agent and conveyancer come in. Moving day also requires a calm and organised approach.

The smarter option for sellers who are looking to spend more time hunting for their dream home is to factor in Plan B. We can help find rental accommodation... and the good news is NO mortgage payments, NO insurance and NO big household maintenance projects to allow full focus on finding your next home. The only concern is that if you are to 'break' your tenancy agreement, you may be up for some lease break costs, so simply factor that in. It does work out, especially when wielding a cash contract around with the next purchase. 

We have seen an increasing number of these people ('tenant/buyers') entering the rental market over the past few months. As a result, demand in the rental space is further tightened and these 'tenant/buyers' are directly contributing to our extremely low internal vacancy rate of 0.57%. It is a fascinating time.

So what happens when you are looking to break your lease early? It is not usually a huge problem, especially with the rental market being so strong. On average we see one tenant per month terminate early, but lately we have seen three to four times this level – this is over a large property portfolio.  

For those operating in this hot part of the market, it's an exciting time! Adopt the right strategy; get good advice. We believe the strategy of selling first (so you know exactly how much money you have to work with for your next property), is important. However in order to outsmart these new market challenges, good advice is critical. 

There are options. Adopting a longer settlement, rent back from your buyer, considering short term rental, even taking a holiday and living down the beach in a cabin, are all fun ways that can help the move be a positive and memorable experience. A quality agent can make all the difference. 

A quick coffee and a chat with one of our team is all it would take to get you on the right track and we will help you wherever we can.

From the whole Toop Team, we hope you have a wonderful and safe Easter break and enjoy spending time with family and friends.

Suzannah Toop