We’re 60 days into the new year… and the forecast is it’s going to be a very big one for property growth! What does this really mean for investors?
Here’s an interview with our founder and CEO Jeremy Goldschmidt on this hot property topic and more.
What are some of your big predictions for the property market this year?
The pandemic has driven some big changes in the market, most notably lower levels of immigration and travel, higher levels of unemployment, and general uncertainty as outbreaks occur and the rules change to cope with our new normal. Some of the changes we’re seeing in the rental market as a result are:
- Thrift, and a greater interest in saving money. Deposits and savings with the banks over the calendar year of 2020 ballooned as people ‘saved for a rainy day’. This mindset cuts across all expenditure as consumers and landlords question unnecessary spend where they are paying on not seeing value delivered.
- Online, and an accelerated adoption of technology. Australians rapidly moved online through 2020 as they learned to make everyday purchases over the internet and source just about everything online. This has pushed services and products into the digital world as consumers continue to take advantage of the efficiency of online activity
Are these trends driving an increase in landlords choosing to self-manage their properties?
These trends appear to be accelerating the growth of the self-managed market. It makes sense that when looking for ways to utilise technology and reduce costs people will start to self-serve and take control of their affairs rather than outsource them.
According to a recent REA report, about a third of the market is now self-managing. If you take a look at the ATO statistics from 2017, they show that only about a quarter of the market was self-managing at that time. So in just a few short years quite a large percentage of the market has started to move.
How much can landlords save by self-managing, rather than going through a property agent?
We expect the savings to be about $2,000 a year when self-managing. Particularly for those with a few properties or who have seen their rental income drop over the last 12 months, the savings are quite meaningful.
A common concern for landlords is often finding the right tenant, how does Rent Better facilitate this (often difficult) process?
Great question, and selecting the ‘right tenant’ is an important decision and the time when you can really consider whether the prospective tenant is able to pay rent and likely to look after your property as expected.
There are a couple of inputs you can use, and we typically say it is about triangulating those points and using your judgement to make the right decision.
The first input is the application. You want a comprehensive document that includes employment history, identification as well and bank and credit card statements. This gives you a chance to assess the candidate on paper and look for any patterns of behaviour around cash flow or late fees on their cards
The second input is a report from one the tenancy databases. This gives you a chance to check their history and whether there is anything unexpected in their past
Finally, you will use your judgement to assess the responses from their references and from your interactions through the inspection/application process.
Once they’ve found their ideal tenant, how does a landlord know what to include in the lease agreement?
Fortunately, in most states and territories the government and regulators have you covered and there is a recommended document in each geography. If you’re not sure, you can always seek legal guidance
How can a landlord determine the appropriate rental rate for their property?
There are many data sources in the market, and you can actually download a rental estimate report from the RentBetter site. However, it always pays to look at the current prices in the market. A quick search on one of the property sites to see what is available and positioning yourself relative to other properties on the market is quite a sensible approach. Beware of those who suggest you can get many multiples higher than what you think makes sense!
Managing a rental property can be a gruelling process, how does Rent Better make it as seamless as possible?
The platform is all about giving you a framework for managing, access to the tools and services professionals use, and keeping everything in one place so it’s available when you need it. Based on the feedback we’ve received from our customers and the loyal following we’ve developed, we know we’re on the right track.
What are some shortfalls you’ve seen in property agents, and how can landlords take back the control of their investment properties?
For starters, I think most people would agree that property managers tend to have a tough job in that they only really speak to their landlord customer when there is a problem, and they tend to have a pretty large portfolio to manage. Such a high coverage ratio by one agent or property manager usually means that the relationship with their customer suffers and they are reactive rather than proactive.
Keeping track of rental records can create a lot of paperwork and become overwhelming, how does Rent Better help?
I’m glad you asked, and this is really one of the reasons why I started the business in the first place. For all the activity and documents involved in managing your own property, one of the key things you want as a landlord, is an end of year report for your accountant. The platform tracks everything, so come end of year you have all your income and expenses automatically feeding into a report so you can click one button to create the report.
In a nutshell, why is it so important to facilitate clear and regular communication with your tenant?
Like most things in life, communication is critical to success. As the owner of an asset, you’ll want a tenant who looks after it and pays rent on time. Similarly, your tenant will want you to be responsive and make sure that the home they live in is looked after. There are a lot of reasons why incentives/objectives are aligned, and that’s why it typically works well. However, over-communicating will always lead to better outcomes for you and your tenant so there is less uncertainty or fewer chances for things to go wrong.
What happens if there are maintenance issues in the property?
One of the great things about the RentBetter platform is that tenants have their own access portal to upload maintenance requests. Not only is this helpful as a single place to document and capture the work, but more importantly it feeds the reporting function so come end of year you have everything tracked and saved in one place.
We find a lot of our customers will have their own preferred tradies completing the work, but there is a network of trades available on the platform if you want to get a quote for specific work.
How can landlords stay up to date with market rental rates, and know when it’s time to increase the rent?
There are typically rules around the timing of rental increases and the way this is communicated to a tenant, so it’s certainly not something you will be doing each week or month. From time to time you may like to conduct a review of prices to ensure you are priced competitively, and give notice that the rent will be increased with the appropriate time frames provided.
Some property agents manage dozens of properties at a time, how can self-managing your investment ensure that no corners are being cut?
Well, there is a reason the expressions ‘too much on my plate’ or ‘spreading yourself too thin’ are so common place. We tend to hear from customers who feel overlooked in a large portfolio where perhaps out of a 100+ properties they are not getting much attention from their property manager and feel the little things have been missed. Ultimately managing a property is not rocket science and is fairly common practice. We believe that an owner is more likely to care for their asset/investment and can drive higher returns on their property investment by taking control and self-managing.