Mistaking Cheap Fees For Quality Service

 

Common Mistakes Property Investors Make 

In property management we see many property investors making the assumption that all real estate companies are the same, and that they all offer the same service.  Therefore they believe that the best way to differentiate between them is to get cheaper fees. However, the common pattern among agents is that the cheaper they get, the lower their service levels.

How is this so? Here is a simple step by step analysis of how cheap fees can lead to poorer service levels:

1. Cheap fees is the starting line- unfortunately the perception is that agencies all do ‘the same thing’, we collect rent, get repairs done and find a tenant. With this perception we then might be attracted to a cheap agent, or one that substantially discounts their fee to impress you to win your business.  

2. The property manager must manage more properties- because the agency has a much lower revenue base now because of their cheaper fees, the property manager is now well overloaded with too many properties to justify the same salary as the other ‘more expensive’ agency down the road.

3. Burnout and resignation- the overload of managements causes the property manager to become disillusioned, not coping and can cause ‘burnout’, struggling to meet investor expectations of service levels, with the end result being resignation.

4. Good property managers now avoid this agency- once word of mouth spreads amongst property managers that to work at this agency you must manage so many more properties and so the good property managers steer clear of this business. Therefore the only people the principal can employ is either inexperienced or poor performing property managers who can’t get a job in good agencies. 

5. Poor service levels- due to this factor of now lower expertise levels, the result is poor service all around and disillusioned property investors who thought they had a ‘bargain’!

The end result is the property investor is now quite willing to go and find a quality agency and realising they may need to pay a bit more to get better service and peace of mind.

How to invest in your 40’s

Is it too late to invest if you haven’t started before hitting the big four-zero?

Not by a long stretch. Here is a step-by-step guide for anyone over 40 looking to get started in property investment to have a nest egg before retirement.

In 2012, the concepts outlined in the guide generally follow from the assumption that the would-be property investor owns their own home, and therefore has some level of equity available to help them get started in investment.

Step 1: Get the right mindset

It is most likely that you need at least 10 years to get a good outcome, and 15 is fantastic, then after 40 it becomes all about how much time you have and what your goal is. Most people won’t be able to rely on their superannuation as the only source of income to retire on. 

Step 2: Establish your attitude to risk

Different investors have different appetites for risk and those risk profiles should be a major factor in deciding on an investment strategy. Your risk profile will determine:

*The loan-to-value ratio (LVR) you’re prepared to use to invest 

*The amount of debt you’re comfortable with and

*The type of property you’re prepared to buy.

Investors over 40 should be more inclined towards a lower-risk strategy, as they can’t really “start again” if they’re financially crippled. This means lower LVRs, lower borrowing and buying standard residential rather than riskier niche market properties.

Step 3: Set your goals

When do you want to retire? How much money do you think you’ll need to live off? These might be questions you’ve put off or ignored up until now, but before buying investment property it’s time to confront them. It’s all about goals –you need to determine how much money you’ll need in retirement and when retirement actually is. 

Many people will want to reduce working hours rather than ceasing working altogether which has a positive impact on your retirement funding. Investors need to think non-financially first. That is, what lifestyle they want, holidays, how much they want to work and so on. Then they can translate that into dollars.

Step 4: Select your property strategy

Once you know where you want to be in 10 or 15 years’ time, you need to map out a course to get you there. The first step is to get educated and the next step is to surround yourself with a good team - Get a good accountant, a good property solicitor, a good finance broker, as well as a good property agent and property manager. 

Investors may look to research and consider different approaches to the property market, such as capital growth, negative gearing, positive cash flow, renovation, subdivision and small development. Other steps to take include checking your borrowing capacity and establishing how much equity you have available to use. 

According to the experts, as far as choosing an investment strategy goes, it’s best to keep things simple. The combination of leverage and high-growth property can’t be beaten in terms of supercharging a retirement strategy.

Step 5: Develop a retirement strategy

It’s important for later starters in property to consider how you might make the transition to retirement and fund your living expenses before they even start investing. This is because the ultimate plan may have an impact on the structures used to acquire

and hold property. 

A glowing endorsement from an LJ Hooker Leeming tenant

A recent email from one of our valued tenants;

I would like to compliment you and your team on the fantastic service we have received throughout our dealings with your office. We have since recently been home owners and were not looking forward to returning to the rental market. Every person we have dealt with from your office has been incredibly efficient, organised, friendly and professional. Whatever your formula is, stick with it! I have honestly never seen such professionalism. As a former Real Estate agent myself, i am really impressed - there are many who could take a leaf from your book. Once again, all the best and thank you and everyone for their professional service.

Regards, Karen D

Make the most of the good weather

Few people can resist the allure of a sizzling BBQ, fresh salads and cold drinks at the end of a long hot day during Western Australia’s summer months, and the way we go about this has become more sophisticated in recent years.

Increasingly, people are taking advantage of our generous weather and balmy nights outside of their homes on patios, decks and courtyards.

Quality alfresco areas are now highly sought after and available in all manner of style and prices.

Alfresco areas, from the Italian, “in the fresh air”, is ideally suited to our Mediterranean climate, and even in cooler months can be enjoyable alongside a glowing chimonea, under a gas lit heat lamp or waiting expectantly before a pizza oven.

In many newer homes and renovations their presentation and quality has grown considerably from the days of the old back verandah.

Ideally an alfresco theme is designed to combine the outdoor and indoor areas of a home in seamless fashion. Real estate agents can attest that an appealing outdoor area has become a strong selling feature which for some buyers is equally as important to them as the interior.

The irony to this trend is that the land area in modern homes is shrinking and the big backyard has given way to bigger homes instead. However, smaller outdoor areas are getting much more use now that busy homeowners don’t have the time to tend to large yards. In other words, land size has given way to quality use of lesser space.

The contemporary alfresco design can range from a simple all-weather patio that leads directly from the living area, to an elaborate structure that might incorporate some standard indoor features, such as a cooktop, sink and refrigerator. A typical alfresco structure is generally a continuation of the main roofline.

The ideal is to create a liveable and comfortable outdoor space. Important factors to keep in mind include protection from glare and direct sun, shelter from the wind, adequate space for chairs and a table and a preparation and serving area for food and drink.

If space and funds permit, you might also include large decorative pot plants, ceiling fans, a television area or maybe a spa?

Having gone to all this trouble, it then helps to screen your garden shed, garage and clothesline from your alfresco area for an aesthetic finish.

The impact of a functional alfresco area in a home should not be underestimated. This is evidenced by the number of homes for sale which are promoted almost solely around this basis, and often the photo which catches the eye of the buyer will be the smart presentation of a home’s outdoor living area.

Christmas Trading Hours

Why use a REIWA propery manager?

reiwa.com TV (9) - Property Managers, "the market" & Midland from REIWA on Vimeo.

RBA lower the official cash rate

The RBA this week reduced the official cash rate by .25%. Weeks leading up to the RBA meeting suggested this may be the case and on 1/11 (Melbourne Cup day) it was announced.

We see this only as a possitive, it will entice buyers back into the market while also allowing first home buyers to also enter the market for the first time.

Most banks have now adjusted their rate accordingly so now may be a good time to check your existing mortgage and make sure you are getting the best possible deal.

Self managed super funds & rental renovations!

This month may see the decision by the Australian Taxation Office (ATO) to allow Self Managed Super Funds (SMSF) investors to renovate their investment properties through their Fund.

The money can’t be borrowed – it must be funded through the SMSF – and it can’t be used to change the fundamental use of the property, such as a house-to-apartment conversion.

It may increase the appeal of un-renovated properties, which tend to be less expensive that their renovated counterparts, with Australian Managed Super Funds investors taking a closer look at this market.

Whether this ruling does or doesn’t go through right now, it is recognition that people saving and planning for their financial future should have the opportunity to buy and improve an investment property’s value through renovations.

Buying real estate through SMSF is a growing trend in Australia according to ATO figures.

If a new ruling doesn’t come down this month, it is likely to stay on the ATO radar, and is yet another reason for investors to work with a real estate network that remains abreast of change and keeps them informed.

For more information visit the below links:

Self Manager Super Funds - ATO  

SMSFS - Propery Investment  

SMSF - IntellieChoice

Getting Ready for Summer

Our Top Recommendations!!

Ensuring that your asset continues to grow in value is what owning an investment property is all about. This is why ongoing and regular maintenance is absolutely imperative. Below are our top tips for pre-summer maintenance which will not only benefit your property/s long term condition but make for a positive and conducive relationship with your tenants. Your efforts in proactively maintaining your property to high standard in between seasons help us to ensure your tenants continue looking after your property to the same level. 

1. Service your air conditioning system/s

An air conditioner is a very tough piece of equipment. It is engineered to withstand heavy use & keep on running. This is great in most respects, but it can lead to complacency about maintenance. Like a car, air conditioners need regular tune-ups to run properly. Studies show that with regular tune-ups a unit will maintain up to 95% of its original efficiency. If you have a system with covers, ensure these are removed prior to summer!

2. Reticulation systems and Bores

Due to water restrictions and bans during winter, it is a good idea to check your bore and reticulation systems are running and programmed correctly. Sometimes when systems and/or bores aren’t used for long periods of time problems can arise, especially if they are quite old to start with. It’s advisable to have a professional check and reset it to ensure no problems during the summer, which can be both more costly and have long waiting lists.

3. Pool/spa health – how’s yours travelling?

Like reticulation, pools aren’t used much during the winter so it’s a good idea to have a health check done by a professional prior to summer. For those who include pool maintenance in their lease your contractor will do this for you. For those who don’t, having a health check done is a great best practice strategy that will help ensure your pool is well maintained and healthy over summer and save you money down the track as potential maintenance issues can be picked up and solved early on, before the summer price hikes.

4. Mulch/wood chip garden beds to aid in water retention & presentation 

This isn’t a maintenance tip as such, more a recommendation. Properties with quite involved gardens or garden beds may benefit from an annual prune/tidy up and fresh mulching. This prepares it for the dry summer we have. This isn’t an owner requirement (unless stipulated in your lease) however it provides you with peace of mind they are in good order and prepared for summer, as although it may be your tenants responsibility to maintain them, if they fail in this it can be a long way back. An annual garden tidy can be the good faith gesture that encourages your tenant to ensure they continue to look after them well.

5. Oil your deck and outdoor furniture

Unless your decking timber is painted or treated, it’s important to oil it every three to six months. Good oil will enhance the natural grain of the timber and make it look lustrous in the summer sunshine. If you have decking give your property manager a call to organise for it to be oiled.

LJH Leeming Licensee/Principal Wins Top Award!

Pauline Francis is announced as the Western Australian Telstra Business Woman of the Year 2011

(Commonwealth Bank Business Owner Category)

Congratulations to our exceptional Licensee Pauline Francis who was named winner of the 2011 Western Australian Commonwealth Bank Business Owner Award at the 2011 Telstra WA Business Women’s Awards last week.

Pauline overcame the effects of the global financial crisis on Perth’s property market to be ranked in the top one per cent of the national LJ Hooker network. Managing twenty property management and sales staff, she was the first WA woman to be admitted to the LJ Hooker Board of Admirals international network in its 81-year history. LJH Admirals are a select group of high achievers chosen to drive growth for the LJ Hooker network.This year, she and her husband Darryl were also named the network’s Franchise Owner’s of the Year for WA.

Pauline was one of only 16 finalists chosen from hundreds of nominees for this year's Telstra WA Business Women’s awards. All Western Australian winners will proceed to the national finals of the Telstra Business Women’s Awards which will be held in Melbourne on the 18th of November.

Over the last few years she has been recognised amongst her peers and within the industry for her unwavering dedication to improving Property Management systems and best practice procedures, not only for her own team in Leeming but throughout the wider LJ Hooker network state-wide and nationally. 

With Pauline currently away, BDM Emma Trezise accepted the award on her behalf last Tuesday at the Hyatt Hotel and said in her speech, “good leader’s make people feel that they’re at the very heart of things.Everyone feels that he or she makes a difference to the success of the organisation.  Pauline is this leader and we are very proud to work alongside such an inspiring woman both as colleagues and as friends”

The awards are in their seventeenth year, and aim to shine the light on leaders in business who, “inspire, connect and achieve so much”.

Proud Children - Nathan & Terri Francis

 Business Development Manager - Emma Trezise 

Accepting Pauline's Award on her behalf