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The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.

Category Archives For: Property Management

Property Managers – What They Do.

From Secret Agent Property Manager, Priscilla Gusman

It is not uncommon for a real estate agent to be spoken of in a negative tone, especially when it comes to property managers. Many people understand property managers to be rent collectors who never return calls and occasionally arrange maintenance – this is certainly not the case.

When considering an agent to manage your investment property, you must be confident that you will receive more than just the basics from them. Your property manager should know your property well in order to be able to market and lease it to the right tenants. Sound knowledge of the area, ability to identify the features and benefits of your property as well as any not so great aspects that may deter tenants should all be on your list of expectations.

Throughout the tenancy, your property manager is basically the referee – maintaining a professional relationship with both landlords and tenants. Whilst the landlord is who they represent, the relationship with tenants is just as important. With so many properties available to rent in today’s market; excellent customer service may be the key to preventing a tenant from moving on.

Your property manager is there to provide professional advice to you as their client. When recommending a rental increase they must research recently leased properties in the area and provide comparable rentals. It is their job to ensure the landlord is achieving the maximum return on their investment whilst keeping the rent in line with current market conditions. You may not always agree with their advice, but you should think of them as your investment advisor – they do this every day!

When you first meet, you should be clear on the type of relationship you expect from them. Do you want to be phoned each time maintenance needs to be arranged? Do you want to attend the routine inspections with the agent? Do you want them to pay bills on your behalf? We expect a property manager to use initiative and make suggestions to the landlord as opposed to the landlord calling the property manager.

A good property manager does exist and having one on your side can be very beneficial. Like in many industries, you get what you pay for. Would you like to spend less on fees and get basic service or would you prefer to pay that little bit more and get a property expert? The answer should be simple.

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Introducing Priscilla Gusman to the Secret Agent Team. Priscilla comes from 8 years experience in the Melbourne property management industry, and is the head of Secret Agent: Manage.


Rockstar Applications: Get The Property You Want

From Secret Agent Property Manager, Priscilla Gusman

Have you ever tried to move into a new rental property in the first quarter of the year? If you have, you will probably think twice before you do it again.

January – March is without a doubt the busiest time of the year for the property management industry. There are so many properties available, but never enough to cater for the amount of tenants searching.

When you make the decision to move, you need to prepare yourself as best you can to ensure you get the property you want. The first thing you need to do is decide when you want to move. There is no point in attending inspections unless you are prepared to move in within two weeks or less once you have been approved. Tenants are required to provide 28 days’ notice of their intention to vacate and the agent will advertise the property within a week. They aim to secure a new tenancy with only a few days in between each so that the property is not vacant for too long.

Next item on the agenda, prepare your application. Each agent will have an individual form for you to fill out, but you can always prepare a little beforehand. A reference; if you can provide them in writing is great, but not essential as the agent will always call to confirm the information. Always be sure to advise your references before you put their details down. It is also a good idea to explain to them just how much your success depends on it. You need copies of photo ID to be attached to your applications, not submitted a few days later as many people often do. What you need to remember is, the more information you provide to the agent, the better your chances of being approved.

Now for the fun part; get online and find a property! Set your budget, decide on property must haves and make a list of what you’d like to see. Many agents will conduct opens throughout the week and on weekends, but during this busy season, many properties will lease after one open, so don’t miss out by assuming you can see it the next time. When you find something that ticks all of the boxes, drive past and see it. If you’re still interested, give the agent a quick call (once only) or shoot them an email to introduce yourself, ask about the possibility of seeing it sooner and request a copy of their application forms. The forms are prepared by the agents, so fill out every section! So many tenants make the mistake of leaving out bits and pieces because they feel it is not necessary – it is! When you are applying for a loan with the bank, you need to provide all of this information; it is no different when applying for a property. Present your application neatly and in an organised fashion.

When attending the open for inspection (along with 40 other people), remind the agent of your call earlier – agents love friendly people, but don’t be over the top! Once you have seen the property and are happy with its condition, hand your application over to the agent and let them know you’re keen. Ask what time frame they require to select a tenant and do not call them before that time has passed – I know it sounds difficult, but you want to build a healthy rapport with the agent, not present yourself as a “needy girlfriend”!

Patience is the key when you are in the market to move. If you are not successful with one property, you will be with another. When signing a new lease, try to negotiate a slightly longer term than 12 months so that if you do decide to leave once the lease expires, you will not be caught in the middle of a fierce rental market.

Introducing Priscilla Gusman to the Secret Agent Team. Priscilla comes from 8 years experience in the Melbourne property management industry, and is the head of Secret Agent: Manage.


What Happened to the tight Rental Market?

The most recent figures released by the REIV suggests that presently a 3.1% vacancy rate is present in the Melbourne market place at the moment.

Looking closer into the city centre it’s currently reported that 3.9% of property 0 – 4km of the CBD is vacant while 3.6% of property sitting within 4 – 10km of the CBD is also vacant.

The figures are collected from Real Estate Companies by way of survey  and the proportion of vacant property sitting on their rent rolls.

This is a rather profound shift and it’s one of the highest vacancy rates I’ve seen for some time.  It’s important to note that this rate is for a given month.  However if we look at the data below then we see some interesting things:

June 2009

0 – 4km of CBD : 1.2%

4 – 10km of CBD : 1.5%

June 2010

0 – 4km of CBD : 0.9%

4 – 10km of CBD : 1.3%

Present:  June 2011

0 – 4km of CBD :  3.9%

4 – 10km of CBD : 3.6%

So what’s the cause?

This time of year is generally a tougher slog for the rental market, however it doesn’t help explain the present statistics.  In fact the past few months of data shows some real concerns for landlords on the horizon.

My initial thoughts are a combination of factors:

  • 1.  We’ve overbuilt

We see plenty about the fact that we’re under supplied when it comes to housing.  I think in past times gone by,  this might have been the case.  However I think we are in a different situation now.  We’ve overbuilt in the past few years,  and we’ve overbuilt the wrong type of accommodation.

  • 2.  Population growth is slowing

Melbourne’s population has started to slow,  yet new projects and developments have only grown.

  • 3.  Prices has stagnated and fallen in many instances

As prices have softened,  this has led many owners forced to rent their property out rather than sell it.

  • 4.  International student levels have dropped off

International students aren’t coming in the same numbers as previous years.  High Australian dollar plus other reasons.

  • 5.  Staying at home longer + Sharing of space

A shift of youngsters staying home longer is evident plus those seeking to share accommodation.

  • 6.  No one wants to live in a box

Too much of what’s been built plus what’s going through construction at present,  is not the type of accommodation people want to live in.  People live in ‘a box’ when the market is so tight that they don’t have a choice.  Bring choice into the market and this stock gets absolutely left behind.

Now we are still seeing strong demand for the good stock, and I don’t think this will change.  Yet some big shifts are happening is this section of the market and it’s looking a little better for renters rather than landlords.


The push-pull of the rental market; what’s happening with rents?

An expectation of rents increasing in a flat / dropping market property market are always a strong viewpoint held by many.

While a property market suffering from confidence issues does push more prospective buyers to renting instead,  it also pushes many owners to rent out their property rather than sell.  Hence the push-pull effect of softening conditions on the rental market.

We also have a number of projects due for completion in and around the city areas.  In my experience a number have purchased with the viewpoint of a quick ‘flip’ in mind.  This will also push more onto the rental market.

So the great past rental shortage might not be as severe as we’ve experienced in Melbourne for the next few years.


Top 6 tips to getting the rental property you want

Although the rental market has quietened down somewhat over recent months, the task of securing a rental property is still a daunting process for many tenants.

There are often many tenants applying for the one property which leaves a number of other properties on the horizon as better opportunities. In any case though, these  tips will assist in making the process less stressful and help you secure the rental property you want –

1. Ring the agent prior to the inspection time to show your interest and ask for an application

2. Bring the completed application form to the inspection, along with written employment and previous rental references and copies of proof of identification and income. Provide these to the agent when inspecting the property.

3. Present yourself well. Often an agent will judge the way you will look after a property the same way as you look after yourself.

4. Have one months rent and bond ready to go. Be prepared to pay these as soon as required.

5. Ask the agent at the inspection if there’s anything else you can do or provide that will be of advantage to you.

6. Be clear that you are prepared to sign a lease straight away and will take the property as soon as it comes available.


Property sales down, vacancy rate on the rise

As property sales slow and the rental vacancy rate begins to creep up, it begs the question, where are people living?

There is no doubt we cannot generalise and say property sales are down and vacancy rates have increased everywhere – there is a huge contrast between the inner and outer city markets, still overall, if this is the case it leads us to to wonder whether or not we do have issue with housing shortage.

It would not be surprising if share accommodation figures have increased and many people have opted to rent a room, rather than a whole property. A very viable option for both parties and becoming increasingly common, especially with the flood of new share house websites.

I think we’ll see a pretty an increase in the number of people seeking and offering share house accommodation over coming years. The idea combats a number of issues including housing shortage and the cost of renting.


Winter Rental Market

The Melbourne rental market has travelled well throughout the first half of the year, the overall vacancy rate has remained quiet low and rents are stable.

This time of year is usually quietest for our rental market. As we head into winter we have less people looking to secure a rental property and often less property on the market also. Will this be the case for winter this year?

Our feeling is the rental market will remain at a similar strength as the first half of 2011. The vacancy rate for April came in at 1.7 per cent and it seems the rental market is still sitting around this level, with a similar number of property offered and property let.

The vacancy rate may improve slightly, however it is doubtful that we will see a huge discrepancy between the vacancy rate for summer and winter this year.


Melbourne Rental Market

The Melbourne rental market has again recorded low vacancy rates during the March quarter, sitting at 1.7% down from 2.3% in the December quarter.

Inner city suburbs recorded the lowest level of vacancies at 1.6%, then the middle suburbs at 1.8% and outer suburbs at 1.9%. While the vacancy rate has been at it’s lowest, median rent has soared. The median rent for a three bedroom house increased by 43.5% and median rent for a two bedroom unit increased 54.5%.

Renters will continue to face higher rents and tougher competition as the vacancy rate currently sits.


Good Rents vs Good Tenants

Often landlords will push for higher rents, regardless of the tenant quality. In the end a great tenant will always be a better investment than $10 or $20 more in rent per week.

When your investment is marketed at the right price level, you will have floods of tenants to choose from, whereas if your property is pitched too high you will often only have few applicants to choose from and often tenant quality diminishes.

Your tenant will live in and take care of your property, often for a period of 12 months or more. It would seem common sense to have an A grade tenant occupy your property. This makes for an easy, stress free investment.

Focus on securing high quality tenants, over higher rent. Focusing too much on a high rent may see you paying for that extra rent at the end of the tenancy or waiting out over long vacancy periods.



Renewing your lease

The most attractive outcome when it comes to renewing a residential lease is that both parties can agree on a fair rental amount and any terms or conditions – provided the tenant maintained the property well and paid rent on time!

This is not however always the case – many landlords or tenants allow a few dollars  to stop them from negotiating a new lease. Really both parties lose when an agreement  cannot be reached. Landlords face costs in finding new tenants and a tenant will face costs of finding a new property. These costs can be avoided by both parties by negotiating a new agreement.

In the long run, it is certainly more beneficial for both parties to come to an agreement and renew the lease. Landlord’s need to ensure the amount they’re after is fair and attainable and the tenant needs to ensure they are comfortable paying this amount for the property on offer.

Rent should be determined by the condition of property and the condition of the market and based on similar properties that have recently been leased.

Always make an effort to come to mutual ground, because you may loose more than what you initially thought.


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