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Nov 9, 2020
The RealWay Team Difference
What makes the RealWay Team so different? You may have seen our previous post about when RealWay Lifestyle sold a home at 11 Barry Street Mount Lofty Toowoomba. The post wasn’t about us, it was about the strongest outcomes for both the sellers and the buyers. It’s the first thing that’s different about the whole RealWay Team, our priority is always our customers, not us. This is a great summary of Real-World success from the Principals David Johnson and Richard Cocozza the Principals of RealWay Lifestyle. What else makes us different? Well here’s the full story of 11 Barry Street and how David and Richard LISTENED to their clients to deliver Real Service and importantly Real Results. The property: Small 1930’s, 2 bed, 1 bath home Large block in a desirable street Potential for views Potential to split the block We LISTEN - The sellers’ criteria: No advertising or marketing budget No online, print, or social advertising No ‘For Sale’ signboard No Open Home Inspections Challenges: The value was in the block size and location, however, the house was going to be a challenge because, although it had some nice period features, it was: Not in a good position on the block to extend Not a good design to renovate Too small to suit most of today’s family buyers The block had roughly a 2m slope diagonally front corner to the back corner How can you find a buyer with no marketing budget and no advertising allowed? Our SOLUTION - We WORK HARDER: Contacted 3 house removalists obtaining written quotes of $15k & $20k for BUYING the house (including them removing it) Obstacle 1 was now a benefit, get PAID to remove the old house With no advertising or marketing, how do you sell a secret? Phone calls! A buyer match in the RealWay system identified 35 parties that had been through close by open homes in the last 6 months. With persistence, we made contact with over 30 of these and had 5 parties come through for Private Inspections Using the yellow pages, we contacted over 90 builders from Toowoomba, spruiking the opportunity of a development block to build on. This resulted in another 2 Private Inspections. We DELIVER RESULTS: Two parties made offers, both initially below the sellers’ expectations By negotiating and selling the value, the final agreed price was $37,500 above the first offer received! An increase of 7.5%! From start to finish it took 2 weeks. Conclusion: What makes RealWay Lifestyle different? Our Customers come first We LISTEN carefully so we deliver the Service you want We fight challenges with SOLUTIONS We WORK HARDER We DELIVER RESULTS
Oct 26, 2020
Avid Investor Spills on What Makes a Good Property Manager
An investor has provided insight into the factors he weighs up when considering building on his property portfolio, particularly how to ensure he’s found the most appropriate property manager for these investments. Throughout his investment journey wherein he successfully built a nine-property portfolio, Eric Wu has made sure to engage property professionals to help him make the best decisions and ultimately achieve his financial goals. One of the most important parts of his financial team are property managers, who oversee the maintenance of his properties as well as the operations associated with his investments. According to Mr. Wu, a meaningful conversation with potential managers helps him assess the role they could play in helping him grow his portfolio. According to the property investor, some of the questions he asks are: “How many [properties do] you manage?” “How many years [have you] been in the industry?” “How do you deal with a tenant runaway on an insurance claim?” “Once you talk to them, you will know, roughly, whether you are on track or not,” he said. Commission Many investors often think twice when property managers take a high percentage from their rent. However, Mr. Wu believes that while the commission is important, it should not be a very critical factor to consider when choosing a professional to work with. “Very likely, they’re only getting 1 percent or 1.5 percent, and that’s only a few dollars away,” he said. “It doesn’t really matter much because not only can they manage your property well and keep everything in order, they can also keep the tenant happy and paying on time — all the issues [are] addressed on time. “I’m happy to pay the person more. There’s no problem at all.” At the end of the day, good professionals are worth their weight in gold as they provide quality services and allow the investor to enjoy the benefits of having more time and less stress in their life. Mr. Wu highlighted, “You’re paying your property manager to take the headaches away from you.” Proactive professionals Mr. Wu believes that dealing with property professionals should be a “reciprocal business” — as long both parties enjoy the benefits of working with each other, then it remains a good relationship. However, if an issue remains unsolved for months or tenants continuously explain and eventually leave, then maybe it’s time to reconsider the members of the financial team. According to Mr. Wu, good property professionals are proactive and, thus, consistently seek opportunities to help the investor succeed. “I really like proactive managers. They can look at opportunities, whether they can increase rent or not,” he said. “If the market’s not good, they should tell me, ‘Rent should be kept at where it is,’ or they can say, ‘This is what you can do to your property to increase the potential of increased rent.’” Property managers are also expected to be transparent around bills and maintain good inspection management and reporting. Ultimately, good property professionals put the best interests of the investors first and foremost. Mr. Wu concluded. “It’s like they are running their own business but they are running it for my own benefit — they also think like I think. They put their foot in my shoes for my interest, not theirs only.” [siteloft_button text="Switch Over to RealWay" link="https://www.realway.com.au/switching-over-to-realway-property-management/" target="_blank" ]
Oct 17, 2020
Increase Your Rental Return with RealWay
How to Increase Capital Cash Income and Maximise Your Rent Value Return Ever wondered why some properties sizzle, and others fizzle? There are a number of factors which influence the potential rent a property can command. Here are some top tips to maximise your rental value. If your property is not near a public transport link or in the best neighbourhood, don't lose heart; there are plenty of ways to ensure for you to enhance rental returns. Present like a pro With the market for rentals being so tight, potential tenants are quick to make decisions. Having a well-presented property will give you the greatest opportunity to attract the best tenants and snap them up without delay. Scrimping and saving on costs is not the best way to go. Instead, consider installing quality bathroom and kitchen fixtures. Have the property professionally cleaned Always keep lawns mown and the outdoor area tidy for any inspections. Ensure that you have a clean and freshly painted property. Prior to letting, have the place professionally cleaned including carpets and windows. An attractive property helps to attract a good tenant who will look after it. Use neutral and soft furnishing It is a good idea to avoid highly personalised furnishing and colour schemes in order to appeal to a broader range of tenants. Keeping colours light and neutral is a good idea, because it makes the space feel lighter and larger. Stay away from cheap, vertical blinds that break when the windows are open. While they are inexpensive to install, they don't help with the presentation of the property and need to be replaced sooner. Likewise, reconsider the type of carpets of flooring you will be installing. It should be tough enough to handle a lot of wear and tear, but still presentable. Some of the more modern office carpets are worth consideration. Make sure things work It's not good having a beautifully presented dwelling if a tap doesn't work. Ensure that all the basic facilities such as hot water system and plumbing are functioning well. Check that all doors and windows are properly maintained and have secure locks. Ovens, kitchen elements and refrigerators should also be fully functional and well cleaned. Consider getting these checked and serviced on a regular basis. By ensuring that your property is in good condition through regular maintenance, you avoid costly repairs further down the track. Throw in some extras Most tenants come with their own appliances and knick-knacks. However, some extra amenities - such as a dishwasher and air conditioning - can be a deciding factor for many tenants. Unfortunately, any facility or amenity you put in is your responsibility to maintain or repair. This means that if they break, the cost will come out of your wallet. Install built-in cupboards and wardrobe cabinets Cupboards are painful to move, and hard to live without, so people tend to rent places with lots of built-in storage. Provide a separate internal laundry facility if possible You don't need to supply the machine, but if the laundry area is internal and separate, it could be a huge benefit. Keep the place secure Security is always a consideration for tenants so make sure that at least the doors have security screens. If money permits, then add security screen to the windows as well. Car parking is a big plus, especially in city dwellings Providing an off-street covered and lock up garage will enhance your property value considerably. Keep gardens simple Gardens may help boost your rental value in theory, however, gardens are quite difficult to justify. Try to keep your gardens fairly basic; it's unfair to have all these plants and expect your tenant to take care of them. You have to be realistic as to how much gardening you can do as opposed to the tenant, especially with the issue of water rationing as well. As long as the front lawn is well maintained and mowed, that's as good as you can reasonably expect. Set realistic expectations Trying to get the highest rent may not necessarily result in a better rental return if you cannot keep reliable tenants. It's crucial that you don't price yourself out of the market by embarking on a very expensive renovation. Go for long-term tenants The benefits of establishing long-term tenants include: less need to redecorate and renovate between leases; long-term tenants tend to take care of the property for themselves; less vacant time means more returns in the long run; and finally, it's just easier and less stressful to manage. Therefore, be prepared to be flexible to keep a good long-term tenant. Visit RealWay Renting page or complete a form for a Rental Appraisal [rex_form_button name="Rental Appraisal"]
Sep 4, 2020
Increase Rental Income & Deductions
(Source: BMT Quantity Surveyors) Australia’s renovations industry appears to be profiting from weaker economic conditions and tighter lending standards, with alterations and additions to residential buildings hitting a historic high recently. Australian Bureau of Statistics December Building Activity data showed a 6.6 percent increase in alterations and additions in 2018, with renovation spending reaching $2.27 billion in the December quarter. This indicates homeowners and investors seeking to improve capital values and increase rental income have been renovating their properties, rather than purchasing anew. It’s expected this boom will continue, as Master Builders Australia has forecast homeowners and investors will spend $8.8 billion annually on renovations over the next five years. Renovations can significantly increase rental income. According to the first CoreLogic Quarterly Rental Review for 2019, gross rental yields are currently around 4 percent. However, in some scenarios, renovators can achieve a 13 percent return on their renovation investment. Renovation case study to increase rental income Let’s look at a case study where an investor completed a $60,000 renovation. Here is the investor’s scenario before and after completing the renovation. Original purchase price (before renovation) = $410,000 Rental income per annum prior to renovation = $18,720 Total renovation spend (completed in 2018) = $60,000 Property value on completion = $565,000 Rental income per annum after renovation = $26,520 In 2018 kitchen, bathroom and other cosmetic renovations were made. Newly installed plant and equipment assets included an oven, cooktop, dishwasher, rangehood, carpet, blinds, lights and a split-system air conditioner. The investor also installed fixed and structural items such as kitchen cabinets, benchtops, a bath, toilet and tiles. A post-renovation valuation found the property was now worth $565,000. A property manager’s rental appraisal also found the owner could earn $510 per week. Below is the investor’s tax scenario before and after the renovation. Prior to the renovation, the investor was experiencing an annual cash loss of $1,207. However, after renovations their weekly rental income increased by $150, achieving a 13 percent yield on the renovation cost. They also turned their annual cash loss into a positive cash flow of $4,054, an additional $5,261. Renovation tips and traps While this example shows the great results possible, it’s important to be aware of some tips and traps before committing to a renovation project. Scrapping can increase deductions when renovating As part of any renovation, old assets will be discarded and new assets will be installed. When removing structures or assets from an investment property, existing assets may have a residual depreciable value. A process known as scrapping should be applied to ensure undeducted entitlements are claimed. Asset selection when renovating affects depreciation deductions Choosing which assets to install can also make a difference from what can be claimed once a renovation has been completed. Items that serve similar purposes, such as flooring, depreciate at different rates. Carpet installation with a $2,000 cost will result in $500 in depreciation deductions in the first full year compared with floating floorboards and tiles of the same cost, which result in $267 and $50 in deductions respectively. Avoid over capitalising when renovating Investors should stick to a budget when selecting items as it’s easy to over capitalise. This is particularly relevant in today’s property market, where according to CoreLogic dwelling values fell by 7.4 percent from their peak in October 2017 to the end of March 2019. As many capital cities have experienced price declines, investors need to be wary of recouping the dollars spent during a renovation, particularly if they are planning the work to help sell their property at a higher value or raise the cost of rent to increase rental income. Sticking to a budget is crucial. Seek advice prior to starting work, particularly if living in the property while renovating A specialist Quantity Surveyor can provide advice on potential deductions available including whether depreciation legislation changes passed in November 2017 have any impact on your personal situation. If you’re living in a residential property whilst completing a renovation, work completed can impact future deductions should you rent the property later. Newly installed plant and equipment will be considered previously used if items are added to a residential property while living there. BMT data shows one in four people lived in their property before renting it out in FY 2018/19. There are exceptions. Substantially renovated properties and capital improvements to fixed and structural items aren’t affected. Even if fixed and structural improvements were completed by a previous owner, a new owner can still claim these items in the future. Assumptions and disclaimer The depreciation deductions in this case study have been calculated using the diminishing value method. Assumptions: The renovations were paid for by increasing the existing home loan and the investor falls into an income tax bracket of 37 per cent.