Property Markets Rebound | Adelaide Hot Spot | Switching Property Managers
Welcome to the September 2019 edition of the Adviseable newsletter!
There’s certainly a renewed buzz in the air, with buyer activity increasing week to week as post-election confidence and markedly improved lending conditions continue to drive property markets throughout the country. Right on cue the clickbait media headlines previously dealing in doom & gloom have now been replaced by catch cries of ‘recovery’, soaring auction clearance rates, how it’s a ‘seller’s market’, and of course the old standby of fleeting ‘housing affordability’…
Irrespective of this improved sentiment, it seems that would be sellers are certainly taking their time to react to the shift as new listing numbers remain suppressed (even more so since this time last year!). That said, there’s still excellent buys to be found if you know where to look and we’re optimistic that as the Spring season kicks into gear we’ll see a fresh supply of opportunities for us all to nab!
On the topic of searching for great buys, we’ve noticed a significant increase of late in the number of investors looking to purchase properties with future development potential. With that in mind, here’s a link to a webinar that Alex did some months back on this very topic (just in case you missed it first time around):
Recently Purchased by Adviseable: 34 Alia Drive Sheidow Park SA
This mid 1990’s vintage 3 bed, 2 bath, 1 car garage brick & tile home on a 600m2 block was purchased by the Adviseable team for $449,000. The local market in the City of Marion is very active at the moment with quality listings selling exceptionally fast! This particular property was no exception being hotly contested by several other owner occupier buyers all with competing offers. The key to getting this one over the line were the terms we could offer beyond price, along with the ability to move quickly (getting it under contract within 6 days of initial listing). The rent for this fantastic property has been appraised at $430 p/w equating to a 5% yield.
City of Marion SA highlights:
- One of SA’s largest metropolitan councils covering 55km2
- Located 8-20km south-west of the Adelaide CBD
- Well established owner-occupier area land-locked by the coast
- $1.2B Tonsley precinct redevelopment
- $880M transport infrastructure upgrades
- 0.6% vacancy rate (Sheidow Park)
Question of the month:
Q: I’m on the hunt for a new property manager to replace my current one. But having already gone through the process of switching managers without much success, I’m worried about choosing the wrong one again and ending up back in the same boat. Any tips or advice on how best to handle the situation?
A: Admittedly finding a property manager who’s a ‘keeper’ can require a bit of trial and error. And even once you find one there’s no guarantee that the prized manager won’t move on from the agency at some point, taking you back to square one. On that note I think that it’s fair to say that unless you’re an especially lucky property investor, this predicament is not uncommon!
As a first step I would suggest expressing your dissatisfaction to your current property manager and your inclination to take your business elsewhere. Although this may seem like an uncomfortable conversation that you’re probably not desperate to have, a frank discussion about why you’re unhappy with the service could yield some positive results. However, I also acknowledge that sometimes this can be a futile exercise and you’re simply ready to move on. If that’s the case, here are some of the things worth keeping in mind when switching property managers:
The notice period before a management agreement can be terminated. This will depend on state legislation, what was negotiated/agreed upon during the initial appointment, or even whether the property is tenanted or vacant. Naturally it’s important to be mindful of this timeframe when coordinating the impending transition. It also serves as a reminder to negotiate shrewdly when engaging the next manager!
Get a recommendation. As with the search for any professional, I can’t stress enough the importance of seeking an unbiased recommendation from someone who’s already put in the work and had success with the search for superstar property manager. This recommendation could come via a fellow investor, a property manager who looks after one of your other properties, or of course your favourite buyer’s agent & property investment adviser! J
Don’t focus on the fees. For whatever reason it seems to be a common trope in property investment circles to become fixated on property management fees. Of course it’s important that we’re getting value for money, but by the same token selecting the most suitable property manager for the job shouldn’t be about a race to the bottom. In my experience, most of the cheaper property managers are cheap for a reason. And let’s be honest here, property management when done right is a hard job and the fee amounts aren’t exactly astronomical at the best of times. Yes they’re going to eat into investment property cash-flow, but for example the difference between 6.5% and 8.0% management fees on a $400 per week rental income is $6 per week (or $3.78 based on a 37% marginal rate of tax). Isn’t $3.78 each week a small price to pay for the peace of mind of having a good operator taking care of your cherished investment property?
Handover. As touched on above, not everyone finds the task of giving someone notice particularly easy or enjoyable. But keep in mind that this job is typically taken care of by your newly appointed property manager. They will serve your old manager with the appropriate forms, and pick up the keys for your investment property on your behalf. So if you’re ready to make the switch, the process of confronting your old manager to ‘let them go’ should be the least of your concerns! – Alex
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