Property Hub - Investment Insights & Inspiration - Realty Talk - Tenant trends revealed

Episode Date: July 4, 2024

20 year property veteran Sky Taylor joins Bushy to explain why you should treat your investment property as an investment.  Also this week award winning property consultant Brett Wheatland details how to find properties that will have the highest tenant appeal. Subscribe for free to Realty Talk on the Property Hub channel, join our community and get more insights here: https://linktr.ee/propertyhubau Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.See omnystudio.com/listener for privacy information.

the intentional investors are fantastic they understand the long-term approach i find it's the accidental investors who get stung and they find it a challenging process so i think approaching it with a business mindset can set them up for the future and ensure that it's not a stressful horrible experience well that's a common mistake made by many property investors Bushy Martin and Skye Taylor talk about how to avoid doing it. Also this week, award-winning property consultant Brett Wheatland details how to find properties that will have the highest tenant appeal. But before we start, I want to thank our supporters and content partners,

Realty.com.au, BMT, Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. And don't forget, you're going to find us on all podcast players, the Property Hub, Southern Cross, Austereo Network, Hot Copper and All Socials as the Property Hub Collective. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced

quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Realty Talk and your host, Bushy Martin. now when it comes to landlord investment properties i'm always hearing the complain

about repair costs and bills as if it's some sort of an annoyance that just shouldn't be happening i mean investment properties are meant to be set and to get aren't they well this common misconception is because most investors just don't treat their property like a business but what does this really mean well to unpack this we're joined by sky taylor the boutique owner of adelaide agency tailored property management a two-decade property veteran who focuses on educating investors on innovations and improving efficiency so welcome back to the show sky thanks for having me now sky from your experience how do you see most investor landlords viewing their properties i think it's a there's two different types of

investors i think we have the intentional investors who go and purchase the property they're very intentional about what they want to achieve with that property then the other camp we have the accidental investor so perhaps they move out of a home into a bigger one and they keep it rented out they might move in with a partner they might inherit a property how each investor approaches property investing can be quite different the intentional investors are fantastic they understand the long-term approach I find it's the accidental investors who get stung and they find it a challenging process so I think approaching it with a business mindset can set them up for the future and ensure that it's not a stressful horrible experience. Very good point

well I guess given there are quite a number of accidental investors who almost fall into it whether they're keeping a house that they've sold or inherited one or what have you so given that different approach what are the downsides of this outlook that you see in practice the downside of being an accidental investor yeah and not treating it as a business so more as an annoyance as i mentioned in the year in the opening yes absolutely and i think that's the downside is that this isn't an enjoyable experience that why would you invest in property this is frustrating it's painful it also has an impact on the tenants because perhaps the accidental investor isn't maintaining the property as they should. And so tenants are

turning over more often than you'd like. So it can have a really broad impact on both landlords and tenants. And if they are finding the process frustrating, they may not remain in it as long as they should. We know real estate is a long-term game. Very good point. So why should investors then that both accidental and intentional treat their properties like a business and as i mentioned in the opening again what does that actually mean and i think that that probably comes back to my long-term comment that we all know we hold real estate long enough that's where all the gains and the growth is and that's why we get into property investment so if we are taking a long-term approach and we're looking at preventative maintenance plans we're looking at

ensuring we have a slush fund to deal with the maintenance that comes up the repairs that are necessary it's not a financial hit on the family who are also trying to maintain their own property it's really about being proactive and not reactive that's really will make all the difference in the property investment experience for landlords yeah well said now for those uninitiated and a lot of accidental investors so can you spell out what's entailed in a preventative maintenance plan for those that don't understand much about it and i think it can vary but depending on how deep the landlord wants to go into it but it can look at what do we need to be spending in the next three years what do we need to be upgrading in the next 12 months and taking that approach

as to where your costs will be coming at so you can prepare for it that's how I would tackle a preventative maintenance plan it's it's not about repairing a leaky tap it's okay what needs to be invested to ensure that we're not then dealing with emergencies and we're not dealing with problems down the track because we know this might come up in the future and really having a budget for that. Yes, exactly. Making sure that when you're doing a cash flow analysis to look at what the true costs are, you actually allocate funds for that. And the sort of rainy day reserves that you mentioned earlier are therefore there to cover it. And there's no surprise in not chewing into hard-earned salary or their limited savings when something does occur.

So awesome. I guess you've touched on some of this already, but what are the benefits of trading an investment property like a business from where you sit it's definitely about having high returns at the end of the day um you know we might purchase property for a capital growth perspective but you want to maximize your returns for that holding period so ensuring that we're not throwing money away on things that won't generate a return on investment and that's where thinking forward as to what you should be investing your money into in terms of maintaining that property is about having that plan in place to make sure that your returns are maximized by not wasting money on things that don't need to be done yeah no very well said now well i can almost

hear a lot of the accidental investors listening into this today sky thinking oh this all sounds like way too much extra work, particularly when I'm time poor. So how can that be overcome? And I certainly don't want our accidental investors to think that way. And we love the accidental investors because it should be a good experience for them. And having an experienced property manager, I hate to say it because I'm biased, but having an experienced property manager will make all the difference. Someone who can take a strategic approach and understand the journey and the goals that each investor is on because everyone has different goals and different times that they want to stay in the market and I think that will make all the difference in that's why

you have quality property management to take care of this for you but you need to both be on the same page about where that journey is going yeah a very good point and let's face it a good property manager is going to be on top of what things cost and how often they're likely to break down and how much you therefore need to budget and they've also got access to the trades that provide quality work that are going to enable you to to keep the property human proper and they're also comparing properties all the time because they're looking at your property in the context of what's happening elsewhere so they can give you really positive feedback on what you need to be doing to keep and achieve that maximum rental return so i guess you know the takeaway for me is that it doesn't

matter what sort of investor you are if it's a two-way communication with your property manager so you're taking on board their level of expertise and experience and hands-on involvement in the industry to position your property to operate at its best both from a rental and a long-term resale perspective then you've got the best of both worlds so look thanks for reinforcing this need to treat our investment properties as a business sky and i really want to thank you for your very valuable time and sharing all of this with us on the show today absolutely thank you having me successful property investment is a game of finance do you have the right team and the right game plan realty talk is brought to you by know how property more than mortgage brokers

bushy martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs tax risk and stress while increasing your capacity for growth know how has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. This is Realty Talk powered by realty.com.au. Now, if you want to be a sustainably successful investor with rental properties, you need to secure property types locations profiles and price points that actually have the highest tenant appeal because it's the tenants that pay the rent that pays your loans and costs

that then allow you to create your wealth long term so it's all about tenant quality and appeal and this can actually change and evolve over time so to find out what tenant trends are being experienced on the ground and how this is likely to affect you as an investor landlord we're joined by Brett Wheatland, an award-winning property management consultant with over 23 years of experience, and he's also the general manager of a specialised property management agency renting Adelaide. So welcome back to Realty Talk, Brett. Thanks for having me again. But looking forward to diving into this one, because again, it's an area that a lot of

investors don't spend a lot of time thinking about, but to sort of get into the guts of it, sort of what changes and trends are you seeing emerge with the types of tenants that you're seeing at the moment? yeah we've seen a uh i guess a logical shift in the direction of a lot of new people coming into our country and obviously south australia uh there's been a big draw card here as an affordable state uh we've seen people shifting for employment but also affordability and a lot of new arrivals that are coming from abroad skilled people with uh you know a lot of government assistance in in getting our population up to where it needs to be to build these properties

we need and i guess with that we're sort of just seeing a bit of change in how we look at processing applications and the types of tenants that we are bending and flexing to to meet um to get into these properties so we can fill these vacancies as quickly as possible well i'd love for you to sort of unpack uh if you're seeing any trends in relation to the sort of level of tenant inquiries, the amount of engagement and open home tenants, and if so, what are you concluding from all of that? Yeah, it's actually been a really interesting thing

to delve into looking back on the data, which I don't think we've done much of an industry to date because we've now just started to work out where's all this coming from and where's it all going to so we can better target things. So we are seeing a lot of inquiries still coming through, but we are noticing that people are sort of a bit panicky about finding a rental property. So they will inquire for a tonne of properties.

They'll get their open inspection times in front of their face and then they'll determine which one's at a priority they'll need to rock up to. So let's say you get 100 inquiries for any property, you may only end up with 10 or 15 people coming through that fit that niche. And then from there, you might only end up with, you know, a couple of applications.

simply because they just they are shopping around so they are looking at as many properties as they possibly can they are putting their application in as many properties as they can but obviously a lot of them are not a you know they're dead-end inquiries as well so it's a bit of a panic station out there in that respect and yeah the amount of engagement we need in order to get ourselves just one or two applications across the line is is quite phenomenal to be honest yeah it sounds like a lot of work to get a result uh i'd love to sort of dig into the tenant application process a little bit more if you can and get you to sort of expand on some of the challenges that are emerging on top of what you've already touched on yeah so that's probably one of the things uh we've obviously

shifted very much into a digital space in that world of tenant applications so a lot of automation in the way of processing references etc um that i think it's an evolving marketplace in itself because it needs to start tapping into things like AI where it can start pulling other information or read between the lines because tenants are, of course, coming across from the other side of the world and English is not their first language.

So putting a significant piece of technology with a large volume of documentation in front of them under pressure, competing against other people in the same boat or even in the local market is is really quite challenging i wouldn't want to be having to go through it myself personally um just understanding things like terminology uh what's a rental ledger um and without that information uh they're not getting through the door because that is really really crucial there's a few obviously touch points that we must have as a as as a property manager and as a landlord you want to know that

they've got ability to pay rent um that they've got a reasonably static you know track history not a dodgy one um and even to be able to pull that information together coming into australia um and trying to understand all these terminologies in one application it would be an absolute challenge hugely be very daunting uh i guess from from property management and a landlord perspective though uh trying to get decent referees and references is going to be a real challenge as well talk to us a bit about that yeah correct so i think that's one of the challenges is that obviously we what we call as a local market those people that have been in the rental market and have been renting or they may have been homeowners um they've got a bit of history you

know they might have they might have that 12 months two years five years ten years and obviously those people with greater history be that financial rental or ownership are going to have a much better chance of securing a property over someone that doesn't have either any history at all or very very minimal history even though they may be the most amazing tenants um we're relying on a sort of limited amount of documentation and information to make a decision as to who's going to be the best person to rent a house and as an investor as a property manager in our job as a property manager you need to make sure you pick the best quality tenant um because it's going to probably fall back in on your desk if it goes balls up so it really is putting the crunch

on those people that don't have that rental history behind them or have limited information or resources to prove where they've come from and their journey going forward because it is a much higher risk to take on an unknown tenant than it is someone that's you know got the history and And it's one thing I often say when I speak to investors and our clients when they talk about these situations. Even so, tenants, tenants that ring us and they think, I can't get a house, what do I do? We always just say good tenants get good properties.

So, you know, if you've got that rental history, then you're not going to have any problems finding a property, quite frankly. Yeah. But we like to flex a little too because everyone needs that first opportunity to break. So I think one of those challenges going forward is going to be filling in that gap, whether that's technology or just that human interaction of talking to these applicants and getting a feel for it. I think that's playing a bigger role for what we do in property management now.

It's not just about what's on that paper. Yeah, absolutely right. And I think it's a bit like the old story when you try to get your first job. Everyone's looking for experience, but you can't get any until you get the job. It's no different for someone coming into the country trying to get their first rental because they've got nothing to show you about what their history has been. So there's going to be a leap of faith from both sides of the fence there, I think, initially. And with someone that's got the skills as a very experienced property manager to be able to use the intuition rather than the rational mind to demonstrate the exercise, that's where the real skill is going to come in, I would have thought. yeah gut gut fuel plays a big role in what we do um and it's something you you can't really be

taught you've just got to learn over the period of time and i think we're now reserving ourselves back to some i guess some intellect and some experience in that process is helping us get a good outcome for our clients um in our business but we're we've we've seen a shift even to having to to ring tenants back not ring referees but actually ring tenants and just have a chat with them and say hey look i've got your application it's missing this and it's missing that but you seem like great people you're very keen um you seem eager you're easy to deal with you're communicating really well but we just need to fill in those gaps and we're having phone interviews or even one-on-one meetings getting them in the office and saying hey i just need to put this

together can we fill in these gaps somehow let's just have a chat be like a job interview sounds bizarre sounds over the top um but when there's other parts of an application missing if you can rely on that um that can be the difference between getting a really good tenant and obviously missing out on those opportunities spot on a very interesting environment that you're dealing with then so again sort of drawing that to a conclusion what does all this mean for investors and landlords moving forward then brett i think um look it's it's a super competitive market for tenants out there and obviously if you're in the the process of trying to find a house to live you're going to do anything and everything to get yourself across that line so from a landlord's

point of view it's really important to be aware of that that going through this process and having a really in-depth knowledge of what it is that you need as a from a tenant and being able to get that information from a tenant in a way that you're going to be able to be confident that you're getting the right tenant is really important so i think tenant selection has always been really really key but I think it's going to be even more key going forward to make sure that you have the pool and the experience to get the best quality tenant because the pool of tenants out there unfortunately it's not as good as what it's been in previous years because we're going into a new marketplace where we have no rental history we have no real financial

history we have language barriers that are making it harder to get this information so we need to be um even more careful with how we how we're doing this process um and we need to be thinking outside the square i think in in getting the best result at the end of the day but the good thing is um there's plenty of people out there looking um you just have to look and probably dig a little bit harder than what we used to to make sure that you get the right fit because it's not always just the application it's about getting the right fit the right tenant for the right property for the right landlord every investor is different they all have different expectations yeah um and you don't want a relationship that's you know going to be constantly heated so it's really important

to get that mix right yeah spot on matt look uh love are you clarifying exactly what's happening with tenant trends in the market brett and it really does clearly highlight that there's while there's been a deluge of new arrivals this is actually creating a raft of tenant application challenges and changes given the obvious language barriers and the lack of local history you talked about that's then i guess creating a lot of initial inquiry but only eventuating in a very few actual suitable applicants so it's clear that investor landlords need to be mindful and patient of this when it comes to securing a good tenant and temper this against potentially false expectations that they've been created through the mainstream media so thanks for joining all

this thanks for sharing all this and joining us on the show again today brett no worries thanks for having me. Are you curious about harnessing your super for property investment? Propel your future with the enlightening online seminar, the ultimate masterclass to self-managed super fund property mastery. Reserve your spot now at getrare.com.au forward slash SMSF. Spearheaded by rasty from independent buyers agency get rare properties this master class unravels strategic property investment using your self-managed superannuation fund you know it's not just about learning it's about transforming your financial future through education so embrace this opportunity to enrich your investing acumen enroll now in the free master class and begin a

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