Using a property manager when buying a house

Robyn Lee, Xceed Real Estate, Perth

Award winning property management team

Good’ day everyone, Simon Deering and Heath Bassett from You&Me Personalised Property Services. Today, we’re joined by the amazing Robyn Lee investment consultant at the award-winning property management team from Xceed. Robyn, thanks so much for coming in.

Property manager and buyer’s agent in the sale

Always a pleasure. Heath, we’ve got lots to talk about today. We’re going to look at the importance of having a property manager involved in the sale, we’re going to look at the importance of having a buyer’s agent in the sale. We want to have a look at some specific examples that you’ve had where I guess some of your eastern states clients have chosen not to use a buyer’s agent and what some of those pitfalls are.

We’re going to look at the vacancy rates in Perth right now. We’re going to look at where we were six months ago and where you feel the property management market is going into the future. We’re going to look at some of the checks that you do to ensure that you’re getting the right tenant for the right property. And then lastly, just to ask you really, what are some of the good signs to look for in a good property management team?

So lots to discuss over to you Heath.

Firstly, I just want to know what is the importance of using a property manager when you’re purchasing a property?

Using a property manager when purchasing a property

So I think having a property manager when purchasing a property is really important because the sales agent is working for the seller. At the end of the day, they’re not working for the buyer. So I think it’s important to get an independent rental valuation on the property because the selling agent might tell you it’s worth $50 more than it’s actually worth, and that can mess with the yields.

Property managers have extensive Real Estate knowledge

And second of all, is the demographic in the area. So you want to know whether it’s a family area or if it’s more singles in the area as to what you’re buying in a certain suburb. So getting that information and also what maintenance is on the property. So does it have a pool? Does it have gardens? I’m not saying don’t buy a property with a pool and gardens, but those things do come into it and they are factors in maintenance going forward.

Using a buyer’s agent when buying a home

And what about the importance of being able to use a buyer’s agent as well? Why do you say that?

I think it’s really important to have a buyer’s agent. A buyer’s agent is going to get information not just from the property manager, but also from their knowledge, and selling agents as well. And I had two or three phone calls a week from buyers over east looking at purchasing a property in Perth, and they’re dealing with selling agents and they think it’s their best mate.

Obviously, they’re to look after the seller, which they’re employed to do.

See one of our success story with a couple of interstate property buyers.

Selling agents work for the seller

And then and they end up paying too much for a property. So I find that a lot.

And have you got any specific details around that? Have you have you seen that lately?

 

Yes. So I had a buyer that called me and said: “what do you think of this suburb?” And I’m thinking, yes, it’s great. “I’ve missed out on two properties, the selling agent, but they’re telling me that there’s one off market. Can you go review it for me? Because I’m thinking of paying X amount because I missed out on the last two.”

And I told him, don’t spend too much on the property because, you know, it’s only going to be $400 a week. He went and spent $60,000 more than he should have, and then all of a sudden wanted $470 a week for this property that was only worth 400.

Well, yep. The buyer’s remorse. We’ve seen it plenty of times.

Mistakes that could cost buyers a lot

Especially in the market where people fear missing out, and especially in a market where you’re trying to do it from over east. And we quite often say that when you try to save a penny, it costs you a fortune. So look, really good example.

Perth vacancy rate

Vacancy rates, you know, obviously Perth’s at an all time low, the demand is really strong.

Can you tell us about your current vacancy rates now? And I guess after that way you say the property management sector in the next six months and immediate future.

Xceed vacancy rate

Yep. So, at Xceed we’re probably an all time low. We haven’t had this many rental properties like as a low for a long time. And at the moment we’ve got 12 properties with no application and we have 5000 properties across the area.

So of 5000, you’ve only got 12? Yes. That’s insane!

Without an application. So yeah, it’s it’s crazy at the moment, the demand is really high.

And where where is your sort of vacancy rate in your office?

And we’re around about the 0.4 at the moment.

Xceed real estate has a low vacancy rate

So, on the low under the Perth average and the Perth average is the lowest of any major capital city across Australia. So you’re even doing better than what the average is here in Perth. That’s a testament to your team. Well done!

Are there lots of application per rentals?

And I guess when we talk real talk, it’s how many applications, you know, we can talk about rental vacancies but for the buyers at home it’s: “alright, I’ve got a property that I want to put with Xceed or any other but Xceed in this case”. How many applications are you generally getting? I know you spoke about a Wembley home or Wembley downside.

Rental prices are higher than last year

It really depends on what what the property is. We might get one application, we might get 50 applications, but that property in Wembley, it was a three by one apartment and I put it on from $475 per week, last year I leased the same similar property for $420 per week. And I thought great, it’s a great return and I haven’t even opened the home yet.

I’ve got yesterday I checked 56 inquiries, I’ve got an application already at $500 a week. Wow. So it’s like $100 more than the average in the complex.

Absolute craziness.

How to select the right tenants?

So and you get a lot of applications, but how do you check them tenants? How do you know that they’re a good tenant or a good fit for the buyers?

I think you have to look at a bunch of things like you can ask, you know, do they pay their rent on time or are they keeping the property well, but you have to look at a lot of different factors. So for example, yes, we’ll look at addresses and make sure that their payslips match the address that they put down.

And we’ll check their employers and check their personal references. But we might look at other things. For example, if the property has got a pool, have they looked after their pool before? Does the property have gardens or are they like looking after gardens? Are they going from a brand new home to an older home? Are they going to be a nightmare to deal with?

You know, you look at lots of different things and not just a case of do they pay their rent on time? Did they keep the property okay? Yeah.

About subletting

What about subletting and things like that? Like, you know, sometimes they some cheeky tenants who try to put the wool over the property management teams eyes.

Yet so we actually look at social media as well and there’s been times where we’ve caught tenants out for having puppies that they shouldn’t be having or and or, you know, subletting as well, where they said, oh, if we’re looking for a property and we’re looking for somebody to move in so they already know they’re going to be subletting.

And so clearly they’re applying on a, on a lease agreement, on a rental agreement for “ABC Jones”, but then you’ve caught them out on social media trying to add more people in there that they haven’t put on the lease. Exactly. Which is illegal. Yes.

Pretty, pretty thorough. And what would an owner look for in a good property management team? How do they find a good property management team?

How to find a good property manager?

I think the two things that a lot of investors look at is Google reviews and Rate My Agent reviews. And that’s that’s probably the main factors to look at first. But also if you’re getting, you know, two or three rental prices, what value they get, they’re giving me, for example, if they’re just saying this is how much your property’s worth and this is our fees, that’s not a good property manager.

A property manager should have extensive knowledge

You need to be looking at a lot of different things. What clauses that you might put into the lease to protect them, what maintenance might be done on the property? Do they need a tax to depreciation? Do they need a capital gains valuation? Do they need cleaners? Do they need this… So you need to really look at it from a whole point of view and not just this is your property and so are fees.

So the devil’s in the detail. Yes.

It’s really important. You mention one thing. The clauses, what do you mean by clauses in a rental agreement?

Rental and property maintenance

So, for example, you might have a self-cleaning oven. You can’t use certain chemicals on that. You might have an induction cooktop, you can’t use it in pots and pans on that. He might have wooden floor that expands and you can’t have so can hot wet mops on there you want to make sure that the tenant isn’t using steam mops on there.

Pools, gardens, lots of different things that we’d look at.

So there you go. I didn’t even know that. So I’ve just learned something as well.

I love the detail. Look, your knowledge in that sphere is just amazing. And that’s, you know, no coincidence that of 5000 properties you’ve only got 12 within an application.

Work with Perth buyer’s agent today

Guys there you have. I hope that you’ve found that is as informative as we have. Thank you so much for coming in again, Robyn, and to all our loyal viewing base until next time happy investing.

If you have any question, please contact us.