Monthly Archives: July 2015
Dianne Barella: Tips For Growing An Outstanding Property Management Business
Business Development Manager, Dianne Barella talks to Harcourts about her strong track record in outstanding property management, and her property management tips for building success within your business.
Property Management Tips: Key Learnings
- Take advantage of the training on offer within your franchise or organisation
- Be clear on what your point of difference is and highlight this to potential clients
- Be flexible. As a property manager, no two days will likely look the same and sometimes you’ll need to be available outside of normal office hours
- Surround yourself with a team of positive people who understand the importance of putting the client first
- Being aligned with a strong brand can help to build trust with your clients
- Be yourself and be honest as this helps to build trust.
“Negative Gearing” Explained
There has been a bit of discussion on negative gearing in both the Australian and New Zealand media lately. So what exactly is negative gearing, how does it work and what are the pros and cons to having a negatively geared investment property?
What is negative gearing?
In a nutshell negative gearing is when a property investor borrows funds to purchase an investment property, and the cost of holding and managing that investment property is greater than the gross income the property brings in. Costs also included tax depreciation on the property and interest charged to the loan, but not the cost of the principal (capital repayments).
In Australia and New Zealand, costs incurred in earning income are generally tax deductible, so negatively geared properties afford investors certain concessions.
How does negative gearing work?
According to taxpayer.com.au, if an investor has a net salary after tax deductions of $50,000 and borrowed $102,000 at 10% interest a year to buy a property. Income from this investment property for the year comes in at $6,240 (which is after deductible expenses other than interest).
| Taxable salary | $50,000 |
| plus net rental receipts | $6,240 |
| Total assessable income | $56,240 |
| less interest deduction | -$10,200 |
| Taxable income | $46,040 |
| Tax payable (excluding Medicare) | $7,362 |
The tax payable on the $50,000 net salary without the negatively geared investment property would otherwise be $8,850, so $1,488 less has been paid in tax.
For more information on negative gearing in New Zealand, visit ird.govt.nz.
When to use a negative gearing strategy
If you have the funds to cover the shortfall between the cost of holding the property and the rental income, then you may be able to purchase a negatively geared property.
Negatively geared properties have certain tax benefits as detailed above.
Holding a negatively geared rental property long-term may see the investment gain capital growth, or become a positively geared property if the local rental market changes. However there are no guarantees which is why this strategy is sometimes called speculative investing.
The very nature of negative gearing means your investment property is essentially being held at a loss.
Negative gearing requires you to have the income to make up the shortfall between the cost of holding the property and the rental income, so if this shortfall is made up of income from elsewhere this strategy may not be suited to those close to retirement or about to leave the workforce.
Conclusion
While the debate on whether or not positively or negatively geared investment properties are the better option for investors, the truth is there is no definite answer. Both have their merits and drawbacks, and both cash-flow structures are currently possible in both Australia and New Zealand.
It really comes down to your financial situation and the type of investment property you are considering.
Notes:
There are two schools of thought – one is capital growth the other is positive cash flow, negative gearing probably appeals more to those looking for eventual capital growth – as some areas with promising capital growth opportunities don’t necessarily promise positive cash flow.
Videography – The Latest, Greatest Real Estate Marketing Tool
If you don’t incorporate videography into your business you will be left behind. Right now there is someone in your market differentiating themselves through quality video but soon it will be the expected norm.
Video shared on YouTube, Pinterest, Facebook, LinkedIn and by email is the marketing strategy of today. However that is not to say that everyone is doing it well. There is still the opportunity to stand out from the crowd.
Three common mistakes to avoid
- A common mistake agents are still making is creating virtual tours, either using 3D cameras or video that shows every part of the home.The purpose of your marketing video is to connect emotionally with the buyers. There’s no need to show every minute detail of a home or even every room. Instead feature brief glimpses of beautiful living spaces, quality features and tasteful décor, like a beautiful stone wall in the courtyard or sun filtering through plants or stained glass. Entice the viewer to want to see more.
- The second mistake agents make is to write a script for the video voiceover and then read it. Reading full copy can sound rehearsed and unnatural. Learn the script, then speak naturally using only bullet points and watch the language you use. Avoid terms such as ‘area’, instead saying ‘neighbourhood’ or ‘community’. Also stand up when you record as it helps to create energy in your voice.Intersperse you voiceover with music in the background as this softens the audio, and creates a feeling, rather than using voice alone. Search royaltyfreemusic.com for background melodies that match the character of the property. For example classical music for a classic style home, jazz or blues for an inner city apartment.
- The third mistake agents make is to create long video clips. Viewer click through drops dramatically after two minutes. Heed this reality and keep your videos short – ideally two minutes or three maximum.
Take your real estate marketing to the next level
Create video that tells a story. Include the community, schools, restaurants, and parks. Why the sellers are moving and what they have loved about the property and neighbourhood.
Prepare the home before entering the market and employ a home stager prior to shooting the video. Move bins and cars. Try filming in the day, night and twilight. Find the creative footprint for your marketing. Don’t be afraid to use something of the sellers that tells their story and use this theme throughout the campaign.
Ask your seller to post the video on their Facebook page. Get the neighbours’ email addresses and have the sellers email them the video – you will be surprised how many more listings you will pick up.
If you have your own stager and videographer you can keep the prices down. Approach a local wedding photographer or hire a recently graduated videographer to get started. Employ them to create your property videos and team promotions, but also have them video local charities and events, new businesses and restaurants openings and all current happenings so you have a stock of clips to feed to your website.
The use of video to market property and your community is quickly becoming an expected part of our service. The use of video to promote you, your team and your services humanises you and helps build relationships. So lets commit to quality videography.
Academy tips on filming
The Harcourts Academy has always embraced the use of video for training and has now released interviews@academy. A series of educational videos that you can watch on your mobile phone. Find out more about the Harcourts Academy and our training .
if you’re interested in exploring franchise opportunities with Harcourts!
The Benefits Of Pet-Friendly Rental Properties
According to the Australian Bureau of Statistics, 2.16 million renting families are pet owners – and over 60% of Australian families have pets. That’s a lot of potential tenants you’re potentially missing out on if you list your investment property as having no pets allowed. The thing that most investors don’t realise is the benefits of owning a pet friendly rental property may outweigh the negatives. Here a few examples…
You’ll widen your rental pool
With literally millions of pet owners looking for a place to rent, shutting the door on those with pets limits your potential pool of tenants, including those who may wish to get a pet in the future.
You’ll attract renters who may otherwise buy
Not being able to find pet-friendly homes is one of the most cited reasons renters turn to buying. The freedom to have pets and not worry about finding suitable accommodation for the whole family can turn a lot of happy renters towards buying their own home sooner. After all, no one wants to lose a member of the family.
Tenants are willing to pay slightly more rent
A lot of pet owners are reasonable about the amount of rent they’ll pay in order to have a pet in the home. Discuss up-front the possibility of a slightly higher amount in rent in exchange for a pet-friendly rental.
Pet friendly rentals means loyal tenants
Most tenants will ensure their pets are well-behaved knowing how hard it is to find another pet-friendly property and you’ll have more loyal tenants for the same reason. Knowing that the majority of rental properties are not pet-friendly means you’ll have an advantage on the competition and will more than likely have tenants who will stay long-term.
You can negotiate a pet bond amount
You can also negotiate to have a separate pet bond in the event a pet causes damage to the property. This will need to be negotiated up-front, and should consider the age and condition of the property as well as the rental amount being paid. Please note this is not available in every area, check your local tenancy legislation.
Alternatively you could negotiate to have the tenant pay for an annual clean if they have a pet.
Still worried? Ask your prospective tenant if they wouldn’t mind supplying a reference for their pet. A reference could include a detailed description of the pet’s size and nature, and include a reference from a third-party – such as their vet.
If you’re a renter looking for the perfect property for you and your pet, why not find a suitable home and ask the landlord/property manager if they’d be willing to consider a pet if you negotiated terms like paying slightly more in rent, or agreeing to a pet bond.