Message from Helen Matsoukas – Blue Wealth Property Management Integration

I was introduced to property management when I was around 5 years old.

My Dad, rest his soul, would pick me up after school, and every Thursday we would go to our ‘investment property’ (which used to be our family home) and collect the rent from the tenants who lived there. I remember it so clearly.

Some days, it was easy.
The tenants would have the rent ready (cash of course) in a sandwich bag. Dad would count it, poke his head in the door to make sure everything looked okay and then we would leave.

Some days, it wasn’t so easy.
My Dad who was a hardworking, passionate, fiery, easily agitated Cypriot immigrant, lost everything in the 1974 war. He worked 10 times harder to get ahead. He didn’t like people taking advantage of him, but was also one of the softest, kindest men I knew. If the tenants were behind in the rent, Dad would see the tenant’s kids playing in our yard or sitting in the lounge room (where my sister and I used to watch tv as babies) and he would soften, giving them another week to get the rent together.

Dad’s decision to become an investor and a landlord was unintentional. There was no research methodology applied. His goal was simple, his dream was to move us out of the Housing Commission home he bought for $9,000 back in 1978 and build his own house in the new housing estate. He achieved this when he was 36 years old and assumed the role of landlord.

In those days, the property management world didn’t exist. Sure, there were Real Estate Agents who listed and sold a property, but there wasn’t anyone to manage rentals. Especially not in the early 80s and definitely not in our country town of Morwell.

I often wonder what my dad could have achieved if he had the support of a good Property Manager.

Today, almost every Real Estate business has a Property Management department. Some Real Estate businesses are even exclusively Property Management businesses.

It’s important to remember that Property Managers only earn income from charging fees – management fees, letting fees, marketing fees etc. Charging landlord fees is the only way a Property Management business can function.

So, when Melbourne went in and out of its six lockdowns and borders were closed, vacancy rates peaked at 16% and 17% in some suburbs. Profitable Property Management businesses were losing 50-65% of their earnings. Why? Because rents were being reduced and properties were sitting vacant for weeks and weeks and that led to no income at all!

Things have well and truly turned around now. In the past few weeks, we have seen numerous media reports about the ‘Rental Crisis’ and the constant commentary around property shortages and rental price hikes.

To paint a clear picture of what’s happening, the latest vacancy rates are listed below.

This is mind-blowing! We well and truly have a rental crisis on our hands.

This will create further pressure on rental pricing. So too will the increased construction costs, undersupply of property, the return of international students and workers. These are all factors contributing to increased rental prices.

So, should you increase your tenant’s rent when their lease is up, and by how much?

Working with your property manager

Your property manager is the person who needs to swiftly identify the peaks in demand and jump at every opportunity to maximise your financial position. Don’t let them leave money on the table for you.

Property management is a tough gig and COVID has defeated even the best in the business. They deal with a lot of crap day in and day out, and some property management businesses are taking cautious steps to ensure they have an income stream to keep their employees employed.

They don’t want vacancies for you or them and the impacts of the last few years have unfortunately made even some of the best property managers take a cautious approach to increasing rents.

How much?

If your property manager has suggested a conservative rent increase of say $10 per week, I would be challenging that. I’m not saying that all property managers should be suggesting $50 per week rent increases, but the reality is that in almost every case nationally, rents should be going up substantially.

Property managers need to take a closer look at what’s happening in the suburb your property is located on a micro-level.

• What is the suburb’s vacancy rate?
• What is the common demographic?
• Has the tenant pool returned to that area?
• Are tenants on the verge of returning?

How tough should you be?

If we have learned anything from COVID, it’s that we are all that little bit more empathetic. Landlords and tenants have been mentally and financially impacted and, like my Dad, it’s okay to make an empathetic decision.

Choosing not to increase the rent to alleviate a little bit of pressure on your tenants is fine if you can afford to, but make sure your tenants know this.

And for those of you who need the rent adjusted to where they were before COVID, then it is time to have a serious chat with your property manager.

Feel free to reach out if you want some guidance on how to have those conversations. Good luck with your negotiations.