Thursday, July 28, 2016

Lease. Break. Two daunting words for investors.

In South Australia, we are seeing a growing trend across the industry where tenants are looking to break their fixed term lease. A correlation is emerging between the current sales market and buyers turning into tenants. 

Let me explain. At present, the number of properties for sale across the industry are very low, and many buyers are finding it challenging to secure a home within their desired timeframe. This is resulting in a spillover effect into property management. Many buyers are turning to the rental market as a 'stop gap' between homes. Then when they purchase their dream home many are looking to terminate their lease early. 

Unfortunately this isn't what investors want to hear. Being informed that your tenant is breaking their lease can come as a shock to most landlords. However it is happening. At Toop&Toop we are educating our clients to ensure they know exactly what their rights are, and how to navigate through the situation to make sure they achieve the best possible outcome.

So what happens if my tenant breaks their lease?

As a landlord, you can claim for the loss of rent until the premise is relet, pro-rata advertising costs, and other compensation which may arise under the agreement, such as a proportion of reletting fees. The calculation is formula based and is set down by the South Australian Civil and Administration Tribunal (SACAT) and can be found on their website.

However... investors, make sure you don't get caught out. SACAT does not look favourably upon 'unrealistic' rental expectations or a lazy agent. Feedback from the tribunal is that investors should be doing what they can to mitigate the loss incurred by a tenant, which means advertising the property in line with the market rents at that time. Agents are required to conduct regular open inspections and should be proactively looking to secure a new tenant.

Why can a lease break be daunting? 

Lease breaks can be stressful for both landlords and tenants. Landlords have suddenly lost the certainty a fixed lease once provided, and tenants are faced with the potential of paying two lots of rent (or rental and mortgage payments) as well as additional costs to let the property. 

Given the current environment, what do we suggest?

Our tip for tenants: Think 'where will I be in 12 months from now?' before signing your lease. This will help you determine if the property is right for you and your upcoming circumstances.

Our tip for landlords: Lease breaks or unexpected events can happen from time to time. We suggest having a 'sinking fund' for when these events occur so you don't get caught completely off guard.

Remember, your agent is here to help guide you through these situations if they arise. They will ensure you understand your rights and responsibilities under the tenancy agreement.


Regards,
Suzannah Toop

Thursday, July 21, 2016

What suburbs are running hot this winter?


At Toop&Toop, one of the most common questions we are asked is, "Where are the property hot spots right now?" It is a really interesting question and we are always excited 
to see what trends are unfolding. 

While some people may believe the winter market has been slow, Team Toop has experienced an extremely busy start to the winter months. Through our winter selling strategies and Toop Vault service, we have achieved some outstanding sale results across a wide range of suburbs so far. June figures from CoreLogic RP Data's Market Share Scorecard show that in our marketplace, Toop&Toop lead the way in both 'number of sales' and 'dollar value of property sold', with 18.96% and 25.87% respectively. Both results are ahead of the marketplace with the next real estate agency recording a market share of 10.42% (number 
of sales) and 10.20% (dollar value of sales). 

So, with this significant sample size of properties sold across Adelaide in June, what suburbs are we seeing leading the pack? Not surprisingly, we are witnessing stellar performances in Adelaide's eastern suburbs. Two suburbs that have particularly stood out to us so far this winter are Glen Osmond and Kensington Gardens.

Glen Osmond's median house price in June 2015 was $698,000 compared to $820,000 in June 2016 ... that's an increase of $122,000! 

Kensington Gardens also experienced a substantial increase in property value in the past 12 months recording a huge 18.99% growth. The suburb's median house price currently sits at $940,000. 

Online demand from buyers in these areas mirrors these statistics and is proving to be extremely high. According to realestate.com.au, 
properties in Glen Osmond are receiving a monthly average of 1,445 views online and properties in Kensington Gardens 1,337 views... both well exceeding the South Australian average of 549 views!

This trend is visibly flowing through to our open inspection numbers. Since the start of winter we have had strong numbers of buyer groups through our inspections in Glen Osmond and 
Kensington Gardens. We have an impressive 2,885 buyers registered with Toop Vault waiting 
to hear about properties in these areas as soon 
as they become available. 

The eastern suburbs of Adelaide has always been, and I imagine will always be, in high demand. Right now they are providing some fantastic opportunities for owners who are thinking of selling.

If you are one of the lucky few that owns a property in these amazing suburbs, it's reassuring to know that despite the cold weather, the property market is hot and there 
are some great opportunities to leverage this current buyer attraction to the area!


Thursday, July 14, 2016

The changing times.

It has been a sad week for many proud 
South Australians with the announcement 
that Le Cornu is closing its iconic Keswick 
store after first opening in 1861.

I remember visiting the store as a child. It felt like the showroom was the size of my entire neighbourhood. With a creche and ball pit on site, it truly was more than just a furniture store for many Adelaide families.

With the final day of trade expected in the next six months, it's a sad end of an era, and another sign that times are changing.

Business owners across Adelaide, Australia and the world are trying to figure out their place in the new landscape that is dominated by evolving technologies and changing consumer trends.

With disrupter brands like IKEA, Netflix, UBER, and AirBnB competing for our dollars, there is even more pressure to adapt and evolve than ever before. New vocabulary is being added into the dictionary almost daily such as 'geocache', 'smartwatch' and 'tech-savvy'... and many are becoming a part of everyday dialogue.

But the laws of business are like the laws of nature. Change is inevitable. And whilst a mix of global giants have rocked the business landscape, we are seeing a new trend of local emerging businesses pushing through the ranks; the 'little guys' are making their mark - 
in a David vs Goliath battle.

And if it can be done, I strongly believe businesses in SA will be the ones to do it. The environment we have in Adelaide - with a smaller, less transient population - brings out the brightest and most resilient leaders. Over time this has shown to be the best breeding ground possible for entrepreneurs and leaders.

And the proof is in the pudding. Adelaide businesses are making their mark across the country... and the globe.

Foodland at Frewville was recently named the 'best supermarket in the world' when they won the International Retailer of the Year at the International IGA Conference earlier this year. And, the South Australian success story, the Royal Croquet Club is now setting up in cities such as Shandong, China.

If we can find that balance, where innovative companies in Adelaide are having a go, and then are backed by a community that supports them - this is the perfect concoction. This is what being  'South Aussie' is all about.

Times may have changed, but the one thing that hasn't is the need to continue to support local brands. Let's help create the next generation of South Australian success stories and assist them in building a legacy, not just in our state, but also across the globe.


Regards,
Suzannah Toop

Thursday, July 07, 2016

‘You never get a second chance to make a first impression’ – Will Rogers

In today’s real estate market it’s clear how important property presentation and styling has become, and how much it impacts on the sale of a property. Approximately 75% of residential properties for sale now incorporate some form of professional styling and sellers are seeing an increase in returns on their investment in this area.

Generally people invest between $3,000 and $8,000 in styling their home, which equates to between 0.5% and 2% of the property value. The general rule is that this can add up to 10% to the sale of the property.

With presentation and styling increasingly adding to a property’s return, why do we hear stories of some sellers spending $15,000 and receiving little to no return, while others can spend $8,000 and more than triple their return?  There is a science to this. Return on investment on home presentation isn’t just luck. Employing an experienced agent to highlight who the buyer will be, and what they are likely to value, provides valuable insight for vendors on how to optimise their returns – which is key to achieving great results.

The questions we get asked as agents are ‘How much should I spend on preparation? Where should I start? How much money do I need to spend to maximise the return?’ There isn’t a one-size-fits-all approach. There will be different answers to these questions for every property, however, they will all start with the same approach. This is ‘starting with the end in mind’.

The science of working out how much you should spend and what preparation you should do, starts by working together with your agent and talking through who you believe will be the most likely buyer of the home. What does this person look like? Think about their lifestyle. What do they want from their new home? An exercise that we go through with our sellers is looking back to when they bought the property and remembering what attracted them to the home... often the buyer profile will be similar.

Once there is a defined picture of who the buyer is, the presentation plan of how much to spend and what to concentrate on to maximise returns becomes much clearer. For example, if we were selling a modern townhouse in Norwood, we may look to attract young professional couples as typically it is these types of buyers that are looking in the area for this type of property. Narrowing it down, if the property had an old run down fence it could significantly impact the attraction of this type of property to the buyer. Whereas, if you had a character ‘renovators delight’ property in the same area, with the same condition fence, the buyer profile is very different. This may be an extremely attractive option to developers or renovators so fixing the fence before sale would be a waste of money.

Adding this level of science to selling your home is very cool! If you are thinking of selling and would like to talk through presentation strategies to optimise your sale, make sure you chat to one of our team this weekend. We would love to help!