How to maximise your property portfolio and boost cashflow through finding and keeping the best tenants

By Demii Kalavritinos 10 November 2017 | 1 minute read

You’ve found a great property that you’ve secured under market value, one that shows all the fundamentals for delivering sustainable growth over time, offers upsides for renovation or development potential, and on paper, should deliver a healthy yield.

Thomas Richards, Nicholas Bouris and Phillip Tarrant

But you can’t find someone to rent it…. We hear it all the time on the Smart Property Investment Show.

So, what do you do? Well, it’s time to look at how you’re managing the property – and whether you might need some professional help.

Self-management works for many property investors. If you’ve got the time, skills, aptitude and are geographically close (and willing to get calls in the middle of the night to fix a broken pipe!), you can manage your properties yourself – for very good effect.

However, many property investors turn to property managers to support them – supporting all aspects of their property management in return for sharing some of rent, which can range from 4-15 percent, depending on where you are located across Australia, and the services offered.


Whether you choose self-management or to use the experts, you need to be informed, educated and proactive to ensure you maximise your yield potential, reduce stress through untenanted properties and create the best performing portfolio you can.

In this episode of the Smart Property Investment Show, host Phil Tarrant is joined by Thom Richards and Nick Bouris from Managed, who reveal all the best tools, tactics and tips to manage your properties – and make the most of your investment.

As well as sharing the way they are transforming property management – using smart tech coupled with a focus on asset management to deliver better outcomes for tenants and landlords – tune in to get the inside word on:

  • Finding and keeping good tenants
  • Smart tips for rewarding tenant loyalty and boosting goodwill
  • Understanding what fair wear and tear is – and how not to sweat the small stuff
  • Insights on rental markets in key areas
  • Smart ways to approach the often-awkward issue of increasing, or even decreasing, rents – and how to keep tenants onside, happy and engaged
  • Why you should be proactive when it comes to maintenance and how to keep maintenance costs down
  • Key insights into adding value to tenants through new fixtures, fittings or amenities, and how that may impact your tax position.

All this and a whole lot more on this issue of the Smart Property Investment Show.


Make sure you never miss an episode by subscribing to us now on iTunes! 

If you liked this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn. If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

Suburbs mentioned in this episode:
Mount Druitt
Elizabeth Bay
Double Bay

Related articles for reading: 
What keeps investors up at night and which professionals do they turn to?
The keys to managing a successful 17-property portfolio
On finding good property managers: ‘Follow the person, not the brand’

About the author

Speaker 1: Welcome to The Smart Property Investment Show, with your host Phil Tarrant.

Phil Tarrant: Okay everyone, it's Phil Tarrant here. I'm the host of The Smart Property Investment Show, thanks for joining us. I do apologise in advance if I sound a bit weary, I've just jumped off an aeroplane from San Francisco in the U.S.A where I was fortunate to spend a week with some really bright, smart people talking about the future and whether or not we're gonna be taken over by robots. I really enjoyed it, it was part of an event that Momentum Media put together, taking a whole bunch of finance execs and property execs over to the U.S to understand disruption in the tech space, in particular in mortgages and how people buy real estate.

            And I'm happy to report that for the immediate future, I don't think we're gonna be all replaced by robots. But my takeaways from that particular event was that technology is changing the way in which people can provide services particularly within mortgages and real estate. And what is reassuring is that the quality advice and the need for advice and the value advice, is never more apparent than will be into the future.

            So we talk quite at length around getting your A-team together when you are investing in property, a good account and a good mortgage broker, a buyer's agent and property manager to support you go down that path and over time you're going to say technology, I feel, replacing a lot of the traditional tasks that have been undertaken by some of these people. But the good advisors within the property investment space are focused people so they're gonna work with you to understand your needs and goals, how you gonna get there.

            Sometimes be a counsellor or sometimes be a motivator, sometimes be a voice of reason or a hard truth to get you matching on your way better. But don't discount the power of the person, when it comes to building your portfolio. But also don't discount the value technology to do a lot of the heavy lifting to get you into a position where you can be a better property investor and grow wealth through property.

            And I'm gonna use that as a bit of a segway, and I'm quite happy with where I've ended up because it's allowed me to introduce two guys into the studio. Nick Bouris and Thom Richards from Managed. How you going guys?

Nick Bouris: Yeah, well thank you. Thanks for having us.

Thom Richards: Good, thank you Phil. And I might switch studio, I really like it in here.

Phil Tarrant: You like it? It's all right?

Thom Richards: Yeah, yeah.

Phil Tarrant: It's okay?

Thom Richards: We did some professional podcasting out of Southern Cross and I'll tell you what, you guys got a pit and some good equipment here, and a good size room too.

Phil Tarrant: We're not here to mess around, this is why we ranked so highly when it comes to our podcast, particularly the Smart Property Investment Show. What I just spoke about in terms of coming out of the US, and this is really conducive to what you guys are doing within the property space. You guys are looking to shape the way in which people manage their property.

            So, in all parlance, they probably call you probably managers but in the new world, you guys are using really smart tech to change the way in which property investors go about managing their property and growing wealth through properties. Thom, pretty much a fair assessment what you guys are up to?

Thom Richards: It is, yeah. We want people to not see us as a typical property manager. We want it to be more of an encompassing role, trying to change the way that we approach those traditional property management tasks, make them a little bit more efficient, but also have a focus more on the investment side of things and the performance of the property rather than just taking names at a door or organising a trades' person.

Nick Bouris:   Yeah, just to sort of add to that. Thom and I really wanted to touch the performance of investment properties and we figured, how do we best do it that? Where can we sort of position ourselves where we're in a position to influence the growth of these assets and as you'll know Phil, with an extensive profile yourself, having a property manager ... A good property manager is worth their weight in gold. And they're often people that are right alongside you throughout that process of owning the investment property.

Phil Tarrant: Where your head space is, I really like it. And to go back to my original comment about spending some time over in San Francisco. I'm always trying to evolve the way I think about business and obviously I was over there for many different reasons, but my takeaways from it was, how this fits within the property investment space and I've been thinking about this a lot over many years myself and my colleague Alex Whitlock. If you listened to our last podcast, you would have met him, who we share the Smart Property Investment portfolio with.

            There is a way in which I feel, we feel that people are gonna be smarter about managing their property assets, changing the way in which property managers, and I said that in inverted commas, provide services support to property investors. And we like what you guys are doing, and full disclosure for all our listeners.

            We like it so much that we decided to back these guys with some investment, because this is a market, which is going to change and we feel that you guys got the idea right and obviously it's gonna be a lot of moving parts moving forward. But things are changing within this space and I'm excited about where you guys are gonna take it.

            What I hope to get out of this particular podcast is to really just give our listeners a bit of a greater insight into how they might be able to manage their property portfolio more effectively, from a management perspective. And Thom I know you've come out of traditional property management land and you've built a rent roll and you've sold it, and you've done all that sort of. So you know property investors, so I wanna dig into your mind today, and try and get some secret source for our listeners around, how they can be better at managing their stuff.

            It all comes down to really finding good tenants, right? How can you improve the yield on your property? You make sure you've always got a tenant in there, point number one. But how do you find good tenants?

Thom Richards: Well, the biggest ... I mean, obviously as you mentioned vacancy is the biggest killer. So, good tenants, obviously they look for a good deal. They look for the right property, at the right price. They don't want something that's overpriced, they don't want something that's under-priced.

            They basically want something that is going to be easy to apply for, easy to move into, with a seamless management process behind it. And something generally, that they can stay in for a longer term. So, it's gonna be a home for them for quite some time. But the biggest reason for a turn over, for losing somebody, would be poor management. It's the biggest killer, and brings on vacancy.

Phil Tarrant: So irrespective of whether you choose to manage your property yourself or, if you use a property manager. And a lot of listeners choose to do it themselves, and that's cool. What do you need to look for when you're assessing tenants? You obviously get them to fill out some paperwork and you get a gut feeling whether or not they're gonna do a runner or whatever. What's those three four things you really need to see on an application for you to go "Yeah, these guys are kosher. Yes, let's get into a property because they're gonna pay their rent?"

Thom Richards: The application process, as most tenants would know, it's pretty arduous. There's a lot of information required and it's kinda bending over backwards to get bank statements and tenant ledgers and all those kinda thing together. From an agent's perspective, the best thing ... Well the two things you're looking for is their ability to pay the rent, and their ability to treat the property as if it's their right. The two most important things from an agent point of view, and from an owner's point of view.

            So when it comes to paying the rent, just having a tenant ledger from your previous tenancy, and backing that up with a bank statement to show that you can commit to a regular payment cycle, making your rental payments in full and on time.

Phil Tarrant: And you need to eyeball someone, if you're gonna put some money into a property, do you need to eyeball them and actually go face to face?

Thom Richards: A lot of agents have a different approach, a lot of people are getting indicted with applications and generally a property manager may be a little bit overwhelmed by the number of applications that they've got. They might not remember that person, so they do it very much of the paperwork in front of them. They've got 30 applications across 10 properties from a Saturday, it's gonna be very difficult for them to judge someone's personality or even remember speaking with them. So, the paperwork is a really important part of applying for a property, just in case that property manager doesn't remember speaking to you.

Nick Bouris: And just on the point of that eyeballing, just don't forget that a property manager or a property management agency, with the rent roll of hundreds of properties. Seeing those properties turn over. I don't know, once a year, twice a year, whatever it may be. They've got a much better ability to evaluate and assess. On an eyeball basis, who looks like a good tenant. Who's gonna not fuck your place up.

            If you're a self-manager in property, you're probably only seeing one or two ... You might say under four or five people in the round of letting you place ... For the first 12 months maybe another four or five ... It's not really a great sample size, to sorta work out who's gonna be the right tenant for your property.

Phil Tarrant: It's a really good point and I think a lot of people who self-manage. And some manager are great, if you've got the time and a band with the skill set and all that sort of stuff. But a lot of it comes down to the gut instinct, right? So like "Did I like that person? Are they like me, or they gonna look after my joint?" Right?

Nick Bouris: And that's the point, it's less of a gut instinct with your property manager. I mean, they've got a much wider data set to draw upon ... Past experiences, which are happening daily at our office certainly.

Phil Tarrant: So you can look at sort of benchmarking it, you can apply filters saying, "Here's an application, because of experience ..." If you manage properties, these are your red flags, these are things you look for and you can pretty much Tom, sort of blend it all together and find out the right total.

Thom Richards: It's sort of a recipe you've got all of the ingredients for a right tenant. You've got to tick those boxes and make sure there are no red flags as you say.

Phil Tarrant: So what are the red flags the red flags then?

Thom Richards: Red flags would be ... Well, first of the inconsistency with payments. Another big one would be not getting the bond back, the previous tenancy. Even if something goes wrong with your property when you're moving out and you damage something, a proactive tenant will be open about what the issue was, open to fixing it for the landlord, to ensure that bond is refunded in full. If it wasn't taken, it means generally that there was an issue when they vacated that property.

Phil Tarrant: And just a story all through your experience. Most exits are quite clean when it comes to people leaving a property or is normally a bit legacy issue with ... A bit murky when it comes to the bond or-

Thom Richards: It's difficult, it depends on the property and the issue is that we find, especially in a market like Sydney, because a lot of landlords don't spend the time to make sure their property is in tip top shape between tendencies-

Phil Tarrant: Good point.

Thom Richards: -Because they know they're gonna get that return. But that does create issues further down the track, especially when it comes to tenants moving out because these issues, they snowball and they become ... Starting off with one tenant and they get a little bit worse with the second tenant. Where does that landlord draw the line and say "You are responsible for this damage now that it's become obvious and it's affecting my ability to get another tenant." So it's down to being diligent with your maintenance and your updates and your reporting, to minimise those issues at the end of each tenancy.

Phil Tarrant: If you haven't listened to it, go and listen to that ... It's probably about four or five podcast guys, quite interesting and it's tiny. Had it guy on who is a property investor and he's got properties in Elizabeth Bay or Double Bay or by something out there like Little Studios and stuff. And he ended up with crack addicts in his properties. He was self-managing, they all looked okay on paper, but when he got them in, it was just an absolute nightmare and they his joint, and they didn't pay the rent and he ended up in tribunals and ...

            Getting the wrong person into your property can be really detrimental to your overall asset. So it's critical that as a property investor, to make sure that you get the right person in, point number one. But in putting up to it ... Had he keep them there.

Thom Richards: Taking care of them.

Phil Tarrant: Taking care of them, and to have a quick chat about taking care of people, I look at some of the properties in our portfolio. I'd like to think we're pretty good landlords, right. We listen people, if they want something fixed, we fix it. But we've got a property up here in Brissie who's got an old couple in it, and downsize or somewhere other in ... They're adding stuff, and we ponied up some cash to buy some plants to enjoy ... It's really important to them.

            So little things like these, taking care of them ... But it becomes a point where it's taking care of them and retaining them, versus someone taking the piss and always marching to beat of their drum and being pushed around by your tenants. So, how do you find that balance between overkill or overcompensating to keep tenants, versus maybe it's time to part company and move on?

Thom Richards: Well it's a little bit of education. I mean, attendance will push for any sort of update or any sort of maintenance, even if it is out of the realm or responsibility for that landlord. So, it's understanding as an investor, what your responsibilities are, what your requirement to them is, and then it's up to you to decide if you wanna provide those additional perks like you discussed, you've gotta work out exactly what the real benefit is.

            If you've got a tenant that's been there for six months and they're demanding things and wanting updates and improvements to the property without having developed a track record with you, obviously that's not the ideal situation but if you've got someone in there, as you said, they're parking up for a long time, they've treated the property perfectly for a couple of years, they've taken the increase without complaints and you really wanna make sure that they are being taken care of. There's no harm in going above and beyond with that kind of thing and improving the property for them whilst they're in there, in the hope to retain them even longer.

Nick Bouris: Interestingly, you know you mentioned a story about the guys up in Queensland in one of your investment properties Phil. A friend of mine Aaron, who's just come onto our rent roll. He was just ... In terms of just providing the basics. He had it an old carpet in his place in property in Bronte, asked the landlord and the property manager to replace it a number of times, smelled ... I've been in the place.

            What was once a white carpet, is now yellow and mould. Property manager and the landlord, really dug their heels in, gave it a stain clean or something very basic like that, couldn't get the smell out, couldn't change the colour of the thing. Still looked old and mouldy as hell. He's just bought the place next door to him, he's now in our rent roll. Hasn't given the management to ... As a tenant, hasn't given it to the property manager that was managing his place when he was a tenant.

            You've really just got to be careful, because I mean ... Don't forget, those tenants will eventually become property investors one day. They've cut their nose off to spite their face type of thing. Lost the business in terms of the tenancy, lost the business in terms of the management on the new property too.

            So, I think just being reasonable, and giving tenants even just the basics is an important thing as a property manager and as a landlord.

Phil Tarrant: Couple of questions from that discussion that have come up. The first one is, what does it mean to actually be a good landlord? So, if you're sitting there and you go, look the carpet's fine, get on with it. Shut up.

Thom Richards: How do you turn, it's very qualitative isn't it?

Phil Tarrant: Yeah, yeah. So how do you work out what you need to do with the property … How do you work out to... You wanna have longevity and consistency in your rentals, and you wanna reward loyalty as well, right.

Thom Richards: Absolutely.

Phil Tarrant: So, when do you start rewarding loyalty and you start giving them new stuff? Or do you do at the front end and just hope that it's gonna make a sticky tenant. The problem is, if you're self-managing you're probably not gonna be able to have the experience of bandwidth to do it. And if you self managing, you're probably a bit more or a penny pincher, and you just go ... Because some horrible landlords are around. Don't get me wrong, who just don't care, who are just downright miserable. I live in a reasonably nice place now, but during my 20's and stuff, I lived in some shit holes, right?

Thom Richards: Yeah.

Phil Tarrant: And it was bad. The landlords didn't care, it was just like backpacker houses and most times, they just don't care.

Nick Bouris: Look, there are some that are ... Just as a balancing point to that argument, there are probably some landlords that ...If it is an expensive item to replace, how much is a cat ... Thom comes from a renovation development background, as well his real estate and probably management experience. I mean, how much would it cost to replace a carpet in a two bedroom apartment?

Thom Richards: Maybe if you just choose even the smallest example for the inner city, you got an executive one bedroom, you can go a couple of thousand dollars on a decent carpet.

Phil Tarrant: Yeah.

Thom Richards: But when you bring in the depreciation side of things and potentially the increase in rent.

Nick Bouris: So it's my mate in Bronte, Arron who's now in our rent roll, what was he looking at to replace his carpet?

Thom Richards: He was looking at spending about three and a half thousand to replace the carpet.

Nick Bouris: Okay, so it's ...

Thom Richards: And then a coat of paint.

Nick Bouris: So look, let's just… He's talking about the property that he's just brought over to us, the one that he bought. But he was living in an identical apartment right next door, so let's just assume it's the same amount for the one that he was living in as a tenant. I mean, three and a half thousand, that's a fair bit of change. And some landlords might be in a bind, and not have the cash to pony up and pay for these corrections to the place, if you will, or maintenance and repair issues.

            But to knock back consistently, and to not come up with a way of moving forward on that repair or bit of maintenance that needs to be done. I think that's ... Maybe they could sit down and work out some sort of payment plan to get on to ... A reduction in rent, or some sort of compensation. You can't just straight away say "Hey listen, no I'm not gonna do it." Grin and bear it basically, or nic off after your term is finished. Come up with some way of compensating them, either give them a discount or work out a payment plan to getting that repair and that maintenance done on the place in the future.

Phil Tarrant: It's really strategic and I now look at some of the properties in our portfolio, where we would say this needs some work, this particular property needs some work, maybe with purchase and it's already got sitting tenants and we got ... We'll just leave it. Let's just leave it. And as long as the tenants are happy to pay what they're paying right now we'll let it go.

            And we won't do any further improvements to a point in time when they choose to move out. And then we'll spend a few bucks and then we'll lift the calibre of the tenant that comes in and calibre being they're willing to pay more money and maybe have a different outlook or a different living.

Nick Bouris: And who knows Phil, you're ponying up a little bit of cash to make their life a little bit better. When the end of the term comes around they're looking to release, you might get some more rent out of them for the following term.

Phil Tarrant: Absolutely.

Nick Bouris: So a little bit of goodwill goes a long way when you're asking for another 20-30 bucks a week after the place releases for another term.

Phil Tarrant: So then it's a good point and goodwill, loyalty, rewarding loyalty.

Nick Bouris: Absolutely.

Phil Tarrant: You wanna keep your tenants in your property and to spend three thousand bucks or two thousand bucks on some new carpet on a property that's probably getting rented at what? Seven hundred bucks a week, or two or three weeks, you've lost the price of the cost to put the carpet in anyways. That said, if you chucks a new carpet, you're adding to the capital value of the property, getting depreciated obviously. But there's upside benefits as well if you do improve a property to get a better calibre of tenants in there.

Thom Richards: Yeah, you also get the tenants on side, you've got a bit of-

Phil Tarrant: Goodwill.

Thom Richards: Yeah it's goodwill, but you get cooperation from tenants as well. If you're showing them that you're working for them, you get them on site and that that comes across in a multitude of different ways, everything from access when you need to get in there and just do something. Whether you want your rent to be paid on time, that's an extreme example but ...

Nick Bouris: A tenant can make your life difficult as a property manager and by default or by extension, the property owner as well. You don't want them calling you ... Decided to go the other way with it and hassle you on every single little thing. If you go and help them out that one time, they might think to themselves the next time they need something done. Do I really need it done? Maybe I'll leave the property manager in the landlord alone this time.

Phil Tarrant: So, how do you find a good property manager that is the advocate of the owner of the investor, but also very tenant focus? Obviously you get a foot in both camps, right Tom. So how can you always have the best interest of the investor friend of mine? Often that might be some hard truths to give to the investor to say, "You need to be doing this."

Thom Richards: Yes. I think the most important thing is transparency on that. You just need to make sure that both the tenant and the owner are on the same page is what they want to achieve. And it's just a matter of being a mediator at the end of the day. The owners job is to get the most money out of the property it's what they bought it in the first place.

Nick Bouris: You need two to tango right? And although the landlord is strictly speaking your client and the ones that are paying your wages bought by management phase to remember that you need a tenant in and then the tenant needs to be happy in order for the landlord to get his rental income. And by extension pay your management fee. If you take a holistic view to it like that, then you can definitely justify being in both camps at the same time.

Phil Tarrant: On that page then, what should you be looking for when you're choosing a property manager?

Thom Richards: The main thing is turn over for me because if they're turning over tenants, generally the tenants aren't that happy being managed by that particular person.

Phil Tarrant: So, that's an indication of poor management not an indication of they're just crap tenants?

Thom Richards: Yes.

Phil Tarrant: So one of the same.

Thom Richards: For me, if the agency is turning over a lot it could have something to do with the poor management. I mean we have got in the inner city in Sydney it's something like 40% turnover at the moment in terms of tenant searching for new properties and with rents going up there's got to be a reason as to why they're moving around the properties and looking for the next best thing. One of the biggest factors is that agents or owners aren't adhering to their requests quickly enough. That's the biggest turnover.

Phil Tarrant: Could I argue? The flip side of that would be if someone hasn't got any tenants turnover. They're probably not doing a very good job, because they're probably not putting positive pressure on rising up rents in line with markets. So I know some places haven’t had they're rent increase in 10 years. How well is someone managing a property right? So it's a fine line balance.

Thom Richards: Ideally in that situation, they may be getting the increases, but they're actually being open and communicating with their tenant. They're advising them what the market's doing, they're letting them know that, "Okay, well maybe the market is $30 away from where we are, but you guys have been great. How about we agree to a $15 increase or a $20 increase and we re-sign a new term?" So they're not getting that turn. They're still increasing the value of the rent that's coming in the door.

Phil Tarrant: I want to touch on a little bit later on about the dynamics of pushing out rental or decreasing rents, 'cause it's often a tricky ...

Thom Richards: Yeah, it's a delicate situation.

Phil Tarrant: It's a very delicate situation. Both the tenant and the owner, it's in a lot of market conditions. Just before we move on. What's your observation on ... Question to both of you guys. If you self-manage, even if you got a proper manager doing it for you. If you get too close to the tenant, so you potentially become compromised by ... If you're self managed for example, you collect the money direct from someone, "Little Johnny's had problems at school or XYZ, his car is broken down, I can't pay the rent" Or whatever.

            How do you deal with those situations? How do you not get too close where you're compromised, but close enough to be thoughtful and a good landlord.

Nick Bouris: That's a classic question and I think one that's much broker than just property management. Having someone in the middle as a broker so that you're not the guy where the directive isn't directly coming from the person asking it. You're asking anyone for something and they're gonna push back and to not have someone in there that can point to themselves as an intermediary and say that they're only acting on behalf of someone else is important. Because then you can really step back and play hardball.

Phil Tarrant: An amenity for the investor to not be connected with the actual tenant is a positive point for using a property manager.

Nick Bouris: Absolutely. Sometimes the reasons for pushing back might be less than adequate, but a lot of times that they are reasonably founded reasons. Some of the people might be experiencing hardship, their daughters are having surgery or some other major non-trivial reason for them not wanting to pay more. Without trying to sound like a cruel hearted bastard you wanna be able to step back from that and not really hear those things and just put your directive forward.

Phil Tarrant: And it's a business investing a problem.

Nick Bouris: Absolutely. Totally.

Phil Tarrant: And obviously that's one of the positives for using ... A problem manager talk about all the show or that's managed by some really good agents, right across Australia where we do have our assets. So I don't want to manage my own property, so I think it's a headache and I won't touch it. I'm happy to give away a bit of the rent in terms of fees, but is there a time when it makes sense to do it yourself, to manage your own property Thom from your experience?

Thom Richards: Personally, I prefer to have a manager just like you've got with your portfolio, but there's a lot of people that have a little bit more time-

Phil Tarrant: I like to be balanced, gotta to be fair and impartial here.

Thom Richards: Definitely. One of the biggest demographics for self managers is sort of retired tradies and those kind of guys, because they've got the skills to look off of the property themselves. They're usually on call, so they can actually attend to an issue that the tenants got quicker than an agent can facilitate. 'Cause they've gotta go down the path of collecting quotes and facilitating times to inspect the property and make the repairs.

            So a lot of the DIY landlords that we come across, they do it themselves. They're leaving the property, they can shoot over there at a moment's notice. They collect the rent straight from the tenant and they give them a helping hand if they need things. And a lot of them are quite hands on. Some people just prefer the control. They like to know what's going on, they like to have direct lines of communication with people living in a really expensive asset of theirs.

Nick Bouris: I think in any case you've got to justify whatever you're spending on your investment. Right? So, if you're spending your own time, what's that worth to you? If you're spending the management fee is, 5%, is using that management team getting you a return comparable to 5% or greater, I would hope so. That's certainly what we try to achieve at Managed.

            Or if you're using DIY and the technological tools are providing you the ability to manage your property too. What are they providing to balance the cost of whatever the tool is or whatever the time spent using the tool is. You gotta think about this thing as an asset always and justifying whatever input is going into it. Whether it be your own time or property manager's time or a combination of the two.

Phil Tarrant: The last thing you want is a phone call saying all my taps leaking, can you fix it, how do I do that?

Nick Bouris:   Like God knows what hour of the night.

Phil Tarrant: No way in the world. My weekend is my weekend, right?

Nick Bouris:   That's right. Convenience is important too, right? You can't always look at things as an investment decision, sometimes you only get one crack at life. Do you really wanna be spending a fair portion of it managing an asset. That's why you need to invest in things.

Phil Tarrant: I think it comes down to good investor EQ. Like having the apathy, the sensibility, the human touchpoint to be a good landlord, but being a realist about it. How does that fit with the framework of you trying to make a return here, right? You're trying to get money in the door and seeing the gap in the valley. So they're the best landlords. Also, I like to think I fall into that basket. I want people to enjoy living in the places that I own.

Nick Bouris: What Thom and I like to do is ... There is a cost to our service, but we wanna improve the assets value, whether it be reducing cost or increasing income of the asset to the point where our fee is paid. Anything above that is just taking the headache out of life for you.

Phil Tarrant: Touch on this quickly. So based on that quick dialogue I had around this stuff I was learning over here in the U.S. recently. You still need people to help manage your property, but a lot of the heavy lifting can happen through technology right? This is where we're heading. And that's pretty much what Managed is doing.

Thom Richards: Exactly. We're taking-

Phil Tarrant: Putting the human touch where the human touch is mostly powerful.

Thom Richards: And where it's most required. Landlords still need to feel confident that they're getting the most out of their investment, or that things are being taken care of. But there are a lot of mundane task that sits beneath that kind of senior adviser role, that can be taken up by technology. And allows those property managers to communicate with their landlords, provide them more sound advice to help them really get the most out of these investments.

Phil Tarrant: So, the advice is the important bit, right? So, the advice is something, which is never gonna be replaced by robots or computers or technology or whatever. And it comes down to your point. I wanna talk about ... You mentioned beforehand how a red flag is when someone lost their bond in their last place or they've trashed a joint or whatever. So this whole concept of fair, wear and tear is always a point of conflict, sometimes between investors and tenants right? "They trashed my joint, I want it repainted."

Thom Richards: I want compensation, yeah.

Phil Tarrant: And I'll go, "Well, you knew that I had three kids and a dog and dogs wreck lawns and kids draw pictures on things. So it's all part of things." Where does it lie, this fair, wear and tear thing, because it's always a bone of contention.

Thom Richards: It is a very difficult topic and it's very much a grey area, but there are a number of things that you can look at. I mean everything from the size of the property. So if you've got a four bedroom terrace, the demographic is going to live in is most likely you're gonna be a family or you can get four students, is probably worse.

Phil Tarrant: It's worse.

Nick Bouris: Definitely worse.

Thom Richards: But if you look at a one bedroom in the city for instance it's lived in by a professional, they're very rarely there. They've got a busy life, they eat out. The difference in the wear and tear between those two types of properties gonna be quite dramatic.

            And also the actual age of the property itself, things are more likely to go wrong in a property that hasn't been renovated in 20 years as opposed to a property that is just undergone a top quality renovation. They've done the job properly and they've documented everything. You've got warranties and all the other information. That's less likely going to be an issue than if you've got a property that you've just neglected a little bit and just place a tenant in there and it's just been sitting stagnant for sort of 10, 15 years without any TLC.

Phil Tarrant: So don't sweat it too much, right, is that the idea?

Thom Richards: Yeah. I think the most important thing is just to make sure that you've got the information recorded.

Phil Tarrant: Okay.

Thom Richards: So it's about that when the tenants move in everything is documented. You work on everything, you go through everything, you test all the fixtures and fittings, make sure everything's working for them, make sure they're happy in the property. I think a lot of people would just sort of do the hand over, they check a few boxes on a standardised form, take a couple of photos then hand over the keys.

            And it's not really a thorough test of what an accurate portrayal of the property's condition. So I think going through a little bit more detail in terms of the onboarding process so to speak with the tenant, making sure that they're completely comfortable in there, working through all the different parts of the property, making sure it's all working as a whole. And then if things do come out of the wood work, they always do, get them sorted quickly and make sure they're documented as well. Because then you may get to the end of the tendency, that item that was flagged at the beginning was dealt with straight away.

Phil Tarrant: That's how you build good will and loyalty right?

Thom Richards: Exactly.

Nick Bouris: That's right. At the end of their tenancy, right. You're doing those things closer and closer to the end of the tenancy. What's the residual in the tenants mind? Get them all out of the way at the start. Last six months have been a breeze and of course, they're gonna re-sign at the higher rental yield.

Phil Tarrant: That's a good point. How much did you worry about whether or not there was this many hooks in the wall for people to hang photos and stuff, does it really matter that much? I find it quite tiresome and tedious personally.

Thom Richards: Yeah. I've rented my fair share of properties, people just blatantly refuse to put a hook in a wall and then others they don't mind whatever you do. I mean, to be honest it's an investment property. You're gonna get a number of different people. Majority of people wanna hang up. They want their pictures on the wall.

Phil Tarrant: You want people to make it feel like a home.

Thom Richards: Exactly.

Nick Bouris:   Those are the tenants you want. They're in there for the long haul right. You're not putting any artwork up, I think you should be worried about your tenants.

Phil Tarrant: Worried.

Nick Bouris: Yeah, exactly. He's about to punch out the next few months.

Phil Tarrant: What about dogs and pets and stuff, what do you reckon?

Thom Richards:        I have an animal. I've always had dogs.

Phil Tarrant: You have dogs, Lucky dog is cool.

Thom Richards: I've also got a kid and I think the kid does more damage than the dogs can. But there are lots of things that you can do. We've got everything from pet references in the past. People have offered pet bonds, legally you're not allowed to take any anything ...

Phil Tarrant: But you're allowed to accept it, you know how to accept it, right?

Thom Richards: No four weeks is the maximum you'll have to take in terms of a bond, so you can't take a pet bond.

Phil Tarrant: Can you have a condition, anything saying that, if you've got a dog that you got to pay for it extra stain cleaning of carpets and stuff when you leave, right? You do that?

Thom Richards: The way that we tend to approach these situations is that you have to hand back the property in the same condition that you took it over. So, if you provide the property to them with a steamed clean carpet. It's a fair request that you asked them to hand it back in that same condition. And at the end of the day if a dog does some damage that is part of what can be claimed via the bond.

Nick Bouris: That's right. You're just relying on the tenant at that point. If they'd be willing to give you the money up front and they're probably gonna spend over and above the bond to make sure the place-

Phil Tarrant: You're not a dog person, are you?

Nick Bouris: I am, yeah. I don't mind dogs. I'm actually a guy that likes cats too.

Phil Tarrant: Okay.

Nick Bouris: I'm the broad church Phil, all welcome in my place.

Phil Tarrant: Really? You got a goldfish? Goldfish are cool. But I think the whole idea of making people feel like ... This debate around pets or no pets, I find it quite tiresome, again. One of those things I find quite tiresome. Every single problem we've got, put a dog in, we don't care, if it makes you happy, sweet. Pay your rent on time.

Nick Bouris:   And the Strata’s are bad too. They're trying to pass by-laws that ban pets or that kind of thing.

Phil Tarrant: It's all changing now. I think that in Victoria they've changed it so you cannot refuse to have a ... I don't know, a written balance, smartpropertyinvestment.com that you check it out. Yeah, but it's worth looking at anyway. We're digressing a bit. So, we spoke really quickly there Thom and Nick around pushing rents up, pushing rents down, keeping connected with markets.

            When you choose to do particular things, if stuff starts falling to bits you can reduce your rent to keep people in there. Just how do you judge these optimum rent levels so it's conducive to meeting the market or getting as hard as you can within the market without high turnover associated with increased rents? What's the secret, is there one?

Thom Richards: Not really.

Phil Tarrant: Okay.

Thom Richards: I mean, most landlords they forget the concept of the market is that it can go up and down. I mean the property values are increasing quite dramatically, but rents do fluctuate a little bit more so and they definitely don't grow at the same rate that the properties value has been. So, the best thing for me is that comparable properties are the key to judging what you should be asking for when your property comes available. And the rental market changes. Properties can be renovated, unrenovated variety of different types of property.

            So going by median or a suburb averages is not the right way to approach what your property is worth. The best thing to do, this infinite data available on domain and realestate.com and all those other companies to have a look at some really comparable properties, check out the photos, make sure that the likeness is close enough to your property to justify saying, "Well that one got 750." He's got a slightly newer kitchen, so I'm probably gonna sit around that 730 mark. I think that's the best yard stick for choosing where your property should sit.

Nick Bouris: Absolutely. We've got an amazing data insight into the ... The property market in Australia and probably around the world for that matter is probably one of the richest markets in terms of data. So there's plenty of stuff to point to. Whether it be from your tenants to your landlord, whoever you're trying to convince that what you're proposing in terms of a rental increase is justified.

            And pushing hard enough to sort of ... And not just asking once and then backing away a bit, but staying on it and making sure that your firm and having conviction behind what you say. The tenant in the past have been asked to pay more and I asked for discounts on everything. Just yesterday I argued about a $10 increase on my haircut and I ended up walking out of there paying-

Phil Tarrant: Is that what happen, is it?

Nick Bouris: You'd asked for a freebie.

Thom Richards: Yeah, exactly, right.

Phil Tarrant: It looks like you just got to bail out and tried to get around it.

Nick Bouris: I was trying for the free one by the time the guy was done. They asked me and I said no and that was the last I ever heard from the property manager and by extension the landlord on the rental increase. So, I moved out of the place. And I was always wondering whether they were gonna come back to me and to be honest if they had come back to me a second time I would have folded.

Phil Tarrant: So whose job is it then to agitate for a rent increase?

Nick Bouris:It's gotta be your property manager.

Phil Tarrant: It's the property manager.

Nick Bouris:They should be constantly analysing the market, they should know what a fair increase is and they should be the ones that are pushing on behalf of the landlord.

Thom Richards: And they should also be the devil's advocate. If an owner wants a premium for their property, they need to be able to pull that owner back in line. "Look, the market doesn't support ..."

Phil Tarrant: It sounds like a really hard job being a property manager.

Thom Richards: Yeah, it certainly is, yeah.

Phil Tarrant: To be a good property manager, therefore is it's weight in gold, right. Yeah.

Nick Bouris: Thom made an excellent point, sometimes going the other way makes sense to avoid things like vacancy, which can really hurt you, if you got three or four weeks I mean, rental decrease of 10 bucks a week or something like that can ... Saving you three or four weeks of lost rent. You'd be crazy not to take the reduced amount of rent.

Phil Tarrant: Absolutely. And we've been in the position in our portfolio where we've had to all down rents, because we can't get someone in 'cause market has changed. And for example, out in Mount Druitt in western suburbs of Sydney where we initially had rents at 300 bucks a week or whatever it was. And then every single man and his dog become property investors properties in Mount Druitt so there's therefore so many more investment properties on the market, which therefore puts positive pressure on maintaining those rents, we've had to bring our rates down in order to get somebody into the property.

            And yeah, you cop that for a year or so, and then you bring a tenant in who likes the place and you look after them ... That we're spoken about, and you can push your rents back up, so it does and roundabouts. It's a reasonable perpetual problem. A lot of the people I speak to, the buyers agents for example, they make it part of their annual ... One of the first things they do annually is to get every single one of the property managers and say "Should we be putting up our rents on this property? Can you please advise or what's your advice on that?"

            So you should be asking your property manager for advice as part of ... Like an annual health check, I guess, right? Is that the best way to go about it?

Nick Bouris:   Absolutely. Even just before the term of the lease as well, I mean, depending on where you come into the cycle ... Where the term finishes, even six months you should be having that conversation.

Thom Richards: And continuously having an in case things change.

Phil Tarrant: And when would you decrease rent? I'll just give an example then that is probably natural, is when markets demands that you do, most times you're forced by the market to decrease rents, right.

Thom Richards: Back to the point of having that good rapport with a tenant. Is being able to openly discuss what their plans are, and that's the best thing that probably Amanda can do, is move forward knowing exactly what that tenant's intentions are. If you know you're three months out of the end of the term and they're not happy, they've seen the place next door leased for $20 a week less. And they know that there's better options out there for them, a better deal-

Phil Tarrant: People talk right? It's all very visible, you're just jump online and see it.

Nick Bouris:   And if the intention is to leave and getting out right ahead in front of it, and start marketing early for the release of the property. I probably wouldn't pre-emptively decrease rents. I mean, if you have enough time in the market and you're getting the feedback from the market that that rent is gonna cut it in this current condition, then you should only change, but yeah, never do it until you test the market first.

Phil Tarrant: That's fair enough. And we spoke really briefly about maintenance right. So, obviously ... Probably, which is two years old ... Is 15 years old, had different levels of maintenance, and that might influence your ... Whether stuff, sort of wear and tear is appropriate also ... But it's best to be proactive with maintenance, rather than reactive with maintenance. Is that a fair call?

Thom Richards: The reason why you should be, it's not even so much as keeping the tenants happy. But it is about, in the end of the day, the investment performance. If you're proactive with your appears and maintenance, you're getting the best possible deductions, you're getting the best possible rental return for the property, provided you do it an intelligent way and don't over capitalise. But if you're on top of your repairs and maintenance and the general condition for your property, you're always gonna ensure that property is performing at it's peak in terms of your yields.

            And it also saves the headache and costs of that maintenance over the term, just nipping something in the butt early in the pace and making those cosmetic changes between tenancies can save repairs and maintenance bills and expensive tradie call outs, all that kind of stuff, over the next two years, three years, however long that tenants in there before you might get a chance to have another two week window to do those updates.

Nick Bouris: Getting to those deprecations right before tax time is important too, right. It might be a sound tax decision to go and do that.

Phil Tarrant: It's a timing thing right, so get it done.

Nick Bouris: Absolutely, yeah. Absolutely. I mean, you might have a lot of taxable income that you need to find deductions for or against and doing those repairs and maintenance at that time might make a lot of sense.

Thom Richards: I mean, it's anything. We live in a hot climate now, we're coming into summer, even something like an air conditioner is tax deductible. You could put air conditioning in for a couple of thousand dollars, increase the appeal of the property, especially on a 40 degree Sydney summer. And to save yourself a bit of money, increase the appeal for the property, make the tenant happy, and potentially increase the value as well. Just something as simple as that can go a long way. And that applies to a number of different-

Phil Tarrant: So it's changed a lot, depreciation, legislation after budget in May and I spent some time with Brad Bear the other day from Boom 2 who, if I have a depreciation question, I generally give him a call 'cause he knows. And the need for depreciation reports is as strong as ever, it's just changed the way in which you can depreciate stuff, but if you're buying new assets like in air conditioner or a new stove and stuff, based on your maintenance, you could still depreciate that under the new requirements of this legislation.

            So, if I was a ... For our listeners, go and well verse around that, we've written heaps of it on smartpropertyinvestment.com about how you can be replacing this sort of stuff. And the depreciation benefits associated with it. And to Nick’s point, around timing with this stuff, if you're getting towards tax time, speak your account pretty early on to understand where you are with it. So question Thom and probably both for guys we're running out of time and I'm enjoying the chat, so I'll keep going a little bit longer.

            The question is, and as an investor, I'm quite a self-reflecting type investor, what I do in life, I've always wanna be better at what I'm doing, at what it was the day before. So, as a property investor, I wanna be a good client for a property manager, so I don't wanna be one of those nuisance clients, who's always yelling and screaming at them, demanding more, telling them that service is shit.

            So, as a property manager, I was someone who is looking after someone's asset and we've spoken about looking after your asset is more than just receiving the rent. All these other things like, good advice round rents, good advice around maintenance, all this sort of stuff. How can you be a good investor for a property manager? So, how can you be someone that they want to do business with? Because I imagine you've had over the years, people who just go "I hate this person, they're absolutely a nightmare." The time and effort I'm putting into receiving whatever rent you're getting, a percent cut on there just not worth it, right?

Thom Richards: Just not worth it.

Phil Tarrant: It’s just not worth it, so how do you how do you be someone that people wanna do business with?

Thom Richards: I mean property managers are professionals. They know the market, they usually have a clear schedule. They know exactly what they need to do. They've got to set the task list when it comes to leasing a property to managing a property and how they address each of the items they've got to do. I think one of the best things is working with somebody that also has that same mindset. So they might have an investment strategy, they might know when they plan on doing these renovations, what their targets are, exactly why they bought the property, what sort of communication they need, and what sort of schedule they want to be on, all those kind of things.

            If they're trying to get somebody on the phone to answer a question, they might need to obtain a ledger at a certain point in time. For instance, if you've got the ability to reach out to them every month and say, look what's the plan for the month, or you applying for anything? Are you doing your tax now or are you getting that new car? Whatever it may be.

            If the property manager a little more proactive and they understand exactly what that investor wants, they're gonna have less of those points where the investor is chasing the property manager for something. But being clear with your needs as an investor, what do you want? When are you gonna need these things you gonna need to access at this time of the year? Are you going to do some updates? You need some vacancy, you got to move back into it. Whatever the plans are just being up front with the property manager.

Nick Bouris: I like that question Phil and I heard you asked a question on one of your other podcasts. My other problem as an investor, is my property manager gonna start avoiding me like the plague if I'm asking too many questions or taking too much of their time. And I think Thom's point is great.

            If you are someone that needs a lot of service and attention maybe best to have that discussion with your property manager and work out a time. Whether it be monthly or intra-monthly where you can sit down and get all your needs and concerns out of the way up front and not just fly in and out with a bunch of harassing start questions from time-

Phil Tarrant: Yeah, that's right 'cause you're just a nuisance, right? Because you're just a nuisance.

Nick Bouris: That's right. Instead of calling every time something pops into your head, write it down and arrange a time to sit down and address all those concerns at once.

Phil Tarrant: So you should have a conversation then with your property manager saying here's how we will work together?

Nick Bouris:   Absolutely. Set out a framework for it.

Phil Tarrant: And that's the best way. And most property managers will be quite malleable in terms of how they choose to deal with each… And I'm sure you were probably pigeonholed investors in a different camp. The annoying guy who just has a little time. The one who you can't get a hold of and never get a decision out of. They're all come in all shapes and sizes, but if you just establish that playing field, initially it's the way to go.

Nick Bouris: I wouldn't say ... And I wanna speak nicely about the industry that anyone is gonna you know purposely avoid a client. I just think you know they'll probably dish out their time evenly amongst their clients. And if you're someone who needs more time than others then you're gonna feel underdone because you're getting basically what everyone else is getting.

            So, making it more efficient on yourself as the property investor and the client and putting all those things into a bucket and saving for the time that you do have time, time with your property manager makes a lot of sense.

Phil Tarrant: I've always found when it comes to investing in property and as someone as a purchaser of services, so he's a broker and he buys out your property manager and all that sort of stuff. The more they like as a person the much better the outcome, the service that you receive. It's just human, right? So it's nice to be nice to people. That's all I'm gonna say.

Nick Bouris:   Absolutely. You get a lot more out of it.

Phil Tarrant: You get a lot more out of it. So, Thom, and we'll finish with a question and I'll put it to both you guys. How do you know your property manager is doing a crap job, when is it time to punt them?

Thom Richards: Well, when you don't hear anything you're pretty safe to say they're doing a good job. I mean, it's a little bit of a catch 22, because you can assume that if you don't hear anything then they've got everything under control. But you can also assume that they're trying to keep things from you.

Phil Tarrant: Okay.

Thom Richards: So it's making sure that you're getting your routine reporting, but you're not hearing things constantly. So at the end of every month you get a report, you know exactly what's going on with the property. You know when your rent's coming in, you know what issues are being addressed and you know that the quotes were collected for that particular work order. And that property manager really push for the best price. They didn't just go to their go to trades person and fix it off.

Phil Tarrant: There's so many things were gonna touch, but we don't got time around chossing tradies and stuff. Nick when do you punt your property manager?

Nick Bouris: I'll put it simply. Two buckets, are your cost reducing? Is your income increasing? Those two things on any standard P & L will result in a better profit for you. So if you can mark those things as going in the right direction then you should be keeping the property manager with ... If they're going the wrong directions and you're feeling just a general level of frustration towards your investment probably that's the time that you should keep the property manager.

Phil Tarrant: You really got a point. Look at numbers, good, interesting. Let's get back in, I really enjoy the chat. So many things I want to touch on with that.

Nick Bouris: Yeah great.

Phil Tarrant: Yeah, it was easy. So, summarise really quickly. What did we speak about today? I thought this conversation around finding and keeping good tenants is critical right? It's incumbent of all investors to make sure you do that well and look to your properly manager to help you out, fair, wear and tear. Work with your property manager and that sort of stuff. And maintenance be proactive rather than reactive.

            It's about creating goodwill the usual term Nick and I think goodwill with your tenants can go a long way. So when things get hard or things get tired or you know the place gets flooded and you're trying to do the best you can to help them out. They will remember that, so keep them inside a bit.

            The most important thing for me around this chat was just this dynamic around increasing and decreasing rents and that's always a real tricky one. We're fortunate to your point again Nick of having considerably amount of data out there to actually benchmark from. But then it still comes down to how well it's pitched, how well it's sold, how well it's communicated to the tenant and also the landlords.

Nick Bouris: Good summary of learning Phil.

Phil Tarrant: Yeah, I know.

Nick Bouris: I love it.

Phil Tarrant: I think I learned a bit. That's why I like doing these circuits here. As I said before, I love what you guys are doing. And I'm excited just in general around the way in which smart businesses is replacing a lot of the human element, with tech and channelling that human element to solve their matters and that's providing quality advice, which is obviously what you guys are doing. So we'll get you back in. Thom I'm gonna hit you off with this man. I want you writing some stuff for us around these points.

Thom Richards: Yeah, no that sounds great.

Phil Tarrant: Let's get a couple of articles from you. We probably haven't gone into absolute justice for all those summary points I've just made, but let's get you writing couple of things on smartpropertyinvestment.com.

Thom Richards: No, that would be fantastic.

Phil Tarrant: Go and check it out everyone. We'll make sure you can find it pretty easy.

Nick Bouris: And if you're unhappy with your property management service, managedhq.com.au.

Phil Tarrant: You get a plug in, did you?

Nick Bouris: Of course, I did. You promise me one Phil.

Phil Tarrant: Really? Okay. We'll see, we'll edit that out, so yeah. We'll work it out. But, nice one. And remember to check out smartpropertyinvestment.com that's my plug. If you're not yet subscribing to our daily news and market intelligence please do, smartproperyinvestment.com.au/subscribe, read all the social stuff. Come and check us out. You wanna be the first to know what's happening. And if you'd like to come to the podcast, we're always looking to share<

How to maximise your property portfolio and boost cashflow through finding and keeping the best tenants
Thomas Richards, Nicholas Bouris and Phillip Tarrant
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