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12 SECRETSof the

MILLIONAIRE LANDLORD

PETER and KAREN HUTTONWinners of “Best Australian Estate Agent”

2“12 SECRETS OF THE MILLIONAIRE LANDLORD” EBOOKBy Peter and Karen Hutton

PETER AND KAREN HUTTON

“12 SECRETS OF THE MILLIONAIRE LANDLORD” EBOOK

This eBook is not intended to provide personalised real estate sales, rental or marketing advice. The authors and the publisher specifically disclaim any liability, loss or risk which is incurred as a consequence, directly or indirectly, of the use and application of any contents of this work.

Agent Brand Co Press

www.agentbrand.co

103 Herston Road,

Kelvin Grove, QLD 4059

Australia

Email: [email protected]

Copyright © 2014 Peter Hutton

ALL RIGHTS RESERVED. This book contains material protected under International and Federal Copyright Laws and Treaties. Any unauthorised reprint or use of this material is prohibited. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system without express written permission from the author / publisher.


Page 4 .......... Introduction

Page 5 6 ........ Secret 1 – THE ‘WINNING FORMULA’ FOR THE HIGH DEMAND RENTAL

PROPERTY

Page 7 9 ....... Secret 2 - ATTRACTING THE ‘GOLDEN TENANT’ FOR BIG BUCK RETURNS

Page 10 11 .. Secret 3 - INSIDER COPYWRITING SECRETS TO ‘TENANT PULLING’ ADS

Page 12 15 ... Secret 4 - THE FOUR LEVELS OF PROPERTY MANAGEMENT

Page 16 18 ... Secret 5 - THE 7 DEADLY SINS OF PROPERTY MANAGER SELECTION

(PLUS 26 TIPS ON HOW TO AVOID THEM)

Page 19 ......... Secret 6 - THE CALENDAR ‘SWEET SPOT’ – A (LITTLE KNOWN) STRATEGY

TO PUSH THE RENT UP

Page 20 ......... Secret 7 - THE ‘LOCAL PROPERTY MANAGER MYTH’

Page 21 ......... Secret 8 - TITIVATING ON A TIGHT BUDGET

Page 22 ........ Secret 9 - GOING FOR THE CORPORATE ‘MONEY BAGS’ TENANT

– IS IT WORTH IT?

Page 23 24 .. Secret 10 - GET RICH QUICK OR THE WARREN BUFFET APPROACH?

Page 25 ......... Secret 11 - SPOTTING AREAS THAT WILL BECOME HOT

Page 26 31 .. Secret 12 - KNOW HOW TO GET A PREMIUM PRICE WHEN YOU SELL

2 ......... To Summarise

Page 33 34 ... Your Next Step

Page 35 ......... About Bernie Kroczek – Your Local Mount Hawthorn, Tuart Hill,

Joondanna Agent

Page 36 ......... About Peter and Karen Hutton – Authors of this Book

CONTENTS


INTRODUCTIONBy Bernie Kroczek

I’m really pleased to write this introduction to “12 SECRETS OF THE MILLIONAIRE LANDLORD” because I believe in empowering landlords and that’s exactly what this little book written by the World’s No.1 authorities on ‘renting your property for a premium’, Peter and Karen Hutton, love to do.

This little book is intended for the ‘savvy landlord, whose most pressing need is choosing the right agent/agency to manage their property; who wish to rent for market value, plus; and for those who would value a REAL expert’s viewpoint of the ‘real estate industry property management traps’ to avoid.

Whether you have countless properties in your portfolio, have just become a landlord, or are just about to, I believe this book has something new for you.

I’m expecting that the reader will take the statements Peter and Karen Hutton make as an opportunity for further investigation. Test what they say. I encourage you to ask me or any property manager for that matter before deciding who to go with the questions they suggest throughout this book.

It’s my expectation that every landlord who reads this will certainly be in a better position to make an informed decision before they place their property on the market for rent (or if they’re thinking about changing agencies).

In it, Peter and Karen make no apologies for the criticism levelled at various ‘old school’ property manager’s practices, which, surprisingly I see some still persist in doing (maybe out of habit).

The property renting success strategies Peter and Karen recommend have been refined over the years and thoroughly tested (by many property managers including myself). Fact is, they work. It is my hope that this little book will make the reader, you, thousands of dollars wherever and whoever you are renting with provided their advice is followed.

Truth is I loved this book so much that I asked Peter and Karen if I could share it with property owners in Mount Hawthorn, Tuart Hill, Joondanna. I’m delighted to say, they agreed to that. I hope you enjoy this short read as much as my clients and I have.

To your property selling success.

Best regards,

Bernie KroczekReal Estate Agent – Total Care Property ManagementMobile: 0419 932 244


Let’s look at a tried and true way to measure rental property investment returns and what investors should be looking for when purchasing. Total investment returns in real estate are really comprised of two pieces: operating positive cash flows and long term appreciation. In today’s world, even though it probably will come, we cannot count upon and should not consider long term appreciation. That leaves positive operating cash flows as our primary source of investment return. Let’s call this: “earning money the old fashioned way.”

Go for the long haul — Rarely do people increase their wealth by owning property for short periods of time. Long term investing in cash flow producing assets like real estate is the way to go.

Skip the prize properties – Prize properties often have negative cash flows and are NO prize, it’s the moderately priced properties that are the real prizes.

Buy as a personal residence to change to rental – Buy properties that make good rental property investment sense and first live in them as a personal residence. When you buy as owner occupant, you get the best financing and can put down a smaller deposit if you so desire. Plus you learn the property’s characteristics and can fix issues so they won’t be a hassle once you make it a rental. Then, move out after one to three years and into your next personal residence that will become a rental property a few years later. This also ensures you will only buy properties in areas where you’re willing to live, and that’s very important to do as a real estate investor.

Buy properties in good shape – Fixer uppers are money pits and rarely sell at a large enough discount to compensate for all the work needed. Buy properties that are as close to rental ready as possible. A great move, if possible, is to buy a property with a good tenant already renting the property!

MILLIONAIRE LANDLORD’S SECRET #1THE ‘WINNING FORMULA’ FOR THE HIGH DEMAND RENTAL PROPERTY

Large, ‘prize’ properties while desirable and attractive, can take longer to rent than small properties; Inner CBD will always be in high demand; Apartments in good order will probably be less expensive to run than a house, though a house may appreciate more over time.


Be conservative on your expectations – Always overestimate the amount it will cost to renovate a property, underestimate the rental income you will earn, and overestimate the expenses you will have to pay.Holiday or boom town (such as mining) rentals can be alluring, BUT holiday rentals can sometimes be charged up to 45% for cleaning, booking fees, pool maintenance and insurance. And mining towns can go bust as quickly as they boom. Before considering buying a property at your favourite holiday spot, investors should investigate visitor statistics, occupancy rates and rental returns.

To summarise, here are the top 10 things tenants look for in a rental property:

1. Location – If you’re in the right location, you may not have to do much else to secure a premium price for your rental

2. Renovated – Kitchens and bathrooms hold particular appeal 3. Open floor plan – Tenants love a space that appears large (even if it’s not really that big).

An open floor plan is the best way to achieve that4. Stainless steel appliances – If you can’t afford that, there are many products on the

market with a stainless ‘look and feel’. It’s a little touch of luxury5. Off street parking – 99% of tenants will require at least one car space. In suburban areas

it’s not so much of an issue, but in higher density zones, your best bet is an apartment with at least one car space

6. Laundry in the unit/building – Tenants do not like to have to lug their laundry to the laundromat. An onsite laundry is fine, but even better is the separate laundry inside the property

7. Large windows/natural light – Who wants to live in a cave? Nobody. The most highly rentable properties will have abundant natural light (window coverings are also very important)

8. Outdoor space – A little garden courtyard or balcony isn’t a must have, but will make your rental more desirable, and get you a higher rent

9. Air conditioning – Becoming an essential item for many tenants10. Storage space – Always sought after, particularly in apartments, where it tends to be

sometimes lacking

Quote:Long term investing in cash flow producing assets like real estate is the way to go.


Principle #1: Know Your Tenants Before You Buy

Spend some time working out what other prospective tenants will want before you buy. Visit open houses in the area and chat with agents/property managers.

Ask them about must have features of properties being sold and rented. Ask them about the people who are renting (and who are buying in the area). Why are they choosing this location (is it a local school, easy access to transportation or some other feature that is attracting them to the area)? Do they have grown kids, young kids, or are they seniors or students?

When you conduct this kind of research for a period of time, it will become apparent what it is that tenants in the area are hungry for. You might learn that air conditioners are a critical feature for a rental, or maybe it’s two bedroom units with dishwashers, or perhaps it’s the three bedroom homes near the high school that always rent out quickly. That’s the kind of property you want to buy.

Principle #2: Open House Versus Private Showing

Many property managers today recognise the value in both time and results that an open house can bring in securing a premium tenant for your property.

BUT . . . not many are prepared to work on a Saturday and spoil their weekend, so often a junior from the office will attend the open house on Saturday, in place of the property manager.

Make sure your senior property manager is the one to hold open houses. Some schedule their opens for Wednesday or Thursday late afternoon and this works well in most cases too.

MILLIONAIRE LANDLORD’S SECRET #2ATTRACTING THE ‘GOLDEN TENANT’ FOR BIG BUCK RETURNS

Attracting tenants to your property has already happened at the time you purchase the property.


It’s a little known tactic that property managers will advertise a Saturday open, then cancel late on Friday or early Saturday morning (and schedule a private viewing or open house the following week). This is very frustrating for tenants and won’t result in attracting the best tenant for your property.

Open homes are much more valuable in most inner city areas as it creates an atmosphere of competition amongst tenants, often resulting in finding a tenant faster.

A great way to assess your future property manager is to book into a few open houses, and analyse their performance.

Principle #3: It’s All About Presentation

Clean your property from top to bottom, inside and out.

Cleaning costs very little, but if the carpets and curtains could do with a professional “deep clean”, it’s well worth the money.

Cleaning your property is possibly the biggest chore you’ll face when renting, lots of people do it half heartedly - all the better for you! Eliminating bad odours is part of this process. We won’t go on about this but:

• Cooking• Smoking• Pets• Damp• Blocked drains

All produce odours that turn off tenants get rid of them. Make sure you clean all your blinds too.

If your house stands head and shoulders above your competition, you’ll be the first to rent.

Principle #4: Find a Unique Selling Proposition for the Rental (a USP)

This doesn’t mean you want to have a unique property – unique often means hard to rent and even harder to sell in the future. What you want to do is ensure that the property you’re buying has appeal to your ideal tenant. You want to have something more to say in your marketing than it is a 3 bedroom and 2 bathroom home.

It’s totally unbelievable that still today, rental property on the internet is sometimes advertised like this:

Large 2 Bedroom 1 Bathroom unit with a lock up garage.

This large 2 bedroom unit is in a great location just a short stroll to the Shopping Centre, Park and Public Transport. This unit consists of 2 large bedrooms a bathroom, open plan kitchen/living.


Quote:The more appealing your advertising is to your target market, the higher the rent you can command.

It reads like the ingredients list on the side of a cereal box. Be assured that this ad will not attract a brilliant tenant.

The more appealing your advertising is to your target market, the higher the rent you can command.

The next Millionaire Landlord’s Secret gives you the inside scoop on writing a brilliant ad for your rental property. It’s one of the crucial elements in attracting the perfect tenant to your property.


Statistics show that you have 10 seconds to grab your visitor’s attention.

It’s a big web with lots to see. E consumers are very back button happy. You HAVE TO give them a reason to stay on your page.

Break it up.

Short paragraphs.

Bullet points.

Use the word ‘you’ a lot to engage the reader.

Few people will read the entire page. Make it scannable. Use sub headings. Use fragments occasionally.

Each subheading should do 2 things:

• Grab the reader’s attention• Give them clues about the content of the next two or three paragraphs.

Remember that reading from the screen puts extra strain on the eyes. Make the read easy, quick and informative. Make the headline intriguing.

Eye tracking studies show that users often read Web pages in an F shaped pattern: two horizontal stripes followed by a vertical stripe. This is why sub headings work. And at the end of the F pattern…

MILLIONAIRE LANDLORD’S SECRET #3INSIDER COPYWRITING SECRETS TO ‘TENANT PULLING’ ADS

You’re about to get a crash course in writing for the internet. This will give you the power to decide which agency to go with to manage your property.


Use a P.S.

When your visitor scans your rental ad page, chances are they’ll read your headline, sub headlines and your PostScript message. Place your most important benefits within your P.S. message. It will get read.

Stress Benefits

Buyers want benefits! What can your product do for me? Right now!

• Can it make me rich? • Can it save me time? • Can it entertain me? • Can it make me feel better about myself?

That’s what people want.

In conclusion, just jam pack your copy with all the benefits your property has to offer – and edit, edit, edit. Make every word work hard for its living.

Quote:Make the read easy, quick and informative. Make the headline intriguing.


LEVEL 1:

First up, we’ll take a look at self management. Self managing a property is not an easy ride, but if you have the time and energy to do so, here are some things you need to consider.

You’ll need to:

• Find premium tenants• Collect rent • Be on call for emergencies and repairs • Hold property inspections • Attend to entry and exit reports• Deal with a lot of paperwork • Remain continually updated on tenancy law• Stay on top of your accounting

That’s just a smattering of items that will need your attention as a self manager.

The biggest one on the above list is the first – finding premium tenants.

Doing that without the help of a property manager is made difficult through the fact that online portals are the number one way premium tenants search for property.

Some property portals have a very large slice of the pie (you would know which ones), and a self manager has little opportunity to list their property on those sites.

So what’s left? How does a self manager promote his/her property to a large audience for a premium result?

Well, the newspaper may bring an outcome, and there are online rental portals that a self manager has access to (however, they are largely unknown to the premium tenant).

MILLIONAIRE LANDLORD’S SECRET #4THE FOUR LEVELS OF PROPERTY MANAGEMENT

Which option does the Millionaire Landlord take?


If you do find a reliable tenant you’ll then need to:

• Carry out ESSENTIAL reference checks, including• Personal referees• Current and previous employer details• Current and previous landlord details• Credit history (property managers have access to an excellent, up to date screening

database for this purpose, you probably don’t)

The time and stress involved in all of this can often significantly outweigh the cost of using a property manager. And remember, you’re still the property manager when you go on holiday.

Of course, being a “hands on” self manager may be for you, but it is unlikely to result in a premium tenant and premium price for your property.

The Millionaire Landlord does not self manage.

LEVEL 2:

The next level is the cut price property manager.

They’re the ones with big signage all over their building offering a slashed rate percentage of management fees.

It’s ironic that some investors want the highest rental price from the tenant AND the cheapest management fees from the property manager.

Of course the percentage you pay your property manager will affect your bottom line, but like everything else, you will get what you pay for. You want a company to want your business because your business is going to be profitable for them.

Profit is what keeps businesses in business. It’s what motivates them to do a great job for you to keep you happy and coming back. Profit is also what stimulates our economy and causes small businesses, like most property management firms, to grow and flourish.

Cut price property managers simply cannot afford to do a brilliant job for you.

They can’t afford to do these things well:

• Advertising (in a ‘mouth watering’ way) your property to potential tenants• Sourcing suitable and reliable tenants for the property• Obtaining references and conducting credit checks on potential tenants• Providing you with information on the latest safety regulations• Preparing the tenancy agreement• Organising and managing the collection of the tenant’s deposit• Preparing the inventory and conducting a state of repair assessment on the property• Collecting the rent from the tenant• Transferring the rental income to your account and providing you with statements of

account


• Managing and arranging any necessary repairs • Inspecting the property periodically (and at entry and exit), and feeding back any

comments to you• Providing tenants with notice at the end of the tenancy• Re-letting the property as quickly as possible and minimising any ‘down time’• Dealing with legal aspects of the tenancy/property, including evictions, non payment,

etc

They particularly have difficulty performing their job well for the time-sapping jobs at the front end (marketing and securing a tenant), and the back end (exit and entry reporting, regular routine inspections).

The Millionaire Landlord does not use cut price management companies.

LEVEL 3:

So would the Millionaire Landlord use onsite management? It’s the next level of property management we’ll discuss.

Only if there was no other option, as you’re about to find out.

You see, most onsite managers are running their management business from home, with a kind of retirement plan mentality.

One of their biggest problems is that they have no access to the big property portals.

To get around this, they often use dodgy agencies who let them upload using their account.

As a result, often the property that’s advertised is not actually available (because it’s difficult for them to continually ask this ‘other company’ to continually upload new properties).

They also do this so that other real estate agents (who CAN get the landlord more than the property is advertised for) can’t discover the actual address of the property being rented and contact the landlord themselves.

So not only does the onsite manager lack marketing skills and advertising ‘packaging’, they’re quite often making you less than a premium price because of a perception of the brand they’re using.

There are onsite manager rental websites, but they’re very cheap and nasty looking, and will not attract a premium price or tenant.

The Millionaire Landlord knows that getting more money in your hand is worth more than having the ‘peace of mind’ that an onsite manager supposedly provides.

A great management company will not be cheap, but what you’ll receive in return will outweigh those costs.


LEVEL 4:

Premium property management is the fourth level.

A premium property manager will MAKE you more money by:

Maximising rents – They know how to present your property to the right tenant. You might pay a few percent more, but when you add up the cost of the extra time a poor property manager will cost your bottom line by the possibility of leaving it vacant longer, and in not getting a premium rent in the first place, those two items alone make it worthwhile to use the best property manager.

Securing a brilliant tenant – Poor tenants know they don’t stand a chance with a switched on property manager, nor would a top property manager present you with any application that was sub-standard, hence wasting your time. They’ll be using all available technology, best practice skills, online marketing channels and their brilliant presentation ability to find the best tenant for you. That tenant is worth gold.

Minimising the cost of repairs – Young, inexperienced property managers have been known to send an electrician to put in a new light bulb for tenants who’ve complained that their light doesn’t work. Needless to say, an experienced property manager will save you money by asking the right questions BEFORE any repair work is requested of the owner.

Being thorough and systematised – A top property manager records EVERYTHING. Every phone call, email, inspection, copies of every letter, all notices in writing. If he or she is away anyone can sit at their desk and see everything that’s been done. Database management, good systems and procedures enables a great property manager to prove everything they do, potentially saving you expensive litigation down the track.

Developing a long term vision with you – An executive property manager will ask about your long term goals, not just your short term picture.

The Millionaire Landlord will go with the premium property manager every time.

Quote:They’ll be using all available technology, best practice skills, online marketing channels and their brilliant presentation ability to find the best tenant for you. That tenant is worth gold.


Wrong. That might just lead you into a hornet’s nest of troubles.

Before you make any decision, consider all options.

Below is some great info that will help you separate the wheat from the chaff.

DEADLY SIN #1: THE OVERLOADED PROPERTY MANAGER

One of the first things to consider is how many properties they are managing. This is followed up with how many employees are managing these properties. Here is what I have found based on our experience building our property management capability internally and then handing the entire portfolio over to property managers: a skilled manager with the right tools, support and proven processes can manage around 150 properties. So, if you are qualifying a property manager and they have no employees and are currently managing 200 properties, how good do you think their service will be?

DEADLY SIN #2: THE LAZY PROPERTY MANAGER

A critical component in managing both properties and tenants is getting into those properties on a routine basis. As part of your discussions with prospective managers, you want to get a commitment from them how often they will conduct formal inspections of your properties. In some cases, managers will be very accommodating. In others, however, they will baulk at this requirement or may even use it as a way to increase the fee they will be charging.

MILLIONAIRE LANDLORD’S SECRET #5THE 7 DEADLY SINS OF PROPERTY MANAGER SELECTION (PLUS 26 TIPS ON HOW TO AVOID THEM)

You might have just purchased your first investment property, or it may be your 10th. It seems only fair that you would consider the agency who sold you the property to manage it. Right?


DEADLY SIN #3: ANAEMIC PLANNING

If you want your property to be full, you’ll need a manager who’s always on the ball. Laws vary, but generally you’ll be making a decision about your current tenant two months before their lease is due to expire. Your property manager will start a marketing campaign to ensure minimum vacancy in the weeks prior to the current tenants vacating.

DEADLY SIN #4: OVERPAYING CONTRACTORS

An ordinary property manager will not have a list of well priced contractors they use for their properties. This list is a must for the premium property manager who wants their landlords to maximise profit. Make sure your manager has this list.

DEADLY SIN #5: SETTING THE RENT TOO LOW

An ordinary property manager will be aware that with their lack of marketing skills and knowledge, they’ll need to set the rent lower to attract a tenant.

DEADLY SIN #6: INADEQUATE INSURANCE

While this ebook is not designed to give specific financial advice, it makes sense that you’ll need to be covered for all disasters. There are many firms that specialise in insurance for landlords, a premium property manager will be able to recommend these companies to you.

DEADLY SIN #7: NOT PUTTING UP THE RENT

Many landlords miss out on their full rent due to their property manager’s failure to negotiate at renewal time. Changing over to a premium property manager could increase your returns by 10% or more.

As we’ve discussed previously, choose an agency to manage your property who knows how to ‘package’, advertise and get you the ‘gold’ tenant.

26 TIPS TO HELP YOU FIND THE PERFECT PROPERTY MANAGER:

• Where/how do they intend to market your property? Do they use the largest property portals?• How will they determine what your rent should be?• What training and support do they have? How long have they been managing

properties?• How do they screen prospective tenants?• Get them to show you an example of one of their latest condition reports. A report

should be detailed with plenty of photos to back it up.• What is their procedure for following up on any late rental payment?• How is rent paid into the office?• How often are internal inspections conducted?• Do they conduct “drive by” inspections? The external state of the property may be a

good indication of the inside.• How often are rent reviews conducted?


• What is the state of the properties currently under their management? A rental portfolio saturated with poor condition properties may indicate an agent who isn’t keen on/able to look at a property and make recommendations to maximise the return on your investment.• What are their arrears like? Get them to show you or at least tell you what percentage

of their tenants are in arrears as compared to the percentage that are up to date with their rent. You want an agent who is proactive with keeping rent payments up to date.• How often do they account to their landlords? Do they do statement runs once per

month or more frequently? The money is better off in your account than in their trust account.• How do they pay you? Cheque? Deposit? EFT? • How many properties will your appointed property manager be managing alongside

yours? Will they be able to handle the workload? Industry standard seems to be about 150 depending on the amount of support within the office. There are some property managers with far more than this to manage but the ones that are able to do this on their own and do it at a level that you would be happy with are very few and far between.• How do they handle maintenance issues?• You might ask for references from other owners.• You might ask to see their office manual for property management (so that you know if

they’re away, someone is able to take over with clear guidelines)• Ask them about insurance – what do they carry, and what should you carry?• What are their fees? Leasing fees, management fees and any other fees that may be

charged (such as termination fees)• You need to look for a sense of mission and inherent values in the answers to your

questions, not just a response to a set of tasks• Security – how does the company protect client information, data, documents and

keys? Are documents shredded or thrown away?• What is the company doing to nurture staff for improvement and longevity of service?• Does the owner of the company take an active role in the rental division?• Will they go to court for you if such a situation eventuated?• What is the length of the average tenancy? (This will give you an idea if they’re

attracting ‘golden tenants’ who are happy to stay longer.)

Quote:Get them to show you an example of one of their latest condition reports. A report should be detailed with plenty of photos to back it up.


What you need to do is discover what time of year the majority of people are on the move.

In most parts of the world, that happens in summer. It’s the ‘summer housing frenzy’. Particularly the beginning of a new school year.

Rental rates can increase dramatically during this period.

However, knowledge of this fact needs to be tempered with the possibility of vacancy, and weighing up negotiation of a rent rise with your current tenant (should they wish to continue for another year).

Time your first lease to expire in this period. Eg: Your property might first come on the market in March. If you’re in the southern hemisphere, you might aim for a short 10 month lease so that when it’s due for renewal it’ll come up in January.

The Millionaire Landlord will always try to have his/her property come up for lease renewal at the busiest time of year to maximise rent returns.

MILLIONAIRE LANDLORD’S SECRET #6THE CALENDAR ‘SWEET SPOT’ – A (LITTLE KNOWN) STRATEGY TO PUSH THE RENT UP

Quote:Rental rates can increase dramatically during this period.

What’s the best time of year to rent my property?


A property management firm does not need to be minutes away from your investment property to effectively manage the asset.

Unfortunately, many landlords are stuck on the notion that convenience is more important than value.

In the age of high speed internet, digital photos, autopay and other technological wonders, an investment property can be serviced from just about anywhere. Of course, for leasing and service repairs you need local contractors and professional services, but this can be achieved with local teams based in strategic locations.

The Millionaire Landlord knows that research is the key to finding a premium property manager, and is prepared to spend some time getting this crucial part of the equation right.

MILLIONAIRE LANDLORD’S SECRET #7THE ‘LOCAL PROPERTY MANAGER MYTH’

Quote:Unfortunately, many landlords are stuck on the notion that convenience is more important than value.

Where should my property manager be based?


Beyond basic cleaning, you may be in the position to spend a little cash (or use some elbow grease) to get your property rented for a premium.

Following are the areas to prioritise:

Paint - Painting the walls in soft white or neutrals will instantly give your property a fresh look and feel. Open areas should all be painted the same colour, and it may not be necessary to do the trims, which will save on time and cost

Make necessary repairs and maintenance – Mend sagging screen doors, stop leaking taps, paint scuffed baseboards, mulch any garden beds, etc

Replace old carpet – Stained carpeting is a big turn off to the premium tenant, and can be a cost effective improvement

Kitchen and bathroom – Regrouting can have a huge impact in these areas, shower doors can be replaced, and kitchen white goods replaced if necessary for minimum expenditure and maximum gains

This list may look a little overwhelming, but if you can begin on the tasks that involve less energy or cash to start, your action-taking will snowball, and you’ll be confident you’ve done everything you could to maximise your weekly rental and attract a brilliant tenant who will look after your property like their own.

MILLIONAIRE LANDLORD’S SECRET #8TITIVATING ON A TIGHT BUDGET

Quote:Start on the tasks that involve less energy or cash.


If you’re a landlord who wants to maximise returns, you’ll want to know what the majority of tenants (in your area) are looking for - a furnished or unfurnished apartment or house.

Generally speaking, most tenants have their own furniture, so a furnished property won’t work for them.

Furnished properties can linger longer on property portals, where after a while they become stale and tenants start to wonder what’s wrong with them; next step after that is that you’ll be forced to drop your price.

Furnishing a property can bring added complications such as accidental damage, repair bills, replacement costs and extra insurance cover.

If however, your property is in a zone where corporate tenants are searching, it may pay quite well to furnish your property to achieve a premium rental return. Also, a furnished property could do well if you’re willing to rent it out short term.

To conclude, most tenants will have their own furniture, and are looking to make a place ‘their own’. These tenants will also be more likely to renew after their first lease expires.

The millionaire landlord will more than likely favour the unfurnished approach for her/his property portfolio.

MILLIONAIRE LANDLORD’S SECRET #9GOING FOR THE CORPORATE ‘MONEY BAGS’ TENANT – IS IT WORTH IT?

Quote:Furnished properties can linger longer on property portals, where after a while they become stale.


Money is part of nature, it doesn’t grow overnight. However, we overestimate the money we can make in a year and underestimate what we can make in 10 years. People make money by staying invested for the long term and without doing much “dancing in and dancing out” i.e. changing portfolios frequently. (NDTV.com)

Warren Buffet’s actions during the dotcom boom of the late ‘90s is a great example. His value oriented strategy had worked for him for decades, and despite criticism from the media it prevented him from getting sucked into tech start ups that had no earnings and eventually crashed. (Investopedia.com)

Real estate investing is like the fine art market (or fine wine for that matter!); buy and hold for true appreciation.

This can also relate to selling your family home. The below section is from Peter’s eBook, “21 Secrets to Selling Your Property for More”

Ok, so it’s time to move.

Whether you’re moving streets, suburbs, to another town, interstate or overseas, if you have the borrowing capacity then you have a choice to make.

• You can sell your home• You can continue to own it and rent it out

How do you go about making the decision that’ll best suit your life and your lifestyle?

MILLIONAIRE LANDLORD’S SECRET #10GET RICH QUICK OR THE WARREN BUFFET APPROACH?

Life is like a snowball. The important thing is finding wet snow (opportunities) and a really long hill (long term).

Warren Buffett


Quote:Real estate investing is like the fine art market (or fine wine for that matter!); buy and hold for true appreciation.

Well, the best advice is to get advice. Engage the services of trustworthy, knowledgeable professionals to help you with your decision.

A reputable real estate agent, for example, will have intimate local knowledge of the current and projected state of the property market and you should also consider a good financial advisor and/or an accountant. You’ll need to carefully do some calculations and be sure to ask plenty of questions until you receive plenty of answers.

You’ll want to know things like:

• What is the state of the market? Is it stable, climbing or even falling? If it’s rising is there an adequate foreseeable gain to encourage you to hold on to the property?• How much rental income could you potentially and realistically achieve?• What are current and projected vacancy rates in your area?• Is a property like mine likely to be in high demand by potential tenants?• What maintenance costs will be incurred if I continue to own it?

You may well analyse your situation and discover that, rather than your immediate thoughts of selling, you’ll be much better off renting out your property. You don’t need a high income or great wealth; all you need is an understanding of how it works, plus sound financial and real estate advice.

So you see, moving out doesn’t always mean “selling up”. In many cases, keeping your property when you move and choosing to rent it out can be an exceptional wealth creation strategy.

It’s definitely worth taking the time and effort to consider.

Every situation is unique. In some cases people are better off selling, whilst others are best advised to hold. Do your homework carefully first. Choose an advisor or even better, gather a team of advisors that you can trust – an accountant, a financial planner, your real estate agent, a property manager and make decisions on whether to sell based on sound advice.

Dismissing the “get in, get out and make a killing” mentality is a must for the Millionaire Landlord.


Well, the good thing is there are indications we can use to make decisions and buy into suburbs that might potentially be undiscovered (by investors) and on the brink of gentrification.

According to hotspotting.com.au, “The established pattern in real estate markets is that the number of sales changes first and prices react later. In a rising market, sales volumes increase and, after a time lag, prices will rise.”

Other things to look for in an area that’s about to boom are investments in infrastructure, job creation initiatives, new residential developments, relaxing of town planning rules on extensions and more affordable properties.

The Millionaire Landlord has a mix of blue chip property as well as keeping finger on the pulse of economic trends and data.

MILLIONAIRE LANDLORD’S SECRET #11SPOTTING AREAS THAT WILL BECOME HOT

I know, wouldn’t we have all loved to have bought a place in X suburb 30 years ago (when crime was rife) and we would have been sitting on squillions now!

Quote:Well, the good thing is there are indications we can use to make decisions and buy into suburbs that might potentially be undiscovered.


So you’ve held your investment for some time now and have decided to put it on the market for sale.

What exactly influences the ‘sale price’ of your property?

Ask your typical ‘BIG EGO’ agent and they’ll tell you they’re the “NO.1 INFLUENCE” on the sales price of your home.

Yeah right.

It’s just not that simple. There’s more to it than that.

Sure, your agent will have an influence on the price. Certainly NOT the only influence though.

And frankly they’re NOT always a good influence either.

Here’s why...

There are actually ‘5 THINGS THAT INFLUENCE PRICE’.

They are:

1. The property seller’s motivation2. The property buyer’s motivation3. The market on the day of an offer being submitted4. The quality of the marketing of the property5. The agent’s ability to negotiate on your behalf

These 5 THINGS all have a BIG role to play in the final outcome. So they’re all equally important. And because each of them can vary, in some cases quite dramatically, so can the sales price.

MILLIONAIRE LANDLORD’S SECRET #12KNOW HOW TO GET A PREMIUM PRICE WHEN YOU SELL

[From ’21 Secrets To Selling Your Property For More’, by Peter Hutton]


That’s why the old adage applies...

“SIMILAR PROPERTIES OFTEN DON’T SELL FOR SIMILAR PRICES”

What that means is, you can have two very similar properties located in similar streets, or even the same street and because just one of the five ‘PRICE INFLUNCERS’ was different for one of the properties, so was the sales price.

Here’s an example of what can happen...

Say you list your property for sale.

Your agent provides a pretty thorough appraisal, identifying all relevant recent sales.

On paper the properties identified in the ‘COMPARATIVE MARKET APPRAISAL’ make good sense. They all seem to be similar properties like yours. “A good indicator of price,” your agent will say.

But hang on a second. Have you considered the ‘5 THINGS’ that may have influenced their sales price?

Probably not. Because unless your agent sold those properties, he or she probably doesn’t know.

For example...

One of the comparison properties may have been sold under some kind of ‘SELLER DURESS’ (e.g. they had lost their job and had to sell quickly).

Another of the comparisons may have had ‘poor marketing’ and as a result didn’t get enough exposure to the market or attract enough ‘A BUYERS’ (I’ll explain who they are later in this chapter) causing the property to be ‘UNDER SOLD’.

While another had its sale price botched because the agent wasn’t a competent skilled negotiator.

This is why getting an ‘APPRAISAL’ is fraught with danger.

You can’t just simply say... “OH there’s a property that just sold like mine, so I can expect what they got.”

No.

That assumption doesn’t take into consideration the ‘5 THINGS THAT INFLUENCE PRICE’ and how those 5 things affected the sale of the property you’re using as a comparison and as a ‘PRICE GUIDE’ for your property. Now you might be thinking this makes pricing your property hard.


Well the truth is, it does make it hard.

Any agent that waltzes in and pumps up their chest professing to know exactly what your property will sell for either doesn’t understand ‘PRICE DYNAMICS’ and the ‘5 THINGS THAT INFLUENCE PRICE’ or they’re psychic. (Not many psychic agents out there so I’m guessing they’re the former.)

So what’s the solution?

Well the first thing to do is find an agent that’s more concerned about getting you the highest price than trying to “estimate” (guesstimate!) what your property is worth.

When it comes to achieving a ‘PREMIUM PRICE’ for your property an appraisal has its limitations.

What’s more beneficial than “guesstimating” a sales price, is the answer to this question...

• “WHAT DO YOU THINK IS HAPPENING TO THE MARKET OVER TIME?” (And what actual real evidence do you have to support your answer?)

The TREND IS YOUR FRIEND!!!

Specifically, there are 3 trends...

The market is either ‘TRENDING UP’ over time - that means there’s proof that the market is rising; and therefore it could be described as a ‘SELLER’S MARKET’.

Or the market is ‘TRENDING FLAT’ over time - that means all the evidence is saying the market isn’t going up or down, it’s just bouncing along without much change.

Or the market is ‘TRENDING DOWN’ over time - that means all the evidence is pointing to prices easing or even dropping; in which case it’s commonly referred to as a ‘BUYERS MARKET’.

When you’re certain what the trend is, it doesn’t matter so much what the ‘appraised price’ of your property is, what matters is you now know what to do to beat the trend or even benefit from the trend.

For example:

• If it’s ‘TRENDING DOWN’ - the quicker you sell the better, that is, the longer your property stays on the market the less it will be worth.• If it’s ‘TRENDING FLAT’ - what’s important is to get it sold before it becomes stale.- the

statistics show in a flat trending market, the longer the property is on the market it gets a stigma about it and buyers start to ignore it. That will cause the price to be driven down over time.• If it’s ‘TRENDING UP’ - an appraisal makes even less sense. That is, over time the

price will go up. Now that will also depend on the time frame. In this case you will want to take advantage of an upward trending market by NOT capping the sales price at a preconceived idea of what it is worth. Fact is, it could be worth more.


WARNING: Most sellers get caught up in the hype of selling their home and nearly always believe the market is going up or about to go up. Most sellers also believe their property is worth more than it is. That’s human nature. Desire replaces reality.

It may be the case that at the time of you reading this book the market is indeed trending up.

If that is so, you need to ask this question... “By what percentage per month is it going up and how long will that upward trend last?”

Don’t fool yourself into believing markets go up and up for ever. You and I both know they don’t. You have to consider the impact the economy will have on the property market in the near future. You also have to look at the bigger picture. Look at world economic trends as they too can have an impact on the market over time.

Plus you need to understand what’s driving the current trend in order to determine what the market will be like in the near future. The question to ask is how sustainable is this trend? How long will it last? These are all good questions to ask your agent. Your agent should be an expert on ‘MARKET TRENDS’.

To complete this ‘Secret’, a couple of things about tenant management during this sales process.

You’d be wise to consider selling when you have a tenant in place who has good/great style and get them onside with your plan with some kind of financial incentive.

You could offer them a department store gift voucher for a certain value to keep the property looking immaculate during the course of proceedings (be generous – your tenant’s cooperation is important and could be worth thousands).

Having your tenant onside will have a huge impact in the end result of a premium price for your property.

Quote:There are ‘5 THINGS THAT INFLUENCE PRICE’.

1. The property seller’s motivation2. The property buyer’s motivation3. The market on the day of an offer being submitted4. The quality of the marketing of the property5. The agent’s ability to negotiate


The hero shot is the thing that cuts through the clutter to capture the tenant’s attention.

The hero shot needs to be as attention grabbing as possible. This is where communication with the photographer is key.

In most cases there will have been some preparation in achieving this image. In the case of a tenanted property, this can be tricky. Perhaps a financial incentive could be offered to the current tenant for their cooperation?

It’s essential that the property be photographed furnished. Even if this means bringing some of your own furniture to the shoot. A minimum would be a few props in the kitchen for a lived-in look, a living room set up and the balcony.

Superior presentation will result in a premium rental price being achieved in the shortest possible time frame.

The hero shot has to show lifestyle, and have as much space as possible.

Need art for a sad looking wall? An inexpensive solution – buy a large canvas and paint it in a colour that complements the rest of the house – just one single colour. The effect can be quite dramatic.

Tips for the best hero shot:

1. Always use a professional photographer, no matter how inexpensive the property is.

2. Key images are the living areas, kitchen, view and the exterior

3. The relationship between areas is important. For example – the flow from the living to kitchen, or indoor to outdoor entertainment areas

BONUS SECTION: THE SECRET POWER OF HYPNOTIC PHOTOGRAPHY


4. Express the theme of the home in the hero shot. Ask yourself, “What is the core attraction of this property?”

5. Twilight images can really enhance your listing. The most amazing shots can be taken during “the magic hour”, when the sun is setting and the sky turns that deep blue. That’s when you’ll get the most vivid colours in the sky, interior and exterior, and really see the details in the property’s own lighting. There’s a psychological reason behind why people’s imaginations are captured by twilight photography. You see, primitive man sought shelter for the evening as the sun went down – they would light their fire and settle in for the night. Photographing a home at the magic hour draws on a million years of primal need - shelter. Show a home at the magic hour and people want to live there. Modern man also relates the twilight hour as a time to go home, settle and relax. Make use of this psychological fact in your photography.

6. Make sure your photographer is using top equipment. The best ones have their own lighting which is the key to clarity, colour saturation and the brightness of the images. Some photographers digitally add in brightness after the shot has been taken to enhance the shot. This results in poorer quality images.

7. Remember, once you’ve had great shots taken, you’ll never have to do it again, so it’s definitely worth doing properly.


TO SUMMARISEBy Bernie Kroczek

No surprise. Finding the best property manager to represent you and manage your rental property is fraught with danger. The truth is, all professions have their fair share of mediocre practitioners. As you’ve read, in this regard the authors are saying real estate is no different.

The good news is there are agents and agencies that are ethical and provide a professional service.

Hopefully, armed with the information within the pages of this little book you’ll be well equipped to now separate the good from the bad. By following a logical selection criterion and thoroughly interviewing and examining a property manager’s claims you’ll find discovering the right one for you isn’t as daunting as it seems.

What I love about this book is the authors’ strong bias towards cost effective and quality ‘presentation centric info rich’ marketing. Wow, ah… that’s a mouthful but how else could it be described?

So, why the bias?

Well it’s simple really. To achieve a ‘premium rental price’ of a property we must accept the ‘shopping habits’ of the modern day tenant; a tenant who is becoming more and more dependent on the internet and therefore information hungry.

I believe Property Managers must realise landlords are tired of paying fees without getting a great result, and they’re definitely over complacent ‘old school’ lazy managers.

We have the internet to thank for this new state of affairs. And I think it’s a good thing if you know what you’re doing. If you don’t, that’s a problem.

It’s the internet that has brought about the greatest change in the real estate industry in the past 10 years. The internet has changed the way tenants find their next home. It has empowered the tenant. It has opened the door to PMs to service much larger territories than ever before. It is, some say, bringing about the ultimate demise of fat cat lazy managers. And I believe will continue to shape the real estate industry for years to come. If you can choose a property manager that has embraced this change, then I guarantee you will be taking a step in the right direction in finding someone brilliant to look after your portfolio.

Yours sincerely,

Bernie KroczekReal Estate AgentTotal Care Property Management


Is this you? Are you thinking about finding a premium property manager soon?

“Don’t fall for the FREE RENTAL APPRAISAL trap. There’s a better way. I can help you make an informed decision and show you how to get your property rented for a ‘Premium Price’ in 7 days (or less)”This is your personal invitation for a no obligation, confidential, “RENTED in 7 Days” Strategy Session.

Hi there,

I’m Bernie Kroczek, premium property manager. Let me get straight to the point...

Times have changed. We have the internet to thank for that. Because of it, if all you want is a market rental appraisal there are now easier hassle free ways than calling in a property manager.

Besides, you don’t want a PM just telling you what you probably already know. Or worse still, one telling you what you want to hear just to get your property on their books.

But if you’re serious about renting out your property and getting it right the first time (you’ve read this far so I’m guessing that’s your plan), then you’ll need more information than just the run of the mill market appraisal. That’s where I can help you.


In this no obligation and free “RENTED in 7 Days” Strategy Session, we’ll be covering the following:

• Create a crystal clear vision for the management of your property and the money, freedom and lifestyle you’d like your property to provide you

• Discover what your property is REALLY worth on today’s market (be armed with a ‘realistic no BS appraisal’ and a full understanding of how the appraised market price was established)

• Uncover hidden challenges that may sabotage the rental of your property and undermine the full potential ‘premium rental price’ your property is capable of

• Show you a ‘5 Step System’ to get you the result you want in 7 days (or less)• Leave this Strategy Session confident, feeling certain about your future, and inspired

to turn your property management into a money making success story (without the usual stress and hassles)

Frankly, I guarantee you’ll not have experienced such an in depth consultation with a property manager before this... and you can feel relaxed, there will be no high pressure sales tactics with me (I hate that myself).

So if you’re ready to maximise the rent returns on your property, then we need to talk. You can book your “RENTED in 7 Days” Strategy Session by any of the contact methods below.

Call or text me now on: 0419 932 244

Email me now at: [email protected]

Looking forward to helping you.

Cheers,

Bernie Kroczek

PS: If you’re thinking of finding a premium property manager, and want something more than just the run of the mill ‘tell you what you want to hear’ appraisal from a PM desperate to get your listing, then this “RENTED in 7 Days” Strategy Session is for you.

PPS: My contact details again 0419 932 244 and [email protected]


About Bernie KroczekYour Local Mount Hawthorn, Tuart Hill, Joondanna AgentBernie Kroczek has been in the real estate industry since August 1986 and after winning numerous sales awards with a major franchise network, decided to ‘go it alone’ in September 2005, together with his wife Gai.

Gai an administration manager for a large real estate company in Perth’s northern suburbs for 16 years knew how to run a successful business from the back end.

So, when Bernie and Gai got together to work as ‘one’, the inevitable result was the creation of an independent property management company reflecting their values, aptly named Total Care Property Management.

Bernie and Gai have developed their business to directly address the needs and concerns of the general public, as well as reflecting their overall philosophical approach to life.

Part of this approach is found in Total Care Property Management’s written, unconditional 4 part guarantee which is unique in Australia. Our Guarantee: http://bit.ly/1oCgg2O

Total Care Property Management literally stands for complete care for landlords, tenants, staff and anyone else with whom we have contact.

“We are uncompromising on the standards we set for the business and for our staff.”

Bernie and Gai’s ongoing vision for the business is not necessarily to be the biggest but certainly to be the most trusted property management company in Perth.

Bernie’s Contact Details:

Mobile: 0419 932 244

Office: Total Care Property Management131 Scarborough Beach RoadMount Hawthorn, WA 6016

Email: [email protected]: www.TotalCarePropertyManagement.com.au www.BernieKroczek.com.auFacebook: www.facebook.com/TotalCarePropertyManagement


Peter and Karen live in Brisbane, and are passionate about empowering property managers to lease their landlord’s property for more.

Once Peter and Karen started the rental division in their agency, landlords flocked to them, having been burnt by the poor service and lower rents achieved by other real estate offices in the area.

Peter and Karen met on a blind date set up by a mutual friend (true!). Their daughters are now grown up and doing their thing; one’s an actress and one’s a poet.

A favourite pastime is heading out for brekkie, though Peter does know a thing or two about making poached eggs.

A few of Peter’s notable achievements:

• A TOP 5% real estate agent for his entire real estate career (17 years selling, 10 as a selling principal – over 1000 properties)

• The No. 1 agent in a leading agency group

• Created an award winning real estate brand, grew a rent roll at breakneck speed

• Keynote speaker

A few of Karen’s notable achievements:

• Appeared in several real estate publications

• Written online guides to increase online visibility for agents

• Co-creator of Agent Brand Co, a branding and mentoring company for the real estate industry

For more about Peter and Karen go to www.agentbrand.co

About Peter and Karen HuttonAuthors of this Book

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