I’d like to remind ARAMA members again that the industry survey conducted by international accountancy group Deloitte demonstrated better returns for owners from properties managed under the Management & Letting Rights model.
Overall, the survey responses indicated that a resident manager acting in the role of an on-site letting agent delivers a better weekly rental return than an outside agent. The Resident Manager also performs the caretaking functions in a more cost-effective manner when compared to other professional outside alternatives.
The Deloitte Survey is available as a four page fact sheet to members from the ARAMA website library.
One of the most striking outcomes from the report was that “on-site management rights models operating in strata and community title properties are understood to offer owners numerous advantages, including higher rental yields and lower caretaking costs.”
This Fact Sheet is a powerful document which can enable ARAMA members to debunk the incorrect assertions that are made by a small minority of owner occupiers who continue to oppose Management Rights in the belief that it can save the scheme money.
The Deloitte survey, now in a Fact Sheet, demonstrates that quite the contrary applies.
Generally speaking, Management Rights actually saves the scheme money and delivers better rental investment returns.
Management Rights is in the best interests of the scheme and we consider that any attempt by committees or their advisors to remove them is not acting in the best interests of the scheme.
The Deloitte Fact Sheet has been produced to provide information which is of a general nature and should not be considered to be directly related to any one particular scheme.
Members may wish to undertake their own local comparison of the rental performance of your on-site letting pool versus those units which are managed by outside agents, either within your scheme or more broadly in your local market.
Sites such as Realestate.com.au or Domain.com.au can provide some easy to obtain comparisons for you to draw on.
You could write to your current clients and point out the comparisons that are specific to your particular scheme and where you can demonstrate that you are outperforming the comparative rental market.
Members may wish to run a similar set of comparisons regarding the role they perform as a caretaking service contractor. Members are encouraged to obtain comparative quotations from professional garden maintenance and cleaning contractors and compare the cost of engaging suitably qualified and capable outside service providers who can carry out the tasks in association with your caretaking agreement and see how much more they will cost the scheme if you were not there.
Measure the cost of security, preventative maintenance and general vigilance and see how much the comparison is. Make sure that those you compare costs with are fully insured and have all the relevant business registrations and licences, otherwise It Is not a fair comparison.
Members who have completed this “market comparison” exercise are staggered at just how much more outside service contractors would cost the scheme compared to what they provide as the on-site caretaking service provider.
Further research Indicates that on 87% of occasions the on-site Manager is found to out perform an alternative off site service provider.
These “market comparison” exercises are good to perform on a regular basis, perhaps even every 5 years as they can assist a Resident Manager to demonstrate the value that they bring to a scheme and to the unit owners in a proactive and tangible way.
The Deloitte survey is available for members in the ARAMA members resource library and available for members to access and send to their unit owners
Members may also wish to review other industry data on the ARAMA Members Resource Library which is packed with useful information to assist them to market their business to their clients Unit owners) and/or potential clients.
Some of the resources you will find included in the section titled “Advantages of On-site letting Management” are:
– Comparison of On-site versus Off-site versus Self Managed
– Suggestions for communications and correspondence with Lot Owners regarding the benefits of a Resident Manager in a Holiday complex and/or a Residential Complex.
The Deloitte survey was completed by lot owners throughout Australia and the results, as outlined in the fact sheet, highlighted the key benefits of on-site rental management in a management rights context, and estimate the added value that management rights brings to lot owners.
More than 75% of respondents surveyed estimated that an on-site letting agent:
– generated higher yields than an offsite letting agent.
– More than 97% of respondents surveyed estimated that on-site caretaking directly reduced costs for owners.
That’s understandable because resident managers typically have a large amount of skin in the game, both in their business and the unit in the complex they have purchased along with the management and letting rights.
As one of the lot owners surveyed remarked in the report, resident managers “are hands on and are the eyes and ears of my investment property. They have a true vested interest with a lot larger investment in the business than that of an individual lot owner.”
The survey respondents identified that the most common area in which an on-site letting agent added value to the owner was in their intimate knowledge of the complex.
In fact, 96% of the respondents strongly agreed that this enabled on-site letting agents to be proactive in addressing owner concerns.
Almost all the lot owners surveyed said that an on-site letting agent adds to the customer experience through being available for 24-hour response and assistance and offering first-hand knowledge of the complex and surrounding areas.
They said that this increased the customer return rate and resulted in higher occupancy rates and better yields.
They also said that because of the constant supervision provided by an on-site manager, the probability of rental breaches and poor behaviour of tenants and guests was decreased.
It also meant a higher level of information was available for owners.
Almost all of the respondents also agreed that because the Resident Manager acting in the role of an on-site letting agent had financial and vested interests in keeping costs down, they therefore strived for the most cost effective means of marketing and maintaining the scheme.
Of all the survey respondents asked to estimate how much value a Resident Manager acting in the role of an on-site Caretaking Service Provider directly added to owners, 61% estimated that on-site caretakers save lot owners up to $500 per lot per month.
More than 25% of lot owners estimated the saving was up to $1000 per lot per month, while 7% estimated that on-site caretakers saved lot owners between $1000 and $2000 per lot per month.
As one of the respondents told Deloitte: “The on-site manager can and does arrange for maintenance to be carried out much quicker and usually much cheaper than that arranged by off-site service providers.
“An on-site manager interacts with tenants and can quickly identify a problem with a tenant or the unit which can result in less financial loss to the unit owner.”
The numbers were also impressive when it came to long term rentals, with 64.7% of respondents surveyed considered that they received added value of up to $250 per lot per month due to the work done in relation to the efficient delivery by the on-site caretaking service provider.
This article was contributed by ARAMA.
You can find more information at: https://www.arama.com.au/
Original article source: https://www.arama.com.au/news-item/11938/arama-press-release-february-2023