Blog

Welcome to our blog page © Real Estate Excellence

Why isn't my rent roll growing?

I receive enquiries on a regular basis from licensees regarding consultancy/training services on ways to ‘grow the rent roll’. The comment I hear often is ‘How come my rent roll is not growing?’.

Before quoting or delivering this service, I always endeavour to find out how the foundations are in the agency first. There is of course no point putting a plan of action in place to grow a rent roll without ensuring that the foundation of the property management department is sound and running proactively.

Some property management departments have daily reactive chaotic management systems in place. I believe that all property management departments always have a sense of ‘chaos’, however the question is the chaos uncontrolled reactive or chaos controlled proactive? If the case is the latter of chaos uncontrolled reactive, then there is no point in my professional opinion throwing away valuable time and good money trying to grow the rent roll.

Tips on creating and maintaining a successful property management business

I am often asked how can we create and maintain a successful property management business. I don’t know if there is a secret as such but I do believe there is process to follow in order to achieve the goal of a productive, efficient and compliant business.

Property management is not hard; however I know that is not easy either. People are our core focus and our core business so having people skills is requirement number one; with this is also the need to ‘like’ dealing with people. Customer service is the core focus of all property management businesses.

What is the role of a property manager?

Property management is a very diverse, challenging and interesting career. No two days are ever the same. What property managers do is mind boggling to some but to many of us it is ‘all in a day’s work’. Property management is really about People Management.

All property managers must remember that ‘nothing is your problem’ (so to speak) and in the great game that is property management, your key role is the following;

  • Maximise your lessor’s income and minimise their loss
  • Always act in the best interest (both ethically and legally) of your licensee and the lessor
  • Always remember your duty of care to the tenant
  • And remember; your main duty is the following
  • Educate your lessors and tenants to the best of your ability
  • Communicate with your lessor and tenants to the best of your ability;
  • Negotiate with your lessors and tenants to the best of your ability.

Property management is a task related profession meaning that the career is made of up of many tasks which require a system to be followed, following up, following through until there is an end or outcome within a reasonable time frame. All tasks should have an end otherwise there are matters outstanding, dissatisfied lessors or tenants plus extra stress placed on property managers.

The above information is an extract from page 1 of the PME (property management excellence) system which is a service provided by Real Estate Excellence Academy.

Residential Property Investors lose depreciation and travel deductions

Sourced article

Federal Budget 2017 - Residential Property Investors lose depreciation and travel deductions

Anthony J Cordato
 
Australia May 12 2017
 

From 1 July 2017, Australian Property Investors will lose two long-standing tax deductions for residential properties as a result of the Federal Budget 2017.

The following extracts state the current law (from the ATO Guide) and the new law (copied from the Budget papers). The precise terms of the new law will not be known until the new measures are legislated.

1. Depreciation of fittings and fixtures

Current Law: Deduction for decline in value of depreciating assets (i.e. depreciation)

When you purchase a rental property, you are treated for tax purposes as having bought a building, plus various separate items of ‘plant’. Items of plant are depreciating assets, such as air conditioners, stoves and other items.

You can deduct an amount equal to the decline in value for an income year of a depreciating asset that you held for any time during the year. However, your deduction is reduced to the extent your use of the asset is for other than a taxable purpose. If you own a rental property, the taxable purpose will generally be for the purpose of producing rental income.

Source: ATO Guide for Rental Property Owners 2016 (page 18)

New Law: limit plant and equipment depreciation deductions to outlays actually incurred by investors

From 1 July 2017, the Government will limit plant and equipment depreciation deductions to outlays actually incurred by investors in residential real estate properties. Plant and equipment items are usually mechanical fixtures or those which can be ‘easily’ removed from a property such as dishwashers and ceiling fans.

This is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value. Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent investors.

These changes will apply on a prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30PM (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either the investor no longer owns the asset, or the asset reaches the end of its effective life.

Investors who purchase plant and equipment for their residential investment property after 9 May 2017 will be able to claim a deduction over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property.

This measure is estimated to have a gain to revenue of $260.0 million over the forward estimates period.

 Revenue ($m)

 

2016‑17

2017‑18

2018‑19

2019‑20

2020‑21

Australian Taxation Office

40.0

100.0

120.0

Source:   2017-18 Budget Paper No. 2 - Revenue Measures (page 30)

Government turns GST on its head for new property sales

Sourced article

Government turns GST on its head for new property sales

Steve Healy Jon Denovan Cameron Steele
 
Australia May 12 2017

The Budget measures include a radical plan to shift the responsibility of accounting for GST from property developers to purchasers. Under the proposal, purchasers must remit the GST directly to the Australian Taxation Office (ATO) as part of the settlement process.

The proposal will apply to newly constructed residential properties and new subdivisions from 1 July 2018.

What does this mean for the developers?

The full impact fordevelopers will depend on the final form of the legislation. The critical question is whether the purchaser’s liability will be interim or final.

If the purchaser’s liability to account for GST is non-final, the purchaser may be required to collect a notional amount and a true-up may then occur when the property developer submits its business activity statement (BAS). This may present cash-flow and funding issues for developers, particularly if the GST amount remitted by the purchaser is significantly more than the developer’s actual GST liability.