How Property Investors Can Embrace the Work From Home Trend

Work-from-home (WFH) arrangements have become the "new normal" as a result of the coronavirus epidemic, which has caused many of us to spend a great deal more time at home. New trends are emerging that are reflective of the changing lives of renters as a result of the fact that tenants now require their houses to be located for both work and recreation.

Which of these trends are the most prominent, and how can you best position yourself to capitalise on the new possibilities they present? Real Wealth Australia's Helen Collier-Kogtevs gives you some advice to help you make the most of your next purchase of an investment property so that you can put your best foot forwards.

The new criteria tenants have for homes

Tenants who now spend months at a time working from home have realised the critical importance of having a substantial amount of space in their homes.

"When you work from home, you have more freedom to stretch out, so having a house that also has a study and other living space is essential."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

They are seeking for an extra bedroom, a study, or even a discreet hallway nook so that they may convert it into a home office so that they can keep their sleeping and living quarters distinct from their working quarters.

This is of considerably greater significance for couples and families, in which members frequently share the same room and are physically close to one another. When people work from home, they tend to spread out, as Helen pointed out; when you add in children who also require space to have Zoom lessons during lockdowns, you need an additional area where all of these activities can place, so having extra space is a need.

“Tenants want more space in the backyard, they want a dishwasher, and they want additional modern conveniences; and the reason they want all of this is because they spend more time at home.”

Helen Collier-Kogtevs, Founder of Real Wealth Australia

As a result of people spending more time at home, properties with larger backyards have grown increasingly desirable. Families adore them since they want to ensure that there is sufficient space for their children as well as their pets to run and play. The property's proximity to the neighbourhood's parks and playgrounds is another desirable feature.

Because renters expect their homes to provide as much comfort as is humanly possible, conveniences and luxuries such as dishwashers, air conditioning, and other supplementary items have grown increasingly important.

Even solar panels can be appealing to tenants, particularly if they have experienced bill shock as a result of higher energy usage brought on by the increased amount of time spent at home.

The regional property boom

The inner-city neighbourhoods have been the primary focus up until this point. Tenants have always placed a high premium on the ability to locate their homes within walking distance of their places of employment. However, because to increasing demand and higher pricing, residents are forced to live in smaller apartments in exchange for shorter commutes.

As a result of the WFH trend, regional centres have witnessed a surge in recent years.

After being confined to a small space for an extended period of time in the middle of the city, an increasing number of people are beginning to ask themselves, "Why do I sit here in this little apartment when I could go get a property in a large regional town where I can have fresh air, less traffic, a better lifestyle, and I can still work?"

"That's something that investors looking to buy an investment property should consider. Look at the outskirts, but make sure that you've still got plenty of infrastructure within a 15-minute radius."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

People who have recently sold properties in inner-city locations may find that moving to a regional centre such as Byron Bay, Wollongong, or Newcastle allows them to purchase a larger home for the same amount of money. This is especially true for people who have previously lived in larger homes. These regions also have a substantial amount of infrastructure already put there, and within a radius of fifteen minutes, one can reach retail centres, hospitals, and schools, making them an ideal location for families.

Actionable strategies for you to embrace the WFH trend

1. Consider tenants’ new search criteria when buying your next investment property

When looking for an investment property with the WFH trend in mind, space is one of the most important factors to consider. Tenants require space for home offices in their apartments. Even more compact flats can accommodate to the trend by designating a room or area specifically for the trend's use; however, this may be more difficult to execute if the unit has less than two bedrooms.

"When advising my customers on the purchase of a home with three bedrooms or more, I always emphasise the need of ensuring that the home has at least two separate living areas. Keep in mind that working from home gives you the opportunity to cover more ground."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

If you are considering moving to a more rural area, you should look into purchasing a home that is larger, has more space, and is located within 15 minutes of a variety of amenities. It is even more advantageous if the home also provides convenient access to major urban centres in the region.

2. Change up your advertising strategy

If you want to embrace the WFH trend with your existing property portfolio in a straightforward manner, ask your property manager to update your lease ads whenever you are searching for new tenants. This will make it easier for you to participate in the trend. It is possible to rapidly transform a property with four bedrooms into a home with three bedrooms and a study. Even a large corridor or an isolated nook can be transformed into a home office. Bring attention to the fact that the outside living spaces are wonderful locations for youngsters to play, and highlight any other features that will make the property more appealing to prospective tenants.

Even though it's just a small adjustment, it will go a long way towards making your rental home more appealing to those who are looking for a place to live. Please do not take it for granted that your potential renters will put in extra effort in order to make your house a good fit for them. Instead, you should ask your property manager to assist you in providing them with a clear image of the genuine potential of your home.

Is the WFH trend here to stay?

It is sometimes simple to brush off the trend of working from home as a transient shift in tastes, particularly as reports of the development of a vaccine start to surface. However, given that many experts believe that the occurrence of the next pandemic is not merely a possibility, but rather a probability, and that coping with pandemics may one day become a normal part of life, adjusting your investments to account for the trend will help to ensure their continued success in the future.

This is especially the case given that Australians initially anticipated the WFH trend to be less persistent than it actually is.

Even while workers are gradually making their way back into workplaces, many of them have decided to maintain the flexibility of their working arrangements for the foreseeable future. According to the Australian Bureau of Statistics, just 31 percent of employed Australians are currently working from home on most days, which is a significant increase from the 12 percent who did so before March.

On top of that, we are seeing businesses reduce the amount of office space they have available and allow employees to work from home on a permanent basis. And as you've already observed from the boom in regional areas, a significant number of Australians are relocating to rural areas in order to make long-term adjustments to their way of life.

Nobody can say for certain what this trend will be like in another five years from now because it is still in its infancy. Your choices in terms of work may shift over time, and so may the other elements that contribute to the desirability of your investment property.

How can you ensure that you are always up to date on the latest trends in the real estate market, regardless of how the search criteria of tenants may shift?

“It's possible that the preferences of tenants will shift. However, when the appropriate time rolls around, the property management will be aware of it.”

Helen Collier-Kogtevs, Founder of Real Wealth Australia

Helen emphasises that property managers will be the first to notice if there is a shift away from offices or any other change in the preferences of renters, regardless of the nature of the shift. It is in everyone's best interest to enquire with property managers since doing so is quite advantageous "What's available for rent at the moment? What exactly are individuals trying to find?" This not only assures that the item you buy will rent throughout the year but also gives you the ability to make a selection that takes into account any changes that may occur in the preferences of tenants.

How to Treat Your Property Like a Business

There is a rationale behind the fact that 1.86 million people in Australia, including you, own an investment property. It is a tried and true method of supplementing one's income without engaging in the high-risk activity of the stock market. But after you've managed to get your hands on an investment property, how can you ensure that you're earning the most possible returns on your investment?

You want to make sure that the money you've worked so hard to acquire is invested wisely in a piece of real estate that will continue to increase in value. Because it would be a waste of time and effort to put in a significant amount of work into an investment if there was no chance that it would pay off, right? In addition, no one wants to pass up the opportunity to earn potentially thousands of dollars through rental revenue.

What's the upbeat report? To get the most out of your investment property and increase your returns, you don't have to devote all of your spare time to managing it. It's all about removing emotion from your decisions, knowing what kind of specialists you need on your side, figuring out when you should spend money versus when you should save money, and learning how to manage your costs so that tax time doesn't give you a headache.

In order to provide you with all of the information you need to maximise your profits, we conducted an interview with Helen Collier-Kogtevs, one of the most prominent property educators in the nation and the creator of Real Wealth Australia, so that she could share her expert advice with you.

Are you prepared to make significant cost cuts and increase company profits? Let's dive in.

Remove your emotions from the situation

When conducting business, you should never let your feelings get in the way of making rational decisions. This is something that goes without saying. After all, basing judgments on your emotions isn't the best course of action to take, especially when you have an investment that could lose you hundreds of thousands of dollars. However, what does this look like when it's put into practise?

Don't let family or friends rent your property

We are aware of how challenging it can be to find reliable tenants that will take care of your property. In the poll that we conducted in August 2020 on property investing, 21 percent of owners cited "getting tenants" as one of their most difficult issues.

However, separating the excellent tenants from the bad ones is not the only challenge here. It is essential to prevent feelings and personal connections from clouding your judgement if you want to achieve the highest possible results. And yes, this does mean that you should avoid renting out your property to close relatives and friends.

It's possible that renting your home to your friends at a discounted fee will provide you the sense of security that comes from knowing the property is in capable hands. However, if you provide a discount of $100 a week, this will result in a loss of $5,200 in rental returns each and every year. In addition to this, you will be expected to pay not just the monthly mortgage payments but also any and all costs associated with maintaining the home. Do you see where we're going with this?

When it makes sense, increase the rent

Maintaining a rent that is low relative to the market rate is of equal importance. It is recommended by Helen that investors such as yourself raise the rent on a yearly basis in order to remain competitive in the market. To accomplish this, you should keep an eye on supply and demand as well as vacancy rates to see how your rent stacks up against other rents for properties that are comparable to the one you have. The principle goes as follows: if there are more persons looking for rentals than there are homes available, then you will have a better probability of successfully raising the rent. [Case in point]

"There are some circumstances, like the one that applies at the moment due to COVID, in which you are not allowed to increase the rent. On the other hand, I relish raising the rent each year when everything is going according to plan."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

We understand that the idea of approaching your renter with the news that you are going to increase their rent may cause you to feel sick to your stomach. However, if you want to run your property like a company, you need to take your feelings about it out of the equation.

Therefore, what steps should you take to accomplish that?

The go-between who assists you in avoiding being emotionally entangled in a situation

The process of negotiating might be handled on your behalf by your property manager (to save you those awkward conversations with your tenants). They will also have their fingers on the pulse of the local market and will have the research and industry know-how to back up and explain the rent increase. In addition, they will have their finger on the pulse of the local market.

If you have an expert on hand to act as a go-between for you and your tenants, it will be easier for you to maintain your concentration on maximising your returns on investment rather than fretting about how your tenants will respond to the upcoming changes. And beyond these difficult conversations about increasing the rent, it is also part of a property manager's duties and responsibilities to keep the frustration out of any issues that may occur.

"Property managers help you deal with any problems that can come up as a result of your renters while allowing you to keep your impartiality. They are therefore crucial to me. I can talk to a property management without letting my emotions get involved, and that makes me a better person. Sayings such, "Okay, the dishwasher isn't working?" are within my power. Okay, we require three distinct quotations. You have the budget in front of you; complete it. I don't have to run around quickly seeking for anything."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

By delegating the day-to-day operations of managing your property to a professional property manager, you will give yourself the opportunity to stand back and examine the situation from a broader perspective. In this manner, the likelihood of your arriving at conclusions that are objective and that will assist you in maximising the profits on your investment is increased.

Keep track of your spending to maximise your tax savings

For investors like you, tax season may be a significant source of stress. Because when June 30 rolls around, nobody wants to spend hours sorting through boxes of recipes and compiling bills, right? A remarkable record-keeping system, on the other hand, can help you save a significant amount of money when dealing with an accountant and increases the likelihood that you will receive a pleasant surprise on your upcoming tax return.

"When it comes to managing my finances, I like to use software. When it comes time to file your taxes, you may send that information directly to your accountant. In many cases, your accountant will charge you less because you won't be handing over a shoebox full of receipts or a ludicrous spreadsheet that you've created on your own."

Helen Collier-Kogtevs, Founder of Real Wealth Australia

Did you know that you can immediately claim a tax credit for over 25 different expenses related to your investment property? You will be able to quickly and easily receive an overview of the beliefs for which you are qualified to make a claim if you use technology to improve your record-keeping system. You can put your trust in us when we say that doing so will help you get the most out of your time spent working with an accountant.

And while we're talking about tax returns, it's important to find a good accountant who can assist you in getting the most money back when it comes time to file your taxes. It is not true that all accountants provide the same quality of service, and a significant factor in determining this is the amount of money you are willing to invest. If you go with the one that is the least expensive, you will likely simply receive an essential tax return rather than strategic advise about how to arrange your assets, cut your expenses, and develop your portfolio. This may seem like the best course of action, but it actually isn't.

Invest in the best expert team possible

When it comes to choosing the members of your team of specialists, the same line of reasoning should be used. We have all overheard businesses stressing the significance of recruiting qualified candidates, and they do so for a good reason. It is really necessary to have the appropriate crew available in order to successfully complete the task. You can manage your investment property on your own, but it will be difficult to get the greatest results without the assistance of a professional, so this is one area in which you shouldn't try to save money by cutting corners.

“Think of it as a business expense for your firm. You won't want to cut corners when it comes to consulting with industry experts if you're going to spend tens of thousands of dollars or more on the purchase of an investment property. These personnel will pay for themselves if you have the right people with expertise on your team.”

Helen Collier Kogtevs, Founder of Real Wealth Australia

Which professionals, then, should you have on your team if you want to maximise the profits that your investment property generates?

To begin, you'll need a group of people who can assist you in acquiring the ideal home. These individuals can include the following:

• a mortgage broker: to assist you in locating the loan that is best suited to your particular circumstances.
• an accountant: to assist you in getting your financial house in order for the purchase of your property.
• a solicitor or conveyancer: to assist you in navigating the various legal aspects involved in the acquisition process
• pest and building inspectors: for the purpose of ensuring that the home you have your sights set on is not a dud property

To ensure that you make an appropriate investment, it is essential to involve professionals from the very beginning of the process. They will, in many instances, be able to provide helpful counsel and direction to ensure that your investment is positioned for success from the very beginning of the process.

"It is essential that you find out whether the property has any issues that need to be addressed. Bring in the appropriate expert to examine the building, whether it be due to the fact that it is an older building or simply to ensure that it is in good condition. In addition to that, check to see that a competent pest inspector is going to be present."

Helen Collier Kogtevs, Founder of Real Wealth Australia

In addition to that, there are a wide variety of experts that are available to assist you after the purchase has been made, including the following:

• an accountant: to prepare your tax returns and provide you with strategic guidance regarding the best way to arrange your investments, save your costs, and expand your portfolio.
• a quantity surveyor: must complete your depreciation schedule in order to ensure that you are able to claim the maximum amount of deductions possible when tax time comes around.
• a property manager: to ensure that your investment is in excellent condition and to get the best possible return on your rental property.
• an insurance broker: to guarantee that you have the appropriate insurance to safeguard both yourself and your home.
• a mortgage broker: to prepare you for the acquisition of investment properties in the future.

Establishing constructive working connections with the members of your expert team might prove to be of tremendous value. It's possible that you won't believe all of the places where they can help you maximise your returns on investment.

"Back in the day, we bought half a dozen properties -  but because they were all old, we didn't think there was anything worth claiming as tax deductions. So one day, I was chatting with my quantity surveyor, and it came up in conversation, so he insisted that he take a look for us."

"When we finally got schedules for all of those properties, we discovered that we were eligible for an additional $20,000 in deductions, which we had not anticipated receiving. If you're going to invest $600,000 in a piece of real estate and you have the right professionals on your side, those experts are going to pay for themselves in the long run.”

Helen Collier Kogtevs, Founder of Real Wealth Australia

Just keep in mind that cheaper property management fees aren't always the best choice

In the same way that you won't want to cut corners on your team of specialists, you shouldn't do so when you're thinking about how to select a property manager who is suitable for your needs. Even while finding the greatest possible bargain is of the utmost importance, you should still make certain that an experienced professional will look after your investment.

For investors like you, striking the right balance between cost and value for money is one of the most important considerations. It was the most major source of discomfort for a total of 42 percent of the 3,000 owners of investment properties with whom we spoke. Although it is feasible to negotiate the rates for the management of your property, doing so may result in a decrease in the quality of service provided, which could mean that your property is not at the top of their priority list.

“If you've negotiated your property manager down to 5%, and someone else is paying them 10%, whose property are they going to put more time and energy into?”

Helen Collier- Kogtevs, Founder of Real Wealth Australia

We know how confusing and difficult percentage-based fees can be. That’s why we encourage savvy property investors to look for property managers who offer a flat property management fee that’s simple and transparent. That way, you’ll know exactly what you’re spending your money on to pick the right level of service for your property. 

Encourage good communication with your tenants and property managers

Putting your property into the hands of other people can feel like a significant risk. After all, it's your hard-earned cash on the line. But, treating your property like a business isn't just about the bottom line. Building good relationships with your tenants and property managers is a smart move to ensure your asset is in safe hands.

So, while it's essential to keep your emotions out of it all and treat your property like a business, it's also crucial that you don't forget about the human element of doing business. Learning how to maximise your returns is all about putting your time, energy and money in the right places. Make sure you have the right experts and professionals by your side - this way, you'll be able to take the hassle and stress out of managing your investment property.