6 minute read
ARAMA Report
Industry survey fi nds resident managers deliver bett er outcomes
By Trevor Rawnsley,
CEO, ARAMA
Once again, I’d like to remind ARAMA members that the industry survey conducted by international accountancy group Deloitt e, demonstrated bett er returns for owners from properties managed under the Management & Lett ing Rights (MLR) model.
Overall, the survey responses indicated that a resident manager acting in the role of an onsite lett ing agent delivers a bett er weekly rental return than an outside agent. The resident manager also performs the caretaking functions in a more cost-eff ective manner when compared to other professional outside alternatives. The Deloitt e Survey is available to members as a four-page fact sheet from the ARAMA website library. One of the most striking outcomes from the report was that “onsite management rights models operating in strata and community title properties are understood to off er owners numerous advantages, including higher rental yields and lower caretaking costs.” This is a powerful document that enables ARAMA members to debunk the incorrect assertions that are made by a small minority of owner-occupiers, those who continue to oppose MLR in the belief that it can save the scheme money. The Deloitt e survey demonstrates that quite the contrary applies. Generally, MLR saves the scheme money and delivers bett er rental investment returns.
MLR is in the best interests of the scheme, and we consider that any att empt by committ ees or their advisors to remove them is not acting in the best interests of the scheme.
The Deloitt e Fact Sheet has been produced to provide information that is of a general nature and should not be considered directly related to any one scheme. Members may wish to undertake their own comparison of the rental performance of their onsite lett ing pool, versus those units which are managed by outside agents, either within their scheme or more broadly in the local market. Sites such as Realestate.com. au or Domain.com.au can provide some easy to obtain comparisons to draw on. Write to your current clients and point out the comparisons that are specifi c 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 qualifi ed and capable outside service providers who can carry out tasks in association with the caretaking agreement and see how much more they will cost the scheme. Measure the cost of security, preventative maintenance and general vigilance, and see how much the comparison is. Make sure those you compare costs to are fully insured, with all the relevant business registrations and licences, otherwise it’s not a fair comparison. Members who have completed this ‘market comparison’ exercise are staggered at how much more outside service contractors would cost the scheme compared to what they provide as the onsite caretaking service provider. Further research indicates that on 87 percent of occasions the onsite manager is found to outperform an alternative off site service provider. These ‘market comparison’ exercises are good to perform on a regular basis (perhaps even every fi ve 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 Deloitt e 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 fi nd included in the section titled “Advantages of Onsite lett ing Management” are: a comparison of onsite versus off site versus self-managed; suggestions for communications; and correspondence with lot owners regarding the benefi ts of a resident manager in a holiday complex and/ or a residential complex. The Deloitt e survey was completed by lot owners throughout Australia and the results, as outlined in the fact sheet, highlight the key benefi ts of onsite rental management in a management rights context, and estimate the added value that management rights bring to lot owners.
More than 75 percent of respondents surveyed estimated that an onsite letting agent: generated higher yields than an offsite letting agent, and more than 97 percent of respondents surveyed estimated that onsite 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 handson 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 onsite letting agent added value to the owner was in their intimate knowledge of the complex. In fact, 96 percent of the respondents strongly agreed that this enabled onsite letting agents to be proactive in addressing owner concerns. Almost all the lot owners surveyed said that an onsite letting agent adds to the customer experience, 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 onsite manager, the probability of rental breaches and poor behaviour from tenants and guests decreased. It also meant a higher level of information was available for owners.
Almost all the respondents also agreed that because the resident manager acting in the role of an onsite letting agent had financial and vested interests in keeping costs down, they strived for the most costeffective 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 onsite caretaking service provider added to owners, 61 percent estimated that onsite caretakers save lot owners up to $500 per lot per month. More than 25 percent of lot owners estimated the saving was up to $1000 per lot per month, while seven percent estimated that onsite caretakers saved lot owners between $1000 and $2000 per lot per month. One of the respondents told Deloitte: “The onsite manager can and does arrange for maintenance to be carried out much quicker and usually much cheaper than that arranged by offsite service providers. “An onsite 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 percent 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 onsite caretaking service provider.
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