| Episode: | E159 |
| Show Title: | What’s All This Business about Free Rent? |
| Cast: | Aaron Horne, Patrick Berry, & John McGregor |
| Show Length: | 23 minutes 32 seconds |
Jump in on some more property-related shenanigans with the crew from the Property Pod once again.
As things change and shift in the rental market, some owners & property managers are changing tact to try and secure tenants for their properties. Find out what one of the latest trends that may be sweeping the marketplace is + Aaron zips us through proposals for Ziplines and Football stadiums as he takes things off course once again.
EPISODE TRANSCRIPT
John McGregor
Look, there’s a lot of papers that have been reporting on this, which is… they couldn’t make sense of this. Okay, there’s a rental crisis, but there’s more properties that have ever been available. It was like, well, both of them actually exist in the same space.
[intro]
Aaron Horne
All right, guys, welcome back to the Property Pod! Your weekly engagement in the real estate here in the Hobart marketplace. I’m your host, Aaron Horne. And Pat is very impressed that I’ve been doing some vocal warm ups before the show. Welcome back to the Property Pod, Pat and John!
Patrick Berry
It’s actually more the point that I think you started and J-Mac wasn’t ready because he’s–
Aaron Horne
Notes. It’s the media training that we turned literally into. Oh, I’m prepared. I’m good. I’ve read the notes.
Patrick Berry
I’m good to go. Yeah. Let’s shift gears; this is like deer in headlights. Yes.
John McGregor
Sometimes you forget to put the clutch in the ground.
Aaron Horne
Well, look, I’m glad you’re here. There’s a bit of a false start to get us here to the studio, but we’ve made it. And I’m ready to rock and roll. How are we feeling this this wintry morning, guys?
Patrick Berry
No joke. You know what? Yeah. Oh, look.
Patrick Berry
It’s been a bit of a quiet week, but, you know, end of the financial year.
Aaron Horne
I know we’re just about to.
Patrick Berry
The corner side, normally quiet up a little bit at times we get to that period of time.
Aaron Horne
So yeah, this is what we’re going to say. It’s probably generally like it’s literally just a made up date of like we crossed through the middle of the year and the financial year switch is over. But it does change either like at the end of financial year sales. Get all this stuff sorted.
Patrick Berry
You’ll see what I think.
Aaron Horne
Yeah, everything is sacrificed now.
Patrick Berry
But I just love that you know of.
Aaron Horne
In real estate terms and stuff, it probably is easier to not have contracts crossing over this imaginary date line or you kind of want to get all your things lined up in.
Patrick Berry
There’s definitely investors that will make the decision to hold off to the next financial year. Yeah, there are some, you know, two or three months earlier that will try to move a property before.
Aaron Horne
Okay. Yeah. Can you explain kind of that leading period to that? Yeah.
Patrick Berry
So it’s something to do with taxes, I believe, correct me if I’m wrong, John, but there are different investors that will try to sell a property in a year or buy so many new ones per financial year and.
Aaron Horne
Will have some to do with capital gains.
Patrick Berry
And something to do with their own personal taxes and offsetting your bits and pieces. So some will say, rightio this year because I’m going to make X, I need to buy so many properties. Yeah. And so you’ll find sometimes you get a bit of a rash of an investor trying to get that extra property before or in the financial year.
Patrick Berry
But for us, because we do work like we have such long settlement periods, that action normally happens in March, April, not–
Aaron Horne
Yeah, so that’s why I was going to say you often have those phone calls and I’ve listened in on phone calls prior to those months where it’s just like, yep, look, we’re just going to do an appraisal on this to work out this for tax purposes. It’s obviously leading up to the financial year and trying to get your ducks in a row for that.
Patrick Berry
Yeah. So everything’s like that is. But yeah, for us once we get to this month, it’s definitely a little bit quieter. Yeah, we do have that, that lull of investors that probably jump out of the marketplace.
John McGregor
Well there’s a halt in decision making till everyone can understand what their tax returns going to look like from on a smaller scale.
Aaron Horne
But I heard on the.
John McGregor
Radio for anyone, I suppose that has been is much more attuned to their financial position.
Patrick Berry
That would have none of us.
John McGregor
Know exactly you know plan accordingly. And I guess another thing that winter settles in and everyone sort of bunkers down a little bit more as well.
Aaron Horne
Yeah, yeah.
John McGregor
So at least in Hobart.
Patrick Berry
So you’ve got no iffy sales on any properties going this week? John.
John McGregor
Not specifically. Now we could probably change the headline I suppose.
Patrick Berry
Yeah, actually it’s 10% off.
Patrick Berry
Actually this month only.
Patrick Berry
Yeah, look, that’s.
Aaron Horne
Not a silly idea. People jump on like Black Friday for like ridiculous deals and things like that. Could you just as a marketing ploy be like, Look, I’m just gonna throw one Hail Mary pass and a financial.
Patrick Berry
Year, I’ll.
John McGregor
Even I suppose on our services it’s like 50% off all.
Patrick Berry
Real estate. Yeah.
John McGregor
I just it’s so odd when you see those the I guess real estate has a very different connotation when it comes to discounting your services in almost any other industry. As far as I’m concerned or any service industry sounds a bit strange. Then when you see, you’ll see here a longer 25% off hourly rate or real estate like, you know, 30% off listed property.
Patrick Berry
Now look, no one wants.
John McGregor
This very small population that would probably get really amped about that.
Aaron Horne
Oh look, I’m sure there would be people out there that are chasing the the cheapest deal and the best deal and being like, I don’t care. I’m I’m still getting it.
Patrick Berry
But now I just want to say in the real estate guy, the JB Hi-Fi inspired ad with the big.
Patrick Berry
Star 20% off this property, 5% off this property.
Aaron Horne
All like the ABC games and stuff. Like every week there’s a new sale on the block and they’re just adorned with more sales.
Patrick Berry
So yeah, so yeah, I’ve got a deck the front of the office out we’ve let his stream is.
Patrick Berry
Oh.
Aaron Horne
We should get one of those.
Patrick Berry
Lucky way. Was it wacky.
John McGregor
Waving inflatable flailing arm to me.
Patrick Berry
This is a perfect segue way into one of the articles we’re going to talk about today. So our property management team were saying it’s a bit dead on enquiries and they both said two of them suggested the wacky crazy guy outside the front of the.
Aaron Horne
House actually imagine one. I’m just picturing now that you’ve mentioned that imagine getting one made that you have at your open homes and stuff like that, but like adorned in like a414 light coloured outfit.
Patrick Berry
Oh, not like a suit and tie.
Patrick Berry
Yeah. Yeah. And then.
Aaron Horne
Then he’s waving like, come on in. Well, my goodness.
Patrick Berry
Oh, we.
Patrick Berry
Can have our marriage stand.
Patrick Berry
Otherwise it could be our wacky waving.
John McGregor
Inflatable flailing.
Patrick Berry
Arm to bang.
John McGregor
Well, you need just sit through. I know it’s not Anana. It’s. But there was actually is. What is it that is bad.
Patrick Berry
That’s why we were moving to a gym to go for a takeaway.
John McGregor
Okay. Yeah, we’re we’re owners that now considering rent free periods this year as incentives to jump in on that property.
Aaron Horne
Yeah. So it’s kind of not too far off what you’re talking about with the, you know, what time is 20% off for this, this period. Yeah. So yeah, there are a few in the in the Hobart area that the the Mackie Jared friend of the pod has put an article together saying you know they’re offering two weeks free rent to get tenants moved into the property.
Patrick Berry
Yeah. To make like there’s a bit of stock around at the moment, not quite as many tenants. And so people are creating these deals I guess to convince tenants to choose their place over somebody else.
Aaron Horne
So my very first thought, which isn’t directly related to kind of the, the free side of it is the mass media is basically just pumping up this rental crisis, rental crisis, rental crisis. All of this information on the mainland is rental crisis, whereas we’re just in reverse here.
Patrick Berry
I don’t think we’re in a reverse. I think the way I look at it and I’ve spoken to Joe about it a few times, our business development manager. Yeah, I don’t think we I think the media is spinning it slightly, slightly wrong. They’re describing a rental crisis, but I think it’s an affordability crisis.
Aaron Horne
Okay. Yeah.
Patrick Berry
So landlords are trying to get a higher price to cover the increase in mortgage rates. Yeah. So that they don’t default on the loan. But people can afford to pay the rent that they need to be able to keep the investment property. So what I think we’ve really got is a heap of properties that landlords and most landlords, as we’ve talked about in the past, a mum and dad investors maybe only own one or two.
Patrick Berry
Yeah. And they are actually struggling to maintain the rental property because the costs that we’re asking for these rental properties is higher than the average tenant can afford at the moment due to cost of living increases.
Aaron Horne
And yes, it’s almost.
Patrick Berry
Like like with inflation.
Aaron Horne
When a new subsidy comes in to pay for. So we’ve got our day-care that we’re trying to sort out at the moment. It’s like, Oh, you got to get this new day-care bonus sort of thing. This is coming through. And then it’s just, by the way, Day-Care is going up. Yeah, it’s.
Patrick Berry
Been swallowed up.
Aaron Horne
It’s being swallowed up anyway. And not actually assisting in any way. So it’s a similar thing where.
Patrick Berry
Yeah. So that’s my take on it anyway is I think that yes, there is a rental crisis in some way where there are a lot of people that need housing, but they need housing they can afford, which is one in Hobart at the moment we don’t have. That’s right. And so I think there is a housing crisis, especially with housing Taz and companies like Centacare that we work with where people are reaching out to them looking for housing.
Aaron Horne
And they’re on a waitlist. Yeah. Donkeys. Yeah.
Patrick Berry
Because they can’t afford to take the private rentals at the moment because the cost of the private rentals is too high. Yep. And I don’t think it me personally, I don’t think it’s from landlords being greedy, I just think it’s from the cost of owning the investment property is that they are trying to maintain the property I guess.
John McGregor
Well we it’s a simple answer. We looked at it was there are more properties becoming available, but just not in the affordability band because all the subsidies that social housing can contribute can only go up to a certain point. I remember when I was before I’d moved into my house, I kept the rents specifically at the subsidy for the family that was there, which was $320 a week.
John McGregor
Yeah.
Patrick Berry
Good Samaritan.
John McGregor
So when, of course, once it moved in, it’s gone. But that’s the thing. Is it will they over and above that Ben. Well not going to find a three bedroom house in Glenorchy for $320 a week anymore. Yeah. So, so the thing is, is that the two speed of this there’s been a few times actually with the media already where.
Patrick Berry
Here we go. Hey, we got this.
John McGregor
Look, there’s a lot of papers that had been reporting on this, which is that couldn’t make sense of this. Okay. It’s a rental crisis, but there’s more properties that have ever been available. It was like, well, other actually exist in the same space and it was the exact same, is it? No, actually a few times the same. And she said, yeah, definitely affordability.
John McGregor
But in the end it just comes down to there are more properties becoming available, but not in the affordability band. So the people that have always been suffering are still yeah. So nothing’s really changed on that front.
Patrick Berry
So like our property management team are all relatively new within the space they’ve sort of joined over the last four or five years and obviously the market’s been pretty good during that time, so a lot of them are experiencing this for the first time. And so when Jared put out that article saying free rent for two weeks, it was almost like a novel thing.
Patrick Berry
They hadn’t seen before. But it’s existed. It’s existed before. I mean, all we’re actually talking about it about a week ago and saying, I don’t think we’re far off having to suggest that to owners. Yeah. Yeah. But it is an interesting thing because owners don’t want to drop the rent, but they’re happy to offer two weeks free. Well, it’s effectively dropping the rent by $20 a week.
Patrick Berry
That’s pretty much.
Patrick Berry
Because if you take that over the course of the year, you know.
Aaron Horne
I guess is that it’s not a sales ploy, but it is because my instant idea when I read the article was, yep, you get two weeks free because the landlords don’t want to be dropping the prices. And I’m like, Yeah, but if you were to negotiate a lower rent than the two weeks a negates itself. So it kind of doesn’t end up being free.
Aaron Horne
It just yeah, the money comes at in a different journey.
Patrick Berry
I guess the only thing I could think of the advantage of the two weeks free, I’ve just moved myself and there is a lot of moving costs involved from going place to place. Yeah. And so I guess, I guess if you have two weeks free rent, it allows you maybe for crossover a little bit easier. Maybe you can take that property a week earlier and start to move across a bit easier.
Aaron Horne
I did see an article of of an agency offering moving assistance as in kind of here’s a way of trying to make that little process easier. It is expensive so that I don’t know if they’d cut a deal with a moving agency or something, but I was like, this is a good idea for to save that kind of problem.
Patrick Berry
Interesting. Yeah. Yes. I think property manager is definitely going to have to get creative over the last over the next couple of months to find ways to rent properties. It will be interesting to see how that goes.
John McGregor
Well, especially if the owners are not in a position just to adjust the rent to meet the market where the good tenants are going to move sideways into it. Because I know a friend of mine was in Sydney Academy, which suburb was near the beach that he was living in, and I was to Sydney.
Patrick Berry
Yeah.
John McGregor
But he was living in an apartment, I think it was paying about $700 a week and over in that time the it had it adjusted and there’s able to get a bigger apartment in the same suburbs like 580. So he went, he just broke lease and moved sideways. Yeah. So that obviously adjusted to where good tenants were like that’s a, that’s a better value proposition than where it was previously because now they were paying over market.
John McGregor
And I guess that’s the sticky point is you described if interest rates have gone up so considerably, some owners are just not in that position to be able to adjust the ten or 20% that perhaps they would probably otherwise have to. And what we find is the real estate agencies that were getting a lot of aggressive phone calls from people that are in a desperate financial situation, but they’ll mask it by just throwing out every other excuse under the sun where behind the scenes all they’re saying is, I’m really financially struggling right now, but I don’t know how to get out of it.
Aaron Horne
Yeah yeah.
John McGregor
Know and they and whatever solution that we can provide for them doesn’t provide a solution. Well that’s.
Patrick Berry
It. You’ve got to think about it. Some of these mum and dad investors have got their own personal home, plus maybe one or two investments that, you know, over the last couple of years, we’ve equity increases in property values like a piece of cake. Go buy a house. Yeah, this is awesome. Now it’s got tough. All of a sudden, they’re trying to cover three mortgages that are going up rapidly.
Patrick Berry
Yeah. And yeah, tenants now breaking leases or moving out, renegotiating. It’s definitely a different market to what it was.
John McGregor
Oh, absolutely. And look, I suppose in that sense, too, that those that are had been struggling are still struggling. So there’s no winners in this scenario, you know? Well, they probably are, but not the people that we deal with on a daily basis. We want to help.
Aaron Horne
Yeah, it’s pretty dire. The the spirits were pretty high for a little bit there. We’re talking free rent now. I’m just like, Oh, I don’t know where to go from here. We’ve just fallen off a cliff. Well, talking of cliffs, I’ve got something to talk about as cliff holidays.
Patrick Berry
This should come on.
Aaron Horne
I just wasn’t sure if you guys were across this. I know. Like, developments on Mount Wellington on Canyon is is always a sore topic, but have you guys seen this zip line idea?
Patrick Berry
No, but tell me more.
Aaron Horne
Tell you more. Have you seen the zip line out here?
John McGregor
Only what you just said. Just a moment.
Aaron Horne
So I can’t think of the guy’s name. It’s. He is Shane Abel, the guy who basically put in the Tahoe Airwalk. But he’s put in a few of these zip lines in New South Wales, New Zealand, etc.. So he’s put a proposal or a proposals going through to the Hobart City Council for the largest zip line in the southern hemisphere to be on Mount Wellington.
Aaron Horne
His claim is that it won’t disrupt the look of the mountain. It’s actually way better for the mountain than the cable car. No, not cable car. All Yes. Better than the cable car. Better than mountain bike tracks and stuff that are already there. So it’s a proposed zip line of 1.3 kilometres will take approximately 90 seconds to complete and would be a massive tourist site.
Patrick Berry
I can understand that because the zip line just got towers segmented down the hill. Yeah. And disappears.
John McGregor
In between.
Patrick Berry
The footprint of the tower would be quite small compared to a mountain bike trail which is kilometres of disruptive earth. Like it’s getting dark every day. So I can see his argument on that. Yes.
Aaron Horne
So yeah, the the plan like the the plans are there and it’s kind of argued that the zip line would have less impact and mitigate traffic all going to the run spot because it wants to have it made at the Strickland Falls and take a minibus to the Springs.
Patrick Berry
So I don’t.
Aaron Horne
Know. It’s an interesting idea. I love kind of when developments come up in Tassie. I like the other ones squashed. Not well. Yeah, of course it’ll get squashed. Yeah. Like we’ve been guaranteed a footy team and that looks like it’s on its way to being squashed.
Patrick Berry
Have you got actually seen the.
Patrick Berry
The graphic design of these towers that you describing. And I think the Empire State Building was smaller than these towers.
Aaron Horne
Yeah. Okay.
Patrick Berry
You know, I like the way that they.
Aaron Horne
Roll up in the bit.
Patrick Berry
Like the footy stadium. Yes.
Aaron Horne
So that’s what I wanted to go to next. I was saying the image of the footy stadium which as someone that works in Photoshop, most days, there’s this new feature generative feel where you kind of just select the area and type in like football stadium. And essentially this looks like what these architect’s plans that I did say that someone has as claimed.
Patrick Berry
Oh, it’ll, it’ll fill up the whole skyline.
Aaron Horne
And take over all of the city. And I think I actually saw Jeremy Rockliff right. Like whoever spent time in Microsoft Paint making this like you’re a real goose.
Patrick Berry
But the silly thing is like I’m happy to say I’m pro stadium, I’m all for it. But if you look at the photos that Rafael just put up, his photo perspective is a lot further back, which makes the stadium look a lot smaller.
Aaron Horne
Yeah, yeah.
Patrick Berry
So every photo that the Tasmanian Government has put out has been halfway in the Riverdale and from a boat or I got all the way back on the other side. Yeah. Yeah. You know Salamanca which when you look at perspective of the photo makes the stadium look way smaller. Yeah, yeah, yeah. I would love to see a photo from the Tasmanian Government taking in a similar size.
Aaron Horne
They basically take that.
Patrick Berry
So yeah. Yeah. And then re okay. Yeah, yeah. Because I don’t think there’d be a huge amount of difference between the.
Patrick Berry
Two and I.
Aaron Horne
Don’t think it’s a monstrous big and think about when you’re walking like along to Edwards Stadium or Marvel Stadium or whatever, you know, blend in like. But yes, I, I just thought it was funny and knowing and playing in the Photoshop space, looking at it, I was like, I know exactly how they’re like, they’ve literally clicked three things and then it’s gone viral.
Patrick Berry
I think I write on one of the posts that someone had commented that the measurements they had worked out for this picture had it at 48 metres high, which was higher than the image’s highest point.
Patrick Berry
Oh yes, yes. Amazing. Yeah, we need 200,000 steps. But yeah, it’s only.
Patrick Berry
It’s only 25,000 or 30,000 straight stadium. But apparently it’s got higher walls in the 800,000 people.
Patrick Berry
So one that.
Aaron Horne
I will say like have you guys been. You probably haven’t. Have you been up to Townsville since they’ve got their new stadium.
Patrick Berry
I can’t say it’s been replaced to everybody.
Aaron Horne
I’ve got family in Townsville so.
Patrick Berry
I just jumped on a plane every day.
Aaron Horne
I knew the answer before I asked. I don’t know why I asked it any home there, the stadium in Townsville has this amazing kind of I know it’s in north Queensland and the weather’s really accommodating, but it has this amazing. It’s almost like a crustacean or a shell. The way that shaped it is quite open. And so as people are like walking towards it, you’re almost being like invited into it and it’s the way it’s shaped in the city.
Aaron Horne
It just fits perfectly. It’s like it’s meant to be there. It’s like a art installation. It’d be cool if the one that we were to build here, if the team was to go ahead, could be this. But it sounds like ultimately.
Patrick Berry
Now apparently we had a big square box. Yeah. And is how.
Aaron Horne
It’s got a big silver thing that’s just going to be ugly, which would actually go really well next to that tin can, that opera house thing that’s there. That is just a bizarre.
John McGregor
I still remember when the insulation was just, you know, it had cracked and it was falling at the side.
Patrick Berry
Of the inside. Yeah.
Patrick Berry
Do you remember when it was first all shiny and they had to like polish it back they old.
John McGregor
Because it’s too intense.
Patrick Berry
So intense. And the heat was increasing. They surrounding buildings by ridiculous amounts.
John McGregor
But it it would it would be impressive. Like they have the only football stadium that looked like a concrete water tank. Yeah. You know.
Patrick Berry
What?
Patrick Berry
A lot of things come and go. Come on, take on the Tassie.
Aaron Horne
Tigers or whatever they called in them in the water.
Patrick Berry
So that’s why it should be the Tassie Mariners in the water tanks.
Aaron Horne
Yes. There you go, marketing genius.
Patrick Berry
Here we are always solving the world’s problems here today.
Aaron Horne
Look, if you are pro football team and you’re listening to this on the day comes out, there is a Tassie versus Queensland footy match on at North Hobart this weekend. So there’s a big push for people who are pro the team to get along and show that we can get a big crowd to a state footy event. So yeah Tassie rap team, they’ll be wearing the the Tassie jumper I think ladies game starts just before lunch 1155 and men’s game is after that and say 2:00 so if, if you’re out and about the family, if you are pro footy team, it’d be a good way to, to get there in, in droves and show them
Aaron Horne
that we are behind and I want the footy team can understand that people are claiming that their money could be spent on better things. The money’s already been allocated. Let’s just.
Patrick Berry
Say.
Aaron Horne
Let’s just build it, let’s get our team.
Patrick Berry
It doesn’t.
Aaron Horne
Happen now. It’ll never happen.
Patrick Berry
This has been an interesting show. If we’ve.
Patrick Berry
Dived into the depths of the.
Patrick Berry
Rental market and now we’ve just aligned ourselves pro football.
Aaron Horne
Man, we’re going everywhere. But look, it’s our show. We can do.
Patrick Berry
Whatever we want.
John McGregor
I, I still, I would still be 100% behind it being called the turbo chooks. And if that was then the not called the tank, we could call the barn and just put up a giant big and look.
Patrick Berry
You know to to save money in construction chicken wire is way.
Patrick Berry
Down the side of the budget still just right where the wind goes from really all to the boulder. Yeah.
Aaron Horne
Fantastic guests.
Patrick Berry
To look.
Aaron Horne
Now. Sorry.
Patrick Berry
Yet I just want to point out they talk about jokes. They just like free range. They don’t frickin live in a box.
Patrick Berry
You can’t time.
John McGregor
That’s why we can’t have walls this time. The walls make sense.
Patrick Berry
Jeez, look.
Aaron Horne
So that’s the show for today. It is. As you say, it’s been a roller coaster of highs, lows, cliff dives, stadium talk, zip lines, zip lines, this, that and the other. Yeah. Get out to the footy this weekend if you can. The other thing that is on day of release of this is the winter fest out in Bridgewater, the Crow, a lot of collective put that on.
Aaron Horne
It’s a really good event. I’ll head out there with the boys so if you are out there, you do listen to this. Come along and say goodbye. Yet another fun community event in the playground.
Patrick Berry
Right next door to it.
Aaron Horne
Absolute killer. Actually, Jack’s probably out enough now to go on that if spinny hamster wheel.
Patrick Berry
For the listeners out there that don’t realise Bridgewater has one of the best playground after Kingston. Oh uncle is climbing it. It is a good playground.
Aaron Horne
I have wanted to do a blog piece on best playgrounds in and around our local area. I know we’ve already done one on like new ones. I’m just up at like the best like ranking them and having like a kid or someone being like, yep. Slate It’s got this many swing, has got this many activities, a zip line.
John McGregor
Well, I know when I was growing up it was the one at West Hobart which was the old train that was, that.
Patrick Berry
Was right station. It was not playground of choice.
Aaron Horne
Let it be known the train place the train station playground is still a ripper. Yeah, yeah, yeah.
Patrick Berry
It just doesn’t really have the train anywhere.
Patrick Berry
It’s just.
John McGregor
It’s just. It’s the plank.
Patrick Berry
Yeah.
Aaron Horne
Not, I’m still trying. Yeah.
Patrick Berry
So it’s not as.
Aaron Horne
It’s not as good, but, but there’s an awesome slide, like an absolute monster slide.
Patrick Berry
So, and we were wrapping up, so sorry.
Patrick Berry
Just get back to what we’re doing.
Aaron Horne
Next week on the property pod. Best parks in and around Hobart.
Patrick Berry
That’s founded by the kids.
Patrick Berry
George, I’m out of there.
Aaron Horne
Yeah, yeah. So big kids at heart.
Patrick Berry
Yeah, yeah, yeah.
Aaron Horne
All right. That’s probably fun.
Patrick Berry
See you, guys. See you guys. Bye.
[extro & disclaimer]
