02 Apr Take control of the management of your investment – Justin Jefferies
A decision that many property investors need to make with their rental property is if they are going to manage it themselves or put it in the hands of a professional property management company. We will tell you about a website that’s been developed to help landlords manage their own property. Justin Jefferies tells us about Lodge.
Kevin: A decision that many property investors need to make is with their rental property, are they going to manage it themselves or are they going to put it in the hands of a professional property manager. There’s a website that’s been developed called lodge.com.au that helps private landlords manage their own property. I’m talking to Justin Jefferies who is the CEO for Lodge. He joins me. Welcome to the show.
Justin: Thanks Kevin, great to be here.
Kevin: The reason why I want to talk to you is because I was interested to read the other day, and I’ve got to admit that I didn’t know this. I knew that tenants are responsible for maintaining the yard of a property that they’re renting, but it’s the landlord’s responsibility to ensure that all the tools that they carry, use to carry out the maintenance, are actually provided and maintained. Things like lawnmowers.
Justin: That’s correct. I’ve lived in rentals where the landlord hasn’t provided the equipment, but depending on which state or territory your in it spelled out pretty clearly in the different residential tenancy acts and it is the landlord’s responsibility to provide the tools.
Kevin: If they don’t provide the tools, and then the tenants don’t maintain the property, I guess I’ve got very little recourse. Is that right?
Justin: Look, I think what a tenant could do likely if they weren’t maintaining the property … And by the way, this same thing holds true for pools, right? I mean, generally the landlord has to provide the the mowers … Or sorry, the scoops and hoses and pool cleaning material. But if the pool is not maintained or the lawn is not maintained, probably you’re going to hear from the landlord what’s going on with the weeds out front. And I think that’s where a conversation would ensue. But it’s clear that landlords do need to provide the equipment. For something like pools, tenants need to provide the chemicals, oddly.
Kevin: Yeah, that’s very strange. I guess an easy way around this with pools or with yard maintenance is to have a professional come in and do it as part of the tenancy agreement. Then there can’t be an argument either way. From the tenant or the owner, can it?
Justin: Yeah, that can get expensive. But it’s interesting, as long as long as the work’s done and it’s a reasonably done, I don’t think you have to mow the yard every Saturday morning, but you also don’t want to have weeds that are two feet tall.
Kevin: Okay. The website is lodge.com.au. That was established to help private landlords manage their own property. Justin, keen to know from you two things. One, what do you see as the biggest mistake private landlords make? And also why did you set the site up? Obviously, because there’s good demand there.
Justin: Yeah, sure. Well, first of all, the reason why we set it up is there are about 2.2 million residential property owners in Australia. Probably 500 to 700,000 of those are self managing depending on which source you check. And for many it makes sense to self manage their properties. Typically it depends again on the state, but you know most landlords will pay six and a half or 7% of rent collected to property managers. And then there are additional charges for finding a tenant, renewing a tenant in some cases. And some of those might be one or two weeks of rent collected. So it gets pretty expensive. And if you look at it, those percentages really haven’t changed much over time. So if you look at rent appreciation over time, 7% of rent 10 years ago was a lot less expensive than 7% today.
Justin: Now you can argue that a property manager’s expenses have gone up. They certainly have, but in most cases, rental growth has outpaced the increase in the cost of doing business. So many self managing investors will buy first generation property and if you’ve bought a unit, and it’s brand new construction, it’s less likely that something’s gonna go wrong in terms of maintenance, et cetera in that time that you own the property. And what we’re hearing from a lot of landlords is that, were it not for the fear, uncertainty, and doubt that I’m thinking about, I would love to go to a product like yours and we’re working with those landlords and bringing them on to our platform, but for many self-managing landlords who aren’t using any system and cobbling together their own way of operating a system like ours makes a lot of sense.
Kevin: Can I just talk to you about something in relation to that and that is that everything’s fine if you’re managing your own property until something goes wrong. The moment it goes wrong, that’s when it all comes unstuck. And yeah, it’s not so much about maintenance always. It can be about late fees or it can be some damage to the property. And that’s really when, if you haven’t got the systems in place, you’re going to be in trouble.
Justin: That’s right. And I think that the best thing that a self managing landlord could do is download the residential tenancy act for their state and get familiar with that. Allows a arrears management, there’s all the notifications there around rent collection and usually when you get in trouble around missed rent payments and so forth. If you got landlord insurance, the first thing the insurance providers going to do is say I need to see every bit of communication that’s gone on with this. One was rent paid, what was communicated back and forth. So it’s really important to have a system of record. You can do that with our application whether you use our application or not. It’s really important to keep records.
Kevin: Some of the insurance companies won’t provide insurance for private landlords. Is that available through your site?
Justin: It’s not, though we are, we are talking with one provider now and it’s my understanding that it’s generally pretty well available.
Kevin: Justin, just before I let you go. Just tell me a little bit more about the system. How does it actually help a private landlord manage things like rental arrears and record keeping?
Justin: Yeah, sure thing. So our system offers tools, resources, insights to really supercharge self-managing landlords. And we do that by offering products and services, which traditionally have only been reserved for property managers. So as an example, if you want to advertise for a vacancy with REA or domain, you need to be an agent to do that. And we are an agent, but we allow you to self manage and really advertise on those sites. Additionally though, you can screen for tenants. We have a partnership with Equifax. You can digitally sign leases, collect rent, handle maintenance requests, et cetera. And what we offer is the ability to have that system of record that’s really important. So you’ve got document management, you can have all your property materials together. I can take a picture of a tax invoice on your phone and upload it right into your account.
Kevin: So if you’d like to manage your own property, if you’re a property investor, suggest you have a look at that site. It’s called a lodge, lodge.com.au. My guest has been Justin Jefferies. Justin, thanks for your time.
Justin: Thank you, Kevin.