Maximising Your Investment: The Difference Between Average and Great Returns

Buying the right property is only half the equation. In this episode, Mel Dennis sits down with Nicola Michels, Senior Business Development Manager at Longview, to talk about what great property management actually looks like, what investors get wrong, and the small changes that can have an outsized impact on rental returns and long term performance.

With over two decades of experience across metropolitan Melbourne, Nicola shares what's happening in Melbourne's rental market right now, why the right property manager is worth far more than the fee difference, and a real life case study of a property turned around from two months vacant to let in two weeks. If you own an investment property, or are thinking about buying one, this conversation is essential listening.

Connect with Nicola Michels, Longview: www.longview.com.au

The Melbourne Property Brief is brought to you by Domain & Co, Your Property People. domainandco.com.au

Timestamps:

00:00 Introduction and Welcome

00:25 Meet Nicola Michels: Senior BDM at Longview

01:17 Longview's Coverage Across Metropolitan Melbourne

02:22 What's Happening in Melbourne's Rental Market Right Now

03:34 Pricing Right: The Key to Minimising Vacancy

04:07 Buy With Your Head, Not Your Heart

05:10 What Makes a Property Appeal to the Rental Market

05:51 Long Term Tenants Mean More Money in Your Pocket

06:22 Average vs High Performing Investment Properties

06:54 The Right Team Around You: Why It Matters

07:26 Data Doesn't Lie: Understanding Real Rental Returns

09:17 The Biggest Mistake Investors Make: Choosing the Wrong Agent

09:58 Don't Skimp on Management Fees for a Million Dollar Asset

10:38 What Good Property Marketing Actually Looks Like

11:43 Floor Plans, Virtual Tours and Photography: Why They Win Tenants

13:02 What Service Standards to Look For in an Agent

13:52 Compliance and Legislative Changes Landlords Must Know

15:28 Longview's Service Guarantee: Putting Money Where Their Mouth Is

16:39 Practical Ways to Maximise Rental Return and Minimise Vacancy

17:55 Proactive Maintenance: Prevention Is Better Than Cure

19:39 How Often Should You Review Your Property's Performance?

20:37 The Case for a Property Management Only Agency

21:41 Unbiased Advice: Sell or Hold?

22:12 Real Life Case Study: Vacant for Two Months, Let in Two Weeks

24:06 Closing Advice: The One Thing Every Investor Should Do Now

24:15 Wrap Up and How to Connect With Nicola at Longview

Transcript

SPEAKER_00 0:00

One thing I've learned after nearly 30 years in property is that behind every property transaction there's a story, a big decision, and often a lot more emotion and complexity than people expect. This podcast is all about giving you access to the people, insights, and strategies behind smart property decisions so you can make better moves, whether you're buying your first home, investing, selling, downsizing, or planning your next step. Today we're talking about a part of property that often doesn't get the attention it deserves, and that's what happens after you buy. Because owning an investment property isn't just about the purchase, it's about how that property performs over time and the role a great property management team plays in that. Today I'm joined by Nicola Michaels from Longview. Nicola has over two decades of experience in property and works closely with rental providers to help them set their investment properties up for future success from the very beginning. What I really value about Nicola's perspective is that she sees a wide range of properties and ownership approaches and understands what actually drives strong performance over time. Nicola, thank you so much for joining me. Thanks, Mel. Good to see you. Nicola, tell us a bit about your role and what you're seeing in the market at the moment.

SPEAKER_01 1:17

Well, I'm a senior business development manager at Longview, so I've just hit my seven years with them, which is excellent. At Longview, we do serve all of Metropolitan Melbourne. So over the past seven years, I've had excellent experience in all over metropolitan Melbourne.

SPEAKER_00 1:31

So And when you're when you're talking all over, you're talking all over. Some of the suburbs, I'm like, I haven't heard of that one.

SPEAKER_01 1:35

Yeah, yeah, that's a there's new suburbs popping up every day. And we also have a very strong concentration in the inner suburbs of Melbourne as well. So we certainly go um down south as far as uh Packenham Officer, out west, up north, and that's that space is growing as well.

SPEAKER_00 1:51

Which is fantastic for your clients because a lot of people are not putting all their eggs in one basket and buying multiple properties have purchased all over the city. Yeah, 100%. But they can have one team look after that, which is not common.

SPEAKER_01 2:01

Yeah, exactly. So we call those landlords our multis who have multiple properties within Melbourne. We actually have an office in Brisbane as well, and we have multis across Melbourne and Brisbane. But yeah, it does enable the one loan, uh the one owner or investor to be dealing with the one property manager or relationship manager that we have. So it's really streamline streamlines communication. But to ask, you know, to about what is happening in the market, it does vary greatly. So in the inner suburbs, and when I say inner suburbs of Melbourne, Melbourne is one of the most spread-out cities. So I'm talking in a sort of 20K of the CBD. Vacancies are still very low and there's high demand for properties. So we are seeing rents on the increase. We have seen a reduction in the number of rental properties on the market. We're definitely finding the selling a lot of interest. And I think the my my last figure was around 10% fewer properties. Um, and I believe that's attributable to changes in legislation, costs, additional costs for landlords, and obviously, you know, interest rate rises can affect some. So, and that obviously, if there's a a lowering in supply, then there's an increase in demand. In the outer suburbs of Melbourne, particularly in sort of the greenfields areas, there is a lot of construction going on, which is great to see. And there's more and more houses coming on every day. So again, it's that supply and demand ratio where we're seeing a larger supply of stock. So we're not seeing the rent increases so much, you know, of the same percentage that we see in the inner suburbs.

SPEAKER_00 3:30

And some more vacancy time out there too.

SPEAKER_01 3:32

A hundred percent um taken up as quickly. Yeah, that also comes down to pricing. So where you do get the pricing right as one of three factors that lease a property, where you get that right, we will be leasing at Longview, uh, we will be leasing properties within sort of ideally two to three weeks of hitting the market.

SPEAKER_00 3:50

And that's not necessarily a property that's vacant either, could already have a tenant in place. Yeah, we yeah, absolutely. So minimizing the vacancy time for any client. Yeah, a hundred percent. Absolutely. Do you find that people focus so much on buying the property but don't think enough about how it's going to perform once they've owned it?

SPEAKER_01 4:06

Once they've owned it. So if they're buying a property, okay, so um it's really important that investors take the time, do their due diligence um when buying an investment in property. And I always say buy with your head, not your heart. Um, we do see a lot of investors who maybe look at properties or areas and property types that they themselves would like to live in. It's not necessarily the case for the rental market. So ideally, you know, an investor does choose um professional guidance, like yourself as a buyer's advocate, um, to actually, you know, crunch, look at the numbers. The nut data don't lie, um, as we say. So look at the areas, look at the rental appeal of a particular property. And also you can um get additional guidance in terms of look at the bones of a property. And if it does need, you know, some maintenance or whatever to bring up that rental return, um, that's where a buyer's advocate again can help you and organise maintenance and those items.

SPEAKER_00 5:01

That's really buying to, and and not just for renting, but for your future sale as well, looking at buying for the masses, like what are the masses going to want, not just what you might want as an individual or someone else might want as an individual. Yeah. You want to get a property where many people are going to want to rent it, that's going to keep your vacancy rates really low. And then when you do decide to sell it, if many people want to buy it, that's only going to push the prices up for you on the selling side of things too. Yeah, exactly.

SPEAKER_01 5:26

So when you are looking at, you know, what has rental appeal to the masses, you are looking at location. You're looking at um its vicinity to schools and to shops. Um, you know, like the walk score, for example. You're looking at aesthetic appeal as well. Is the internal of the property a sort of a very uh neutral scheme so people can actually see themselves in the property or can make it their own? It's really important for the a long-term tenant is going to put more money in an investor's pocket. So to keep that tenant for the longer term, they need to be making it their home. They need to feel comfortable, they need to feel safe. So where you can can do that, or buy a property like that, or turn that property into that safe and attractive property, you'll see a longer-term tenant, less vacancy, and happy tenants look after the property. Which is what every owner wants. Exactly.

SPEAKER_00 6:16

So, from your experience, what do you think is the difference between an average investment property and a great one?

SPEAKER_01 6:22

Okay, so an average investment property will be one that uh rent's paid on time, the tenants are looking after the property, but is it creating wealth for the owner? Okay, so a high-performing property, not only will you receive the rent and manage the finances around the property, an excellent investment property will make you money over time. So you're getting a good rental return, plus it's gaining capital growth at the same time.

SPEAKER_00 6:48

You talking about that has made me think about how important a good team is around any investor. From the, you know, we've spoken about it to circle back to getting the right advice to buy the property, which is obviously where we come in at Domain and Co. Getting the right advice to manage the property where you come in at Longview.

SPEAKER_01 7:05

Yeah.

SPEAKER_00 7:05

And the team there. Like if you don't have that right advice around you and you try and do it yourself, or you listen to your brother-in-law at the barbecue on Sunday because they had an investment property once, or their aunt or uncle did and had a good or bad experience. Yeah. Um, that right team around you is so pivotal to your success. Exactly.

SPEAKER_01 7:23

And like I said before, data don't lie. It's amazing how many people, how many investors come to me and say, I think I can get this for the property or I should be getting that rent. And it's like, that's actually, you know, the advertised price. It's not the price that it maybe started at. And quite often, the average punter is not privy to what it actually leases for. They're not also privy to how long it took. And that days on market is extremely the cost of vacancy is huge. So where you have a team around you, for example, like yourself, and at Longview, and and most agents have it, is that access to the databases where you can see what did it lease for, what were the days on market, how long did it take. We have access to all the photos, we have access to the history as well. Um, and a dedicated team has got the time. You know, you're paying them to help you. Absolutely. So, and they've got the time to make sure you're making the right decision. Um, you know, buying an investment property is it's not buying a car even. It's huge, it's one of life's biggest assets. And honestly, sometimes it it really does surprise me how people don't seek guidance and they think what they know is right. Yeah. And then, you know, bum bow five years down the track, um, it's even gone backwards in value, which I know yourself. Oh, we're myself crazy. You know, yeah. I mean, I was back when I was in the sales arena as well. And we are seeing some properties go backwards at the moment, which it's just not a good story for no, it's really sad.

SPEAKER_00 8:50

Yeah, because they've been their hopes on the thing that their financial planner has told them, or you know, they've seen some information on the internet, haven't sort of done a deep dive into the research and bought a property off the plan five years ago and need to sell it now and are losing a hundred thousand. But you know, we can't see them recouping that cost, so you've got to, I guess, choose where you cut your losses at. Yeah, exactly. So, what do you think are some of the biggest mistakes that you see investors make when they first hand over a property to be managed?

SPEAKER_01 9:17

When they first hand it over, well, I guess it's in the process of maybe the first mistake is prior to handover is in the choice of agent. Do your homework. Some people think all agents are the same. They're not. And people think and they buy based on fees as well.

SPEAKER_00 9:34

Um, you pay for what you get. It's amazing. I find people buy, you know, they'll buy an investment property in Melbourne, and an investment property in Melbourne are good ones, you know, 850k plus now. Um, you can certainly find them cheaper, but are they a good investment property? Back to the circle of actual what we were talking about before. Then they talk to a property manager and they won't go with a good property manager for the sake of 1% in management fees. And we're talking about less than a cup of coffee a day when they're asking somebody to look after their million-dollar investment. Yeah. It's like handing someone, I've always used the analogy, it's like handing someone a million dollars in a briefcase and saying, here, look after this for me, and I really trust you to do that, but I'm going to not pay you very much to do that. And I understand that you're not trained and I understand that you don't know much, but that's okay. I'm going to save less than a cup of coffee. Yeah. Where's the sense? Yeah.

SPEAKER_01 10:21

There really isn't sense in that. But as well, it's that concept of do your homework, do your due diligence, and choose someone that you trust or know that you can learn to trust. Um, obviously at the outset, trust takes time, but absolutely do your due diligence first. So, you know, have a look at where their structure is internally. When you hand over a property, you need to have excellent marketing. What marketing do they do? Still, I go online and I see, you know, very basic photography. It's sideways, you know, there's bent cupboards and bent floors, and it's just very unappealing and very unattractive, and it's not appealing to a renter. And yes, that was years ago, but now everyone, everyone's on the internet, and that's where people are looking. Gone are the days of first impression. Gone are the days of a renter going past an agency and grabbing the paper listing of properties. You know, that's gone showing my age now. Remember it. But the day, you have to have excellent marketing and you need to choose an agency who's got a proven. They should be showing you what their pro how they can.

SPEAKER_00 11:29

And you can easily see that. You just jump on their website, look at their listings and go, yeah, yeah, all their properties are marketed really well. 100%. Even if one isn't, that one could be yours. Yeah. And that's going to stop tenants coming to have a look at it and create more vacancy time for you.

SPEAKER_01 11:42

Yeah, 100%. So, for example, with every listing I bring on, it will always be what I call a polished presentation package, which is professional photography, a virtual tour. Um, we also add in virtual styling as well. In a competitive market, like we do see in the outer suburbs, it is so important that your property pops and they're the one that they're looking at on the website.

SPEAKER_00 12:02

It makes a difference. If they've got five properties to have a look at and they've only got time to look at two, they're gonna look at the two that stand out the best on the internet. And that's not the one with the poor photos, it's not the one without the virtual furniture in it. The furniture creates a feeling. All of those things are going to help them.

SPEAKER_01 12:15

And the floor plan minimizes how much do we love floor plans? Everyone does. I've never met someone who doesn't. I personally, and I do speak to renters as well. They're frustrated if there's no floor plan there. That's like, what are they hiding? You know, yeah, and they can't picture themselves there. That one, that's too hard. We're not sure about that one. But that one, yeah, we can definitely see ourselves in and let's go and have a look on on.

SPEAKER_00 12:36

And even if they've had had a look at five, the better your marketing is, the more it helps them remember your property and think, oh, I remember that floor plan. Yes, I remember those, that room. I'm gonna go and um apply for that one because I can't really remember the other one and they don't have a good enough photos or a full plan. Exactly. And so you need to remember it.

SPEAKER_01 12:51

Yeah, so when you're choosing your agent, um you need to make sure their marketing is excellent. You also need to be making sure that the service-driven and that they're going to provide you the service. Like, well, how do I know they're going to do that? Ask the um, you know, your prospective agent, what services do you provide? How many opens are you doing a weekend? So at Longview, we do them Saturdays, Sundays, and mid midweek for the majority of our vacant properties across Metropolitan Bell.

SPEAKER_00 13:16

Sunday is amazing because there's so much to do on a Saturday. You know, you've got your own sports, you've got your kids' sports, you've got all your errands you've got to run because you've only got two days off in your own job. So if you miss the opens on a Saturday, to have them on a Sunday is um amazing.

SPEAKER_01 13:29

Yeah. So and and on that, we would lease properties on average a week faster because we often maybe have the you know the partner come that day for the second inspection, or themselves come for the second inspection, or like you say, people who work on the Saturday can come on the Sunday. So that certainly speeds up the process. Um, but it's not just around how many opens you do. Service is around having a team of people in the background following up people who've come to the open. What is the feedback? Some renters ask specific questions about what they may need, what would make them apply. And there might be small things, there might be aesthetic. And a built-in robe that could improve the value ongoing.

SPEAKER_00 14:06

A built-in robe, you know, a lot of renters don't want to be lugging around, you know, big water. Well, the property manager said to the owner, look, it's borderline, it might need painting. The one person who wants to move in would like it repainted. It's going to benefit the owner well down. 100%. 100%.

SPEAKER_01 14:20

It might be something that they've already thought about or arranging quotes, but that just um drives, you know, that process home. So you need that service, but also in the referencing and choosing your tenant, nothing's more important at the moment than choosing the right tenant. Um, at the moment, legislation has changed quite drastically, to be honest. Um, we saw the the safety compliance, which is excellent, that came in in 2023, um, making property safe, and that has continued to grow. The list like the 14 minimum standards check, and that's continuing and now and further into you know energy uh saving shahads, heaters, insulations coming in and um air conditioning windows and doors. So um you need an agent, obviously, who's going to be ahead of the game to make sure that that's all going to happen. And if you need to do works now, it that might, you know, affect it, might come into play when the legislation comes in. So it's like, well, hang on, well, let's put in the right air conditioner now. So anyway, back to service. I digress there a bit. Um yeah, so you need service, you need someone behind the scenes contacting renters, getting feedback, getting them to apply, getting the highest price possible at the advertised price.

SPEAKER_00 15:29

What I really like about Longview is you're putting your money where your mouth is. So you're actually guaranteeing your service. And I don't know of many other agents, if any, that do this. There's actually a document that you give clients to say, here's a service offering that we have. And if we don't do it, we will give you money back.

SPEAKER_01 15:45

Yeah, it will three months management back if we don't meet all of this criteria. So there are um every day I speak to owners who say, Oh, I haven't heard from my property manager for a week. They're not returning my calls, nothing's been done with the marketing, nothing's been done with the pricing. Not happy. It really, they still don't move because investors are very loyal to their agents. And I think it's on average an agent needs to make four significant errors in their service um before an investor will move. It costs nothing to move to change agents.

SPEAKER_00 16:18

And I think with any relationship, something can happen. Have a chat with your property manager, get it fixed. But if it continually doesn't get fixed, why would you stay?

SPEAKER_01 16:26

Yeah, exactly. So we don't want to be put in that box the same as an agent who doesn't respond. So we're saying we're not going to do that and we'll give you money back if we don't.

SPEAKER_00 16:38

Yeah, exactly. So what do you think are some practical ways that an owner can maximise their rental return and minimize their vacancy?

SPEAKER_01 16:45

Absolutely, uh, comes down to aesthetic in terms of the physical property, aesthetics. The better, you know, the better it looks, the higher rent you can achieve. So if that's painting new carpets, modern blinds, and they they don't have to be expensive. No. Um they're just investment grade, carpets, blinds, light fittings, um, some older properties as well, just changing the door handles or the bathroom taps and the in the kitchen. Yeah, changing you can make oyster lights to down lights. People love, and there is a lot of new stock coming on. So people love um the idea of, you know, a fresh, crisp property, even internally. It can be an old property, but if the internal is nice, fresh and clean, the other way is, you know, when choosing an agent who's going to choose the right tenant, obviously who's going to pay the rent.

SPEAKER_00 17:31

We also touched on the advertising and how important that is because that can really get a tenant in quicker. So that vacancy time with your week in, week out of rent loss essentially can be. So property management is fairly reactive, but there's a lot of proactive things that can be done by a property management team for maintenance, you know, protecting the long-term value of an investment. Some owners think, oh, I'm not living there, why would I do that? But, you know, not doing maintenance and and proactive maintenance can just cause more of an issue down the track. Instead of repainting a windowsill, they're now replacing the rotten windowsill. Instead of re-grouting the shower, they're now having to do some major retiling and plaster work on the other side where it's leaked through. And those sorts of things aren't covered under insurance. Tell us what you think about the importance of proactive maintenance.

SPEAKER_01 18:27

Well, prevention's better than a cure, right? It's as simple as that. So there's the list goes on what you can be doing. It starts, you know, from your roof to your gutters. Gutters, yeah, gutters. Oh gosh.

SPEAKER_00 18:40

And it's funny because it the investment property is not in the owner's face all of the time, like their own home. You know, they'd see their own gutters and go, oh, we need to do that. Or the air conditioner works better if you service it every couple of years, or you know, you see things happening. Absolutely.

SPEAKER_01 18:53

And pool, you know, pool maintenance. We have many properties with pools, and looking after a pool is it's not hard, but a lot of people don't do a property and expertise. Exactly. So proactive is yeah, engage a pool maintenance, include that in the rent. So you as an owner have the peace of mind that it's being looked after. And same with a garden.

SPEAKER_00 19:13

If you're supplying a proper property to the gardener, supply a gardener. You've got eyes on the property every month. Exactly. And you know your garden's gonna be well looked at. Exactly. And it will always have that street appeal for the next tenant or when the time comes to sell. Because I find the majority of people aren't gardeners and don't really love to do it, but they love to have one.

SPEAKER_01 19:29

Ah, yeah. Yeah. And they're people are time poor. So keep it looking good.

SPEAKER_00 19:33

Yeah, absolutely. Nicola, at what point should an owner review whether their property is performing as it should be?

SPEAKER_01 19:39

Well, they can review as often as they like, but essentially I would like to see every six months. But reviewing is having a chat to your experienced property manager. Um, at Longview, we offer an appraisal on the property at any point in time. Rent reviews come into, you know, is the property performing? Is the rent at the right amount? So we're we're ahead of the game in that sense because we are always reviewing the rent. You can change rent once every 12 months. So we will do a rent review, we'll present comparables, we will have a chat with the owner, like this is where, and you're also taking your renter into consideration as well. Are they great, you know, are they looking after the property? Do we want to keep them? Because obviously a vacu, you know, them vacating because you've hiked the rent up too high leads you into the cost of vacancy and then having to pay another learning fee as well. So um, we take all that into consideration and make sure that any day of the year, your rent is where it should be. That's really important.

SPEAKER_00 20:37

Yeah, I think it's important to, I guess, to mention that you guys are specializing in the property management aspect and have um obviously us working there as a vendor advocate, which isn't always about selling. Like you talk to a sale agent and they want to sell the property. So it's always a good time to sell no matter what. We had a client the other day who's renting a property and has been having a terrible time getting the owner's corporation to sort out a roof leak, and he came to us thinking he wanted to sell. But I had a chat with him on his reasons and we're fixed the roof leak now and he's keeping it. So it's not always about what's good for us. Yes, it's about what's good for the client, is what I really love.

SPEAKER_01 21:11

Yeah, I think that you cannot underestimate the difference of having property management focused agency be sort of your your corner store agency. A property focused agency will always give you unbiased advice, your long-term plan for the property. I think that's really important. Generally speaking, a sales agent will want the sale, that's their end goal, that's where they make their money. We don't have that luxury at Longview of doing sales. We just have to be good at what we do in the property management space. So if we think hold on to it, because we'll give you just because we're property management, doesn't mean we can't give you appraisals and the value of the property. That's where you come in now. So where people want buyer-seller advocacy or simply an appraisal, or if you know you want to cast your eye out and see what we can do, uh, we can provide you that advice as well. And we do work, you know, we obviously work as a team together quite often, but it it works well and we don't have any unhappy investors. Um, it's great.

SPEAKER_00 22:08

Yeah, we go with ourselves. You can see that on the Google review, which is great. Can you share an example that you've seen in real life of a small change that's made a big difference to how the property's performed?

SPEAKER_01 22:19

A small change, well, changing agents doesn't have to be a big thing. So it's a it is actually it's a small change with a massive impact.

SPEAKER_00 22:26

It's a small change with a massive. No, I know who's unhappy with an agent. I mean, I you often find the tenants ten times unhappy with that agent.

SPEAKER_01 22:32

I had this is still blows my mind, but I recently I do pick up properties from other agents. So we call that obviously, you know, take over management. I was referred to a gentleman who bought purchased an established property early December last year. It was still vacant in February. Their current agent was citing it's holiday, it's Christmas, it's new year, it's holidays, everyone's back at school now, every excuse under the sun. And this was an agent local to that property too. There was absolutely no upkeep of the garden, and the garden had pretty much died over that summer period. So it was pretty dire. And they're employing the local agents so they can drive it and have a look, but they never actually die, exactly. So I took over the property, went out to inspect, yeah, had to have, you know, the serious conversation with the owner. It's like we need to do it, needs a clean, we need to do the gardening. Um, this is where the rental price is at. The marketing was very poor. They didn't even have a floor plan on the ad when there was a floor plan available on the sale. Yeah, but anyway, um, we literally secured a tenant following the works, which took two weeks using untrusted trades. We had secured a tenant within two weeks.

SPEAKER_00 23:39

It's amazing and clean and happy. I remember taking over a property once an agent couldn't rent, we just put virtual furniture in it and in the photos and re-advertised it and and found a tenant within a week. Yeah, crazy. What little things can help. And whether it was that or whether it was a service we provided to tenants or you know, whatever it might have been, just that little change, little difference. Yeah, yeah, yeah. Closing question. If someone owns an investment property right now and is listening to our podcast, what's one thing they should do to make sure it is performing at its best? Engage a professional agent. Yeah. The best agent being uh Nicola or Longview. Hey Nicola, look, thank you so much. It's been incredibly valuable and such an important part of the property conversation, it's property management. If anyone would like to connect with Nicola or the team at Longview, we're including the notes, the details in the notes below. And we will also have a free takeaway for you, so make sure you check that out. If you own an investment property and want to understand whether it's performing as well as it should be, I'm also here to help guide you. Thank you again for listening to Melbourne's property brief. And don't forget to subscribe so you don't miss out on the next episode.

SPEAKER_01 24:42

Thanks, Mel.