PM Collective - The ART of property management
The ART of property management with Ashleigh Goodchild is a leading platform supporting collaboration not competition through an online community and events throughout the year with one purpose: to create happier property managers. She creates connections for property managers looking to create momentum in their careers and personal life. Join Ashleigh and her guests as they discuss challenges, struggles, mental health, mindset and give advice to property managers and anyone in the industry. To get the support in your property management career, join our PM Collective Facebook and Instagram community.
PM Collective - The ART of property management
Practical Tips for educating your landlords on Tax Depreciation
Mike Mortlock from MCG Quantity Surveyors is our special guest who loves to work with property managers to make YOU look better to your clients.
Tune in and learn how property managers can transform their services, going beyond the basics to offer clients insights into the 'free money' lurking in tax benefits. We promise you'll come away knowing the optimal moment to introduce tax strategies to investors, be it at the inception with a Business Development Manager or amidst the hustle of ongoing property management. Discover how to seamlessly weave this crucial knowledge into everyday client interactions, empowering property managers to become de facto investment gurus without piling on the workload.
Imagine a vibrant community where property investors thrive, supported by a network of astute professionals—this episode paints that very picture. Drawing an analogy to a nurturing educational environment, we talk about the crucial role of property managers, accountants, and tax experts in safeguarding your financial future. As we explore the collaborative spirit found in the industry, Mike chimes in with reassurance that BDMs and PMs are not alone in their quest to excel, offering a helping hand through educational resources and support.
Get inspired to enhance your property management prowess and learn how MCG is just a call away for those eager to polish their clientele communication and education skills.
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Super excited to have the famous Mike from MCG Contidity Surveys join us for today's episode. Mike, welcome.
Speaker 2:Thank you. If you're interested in a very niche part of the world, you might be able to almost claim me as famous, but I'm sure most people have no idea who I am. But I'll try and provide some value. Thanks for the opportunity.
Speaker 1:Well, it's a real estate industry. I would say that you've got a very well-known name that pops up.
Speaker 1:So I think you underestimate that that's for sure. Now I would love to not only just talk about the tax depreciation, because I think you and I would both say the same thing it's quite boring. The topic tax depreciation is quite boring, but what I would really just love to do is just do a real quick episode to help people on the practical side of implementing this into their investors journey. And the real practical side, because, I won't lie, it's taken me a long time and I still have to try and find a balance of how to bring the conversation of tax depreciation to investors. So we're going to talk about whether we think that that would be better in the BDM stage or whether it's the ongoing property management stage. But before we do that, I just also want to reference that I feel like as property managers, we are constantly having to pile duties and jobs onto our role, and we continuously do it, and I'm a big advocate for trying to avoid doing that where possible.
Speaker 1:So I don't agree with this question. I'm going to ask, but I'm going to ask it to you so that we can at least talk about it. But that is why should tax depreciation be something that a property manager needs to talk to investor about. Why can't that be on the same level as their accounting, for example? It's not like we have conversations with landlords to say, hey, have you seen your accountant and done your tax return? Part of me is like tax depreciation falls into that category. So what would be the answer to that if a property manager asked you that question?
Speaker 2:That's a really good question and it's nice that you're asking a question. You don't believe in playing the devil's advocate, but in my view it's like saying there's free money in a cupboard in this property that you haven't noticed before. If you're the person that shares that story, then you get all of the warm fuzzy feelings that are attached to that. So, to put some context around that with what we do, our job is to put more money back in an investor's pocket. Now, of course, there's a fee for what we're doing, but we won't actually go ahead and complete a report unless we know it's beneficial. So we're talking about a service that gives money back to the investor. It also shows that you are an authority in the property investment space.
Speaker 2:I'm sure that there are landlords that think of property managers as rent collectors, and maybe every now and then you've got to sign a new lease agreement and that's all very quick and easy.
Speaker 2:And maybe every six months you come in and see if there's dust in the window sills. But there's actually a lot more to it, and this is one way of saying look, if you haven't heard about tax depreciation, here's what it is. And, as you say, there's so much on your plate, but all we really need to be is a line item on a checklist and it can be automated. There could be an automated message that says Mike, meet person. Mike, please have a look at this property and give them a free assessment about whether there are any potential deductions. So you don't have to be that across it. So I just think it's a crucial thing for property managers, it speaks to the service and it's also for BDMs, a differentiator. Imagine if you're interviewing three people and one of them starts asking you questions that are really critically important as an investor and the other two don't. I think that can be a way to actually win those management.
Speaker 1:Yeah, absolutely, and it's about educating, isn't it? And owners don't know what they don't know. So, like you said, it's a bit of a checkbox to make sure there's been mentioned to them so that then they can go and do that research. Let's just get into the BDM, bringing it to the investor's attention or the property manager, or a bit of both. How have you seen it work best in agencies?
Speaker 2:I think the best time to bring it up is at the beginning, even prior to it being a management. Even if you don't end up winning that management, I'm pretty sure you'll stick in their mind as the person that recommended something that if they go and do, put money back in their pocket. Now you might have missed out because there was a family connection or they knew them somewhere else, but you know management's change hands right. So even if it puts yourself in second place, for maybe when they changed managers, or for the person that they kind of say look, we went with this people because I went to school with that person. But if you're looking for someone, I definitely recommend you talk to Ash. So I think for BDMs, it's just a. It's a, it's a critical thing to show we are not just here to collect the rent. We actually are involved in your journey as an investor.
Speaker 1:Yeah, excellent. So when I was doing more active BDM, I sort of sorted BDM, but more with more lead generation source. So I find that I don't actually have a lot of face-to-face appointments and I think a lot of BDMs these days will say the same thing there's not a lot of face-to-face educational. You know appraisals that we used to do years ago, and so I think one of the real easy ways and I just want to provide some real practical tips for people is including it on the new management email that you send out. So that can be a very simple way of doing it. So it might be an email that says you know, thanks for inquiring about our property management service, attaches our fee schedule, and then on there you might put have you heard of tax appreciation? Here is a link.
Speaker 1:I know that MCG have done a video for me, for the PIN Collective members, which is one that they can just download from their hub, and they can actually include that video link in their new management, which is really handy as well. So the things like that is a real like no-brainer. You don't have to think about it, it's just in the in-going pack and it will, like you said, it will check off a box, that you've done it, but it will also promote conversation if the owner wants to ask a little bit more also about what it is. The, I think a track that we also can fall into is sometimes assuming that there's no need for a report to be done as well, and I don't know if you see a lot of that happening.
Speaker 2:Yes, in fact, even even accountants will sometimes give advice to a landlord saying look, it's built in the 60s, so there's not going to be any depreciation done. And and in their heart of hearts they actually know better, they know the rules, or at least they should do. The date doesn't actually have a huge bearing on whether it's worthwhile or not, because a Lot of people think of the cutoff date for depreciation claims on the original building structure being in 1987. But let's say it was built in the 1950s. If it's recently had a you know, kitchen or a bathroom renovation or an extension, it doesn't matter that the old bones don't qualify. There's going to be enough in the value of those works to make a report stack.
Speaker 2:So yeah, that's where I think it can be difficult for property managers. That's why we came up with the three triggers to tell you that a report would be worth that's it's either built brand new build after 1987 or if it's not one or two, it has 40 or 50 grand spent on it. I think that's really all a property manager needs to know to get a bit of an idea about. Yes, I think this one would stack. But we'll always do that as free advice. You can email us here. There's a link on our website to get a free Estimate. And, yeah, you can put a brochure in your pack or you can actually put a One pager that our team have estimated on that specific to that property as well.
Speaker 1:If you think this is something that you know it's a real good management or it's really got some good deductions, or you know the owners pretty savvy, yeah, I know I do send lots of emails out real quickly to to our WA rep and then and then sometimes I see, see the owner into that as well and I just say hey can you let me know if?
Speaker 1:this properties worth having done, and and that's super helpful Because I know that you guys just replied back with it you know whether it is or not, and then it's also got a link of how they can. The iron can then just click on to go ahead with it. So that's it is super handy as well. The the other way, if you're, if you don't have a BDM or if you're not sure whether the owner has paid attention to the mention of it when the investment first comes over to the agency, is then for a property manager to potentially take Some responsibility in it as well.
Speaker 1:And I think that the best way, like I'm writing to value adding at the moment I'm going to tell you why I'm writing to value adding as a property manager but it involves just once a year doing blanket emails out to your database To say, hey, just a reminder, if you don't have a tax depreciation schedule for your property, now's a great time to get it done with. You know tax time coming up, and so I I generally send that through in about February and then that sort of Means that there's enough time for tax time to get it all done. So the can you just remind me actually why we've got you the. If the owner has had the property for a couple of years, they came back today.
Speaker 2:I think one of Jim's yeah, you can actually amend your previous two financial years worth of claims. Now the accountant might charge a fee to do that. They might do it free of charge. But you know, often we're talking, you know, possibly tens of thousands of dollars worth of deductions in the back claim. So, yeah, it's one of those things where people realize, gosh, I've had this property for five years, I've never claimed anything. It's not too late. You might miss out on some deductions and those figures I've shared in the media a few times that they are quite high, but we're bringing them down with education. But two back claiming those two financial years can be really, really significant for people.
Speaker 1:Yeah, absolutely so. The first step is to just add it on into a BDM intro email about tax depreciation. And then you've got the second option, which is the property manager sending out a blanket email once a year to double check that they've got it in place. And then again it's just that value add and where I think we have to be very careful and I've got lots of jobs this year. I've got quite a few webinars booked in and a speaking job where we're going to be talking about this whole value add because property managers are at risk really of being a transactional agent, which is known to just collect, rent and arrange maintenance and that's what the public think we are Like, that's what we do. And that transactional property manager is where we are at risk of people fee shopping or if there's any fancy new programs out that means that a landlord can manage their property themselves and they might be able to do that.
Speaker 1:But it's so much more important for us to continue doing that value add for clients because they can't get that from an app or from self managing their property. So I'm a big advocate on making sure that property managers are showing their value and we just before we press record. We were talking about how that I'm finding that the more I'm present on social media, the more people are also feeling like my time. They would call me and say, ash, I just need you for five minutes, I'm not going to bother you, and it makes so same to you. It makes me feel really uncomfortable and I don't want to come across as unapproachable because I'm always available for everyone, but when you start getting to that point and you were saying that it's great to see people conscious of property managers time- and it's just so important now and I think property managers are in such a great industry to shine right now, like you would have seen it.
Speaker 1:I mean, I don't want to to our own horn, but I just want to say that I think the property managers role at the moment, with all of this interstate buying, is like I don't really get sales reps that listen to my podcast, so I'm just going to say it. I would say, hands down, we are the most important person. More than a sales agent, more than a buyer's agent. A property manager is going into these properties and helping investors buy in because they know exactly who is going to rent your home. I can't stress enough the value that property managers bring to investors at the moment.
Speaker 2:Yeah, absolutely, especially on your side of the continent, we've seen, actually, wa go from around about 8% of all national purchases for investors in the first quarter of 2022 to, in the most recent stats, actually eclipsing Queensland to be the number one location in Australia for all of our investors, at around 40%. So it's been a huge boom right, and I think that some of the reasons that you just shared are the reasons why people have felt comfortable to invest maybe 3,500 kilometers away from where they live is because they've got a trusted expert that they don't see as just a rent collector. So, yeah, absolutely, you've done an amazing job at building that awareness and I think that the industry will be beneficiaries of that.
Speaker 1:Yeah, and the investors that are coming through at the moment what I call intentional investors and I think that you would probably hopefully be seeing it on your end and in your business as well an increase in the tax depreciation schedules getting done because they are like sponges for education. They love it and they want to make sure that they're so business savvy that they're buying the property with. They've been educated well through different investment courses and buys agents as well, but they really are a sponge for education and making sure they're getting the most out of their property. So I think you would have seen it on your end and I think that property managers will also get a really good get really good feedback, I guess, from the investors, for providing it.
Speaker 1:I had one client say to me and I liked the way that he said it. He said to me Ash, I love that you are so inclusive of investors, and what he meant by that was that we're very inclusive in the property investor journey, Like you know it's you and me doing this together and I'm part of your circle and it's when you send your kids to school.
Speaker 1:I remember the principal when I had a high school interview for one of my kids. He was saying to me that when the kid goes to high school, that you are creating a new community for bringing up that child for the next five years. And that's exactly what a property manager is doing with investor. You're creating a community for the investor for the next five years that they're having an investment, or the next 10 years, and you're creating that environment. So obviously, in a high school you've got teachers and principals and all of that. And for the investor coming into this little world, they've got their property manager, their accountant, their tax depreciation. They've got all of these people creating like. You know what I mean? I don't know. I'm visualizing it's like we're surrounding the investor and giving them everything that they need so that they can have the best outcome, just like our children have the best outcome in high school. That's sort of how I envisage everyone's investment journey.
Speaker 2:I think it's a great analogy.
Speaker 2:They say it takes community to raise a child and I think it takes a team to be a successful portfolio investor.
Speaker 2:And if you think about it, you and I are, I suppose, are in similar businesses where you might see things come in and out the door hundreds of times in a day, and to us it's very easy to slip into the notion that these are transactions, whereas we try and centre ourselves by making sure that if we're speaking to a client, the first thing we say is congratulations on your investment property or congratulations.
Speaker 2:In being an investor, you're in the rarefied air percentage wise of Australians that are working towards their own financial future, and I think it's easy to forget how big of a deal it is. Now their children probably are more important, should be more important, but after that, maybe their own home that's probably the biggest decision that they're going to make. The investment is really, really important to them and I think that anyone that considers their role in that investor's journey and their portfolio as being important is really what they want to see, because it's a big decision for them and it can really change their financial future. So I think we ought to see it as a real privilege to be given the nod that we're the expert for whatever we do that they want to be working with.
Speaker 1:Yeah, and then, finishing up, you know, as a property manager, making sure that you've got your community around you to be able to offer this to your clients. So obviously MCG are a very big part for our real estate and also for PEM Collective as well, and I know you guys are very good, like when I've asked Aaron and WA for a video. He's so good he does his video for me. But you know, if you're a property manager or a medium listening, ask MCG, ask them what you need and say hey, is there any chance you've got a video that I can share with my clients?
Speaker 1:Any chance you've got a brochure that I can share with my clients? Anything like that. Just ask these people like ask MCG, ask your accountant, ask your settlement agent, whoever it is, ask them for information for you to be able to share with your clients, because you don't have to necessarily do all the work yourself. Ask the experts, and I'm sure you've got a full library of everything that we need to make our life easier.
Speaker 1:And I guess that's what it's about, and that's one thing that's which is really great with you know, working with people like yourself is that you make us look good we just have to ask you, and tell you what we need.
Speaker 2:Yeah, that's the idea and you sort of mentioned earlier when we were talking, that there's a lot on the plate of a property manager and we could easily be seen as another thing on the plate. That's actually kind of optional, you don't have to mention it, the investor doesn't have to do it. But I would encourage property managers to understand that all your job is really just to bring it up right and we've actually written templates in how to bring it up and then you just outsource all that to us and our job, as you say, is to make them look good, is just to be that person that made that introduction. We don't expect any heavy lifting to be done by BDMS or PM's and, as you say, if you need content for a newsletter, if you want a video to explain a situation, if you want to answer a client question, we're always here, happy to help.
Speaker 1:Wonderful. Thank you so much, mike. It's always lovely chatting with you and anyone that does want to reach out. Please make sure that you email the team from M2D or Mikey's easily Google, and I'll make sure your details are also on this recording, on the show notes as well, so that you can reach out.
Speaker 1:And yet just the other thing I was just quickly thinking is potentially even having a getting anyone from your team in to do like a team meeting where, or whether it's on zoom or in person, depending on where you are as well, if you feel like your team needs a bit more education around it and around scrapping, and there's so much more we can talk about. But I wanted to leave out the boring tax depreciation part today and just go straight into the practicalities of how to make a property manager look good. So I thank you for that. But there, that was just a reminder that if you do need the team to come in or do a zoom for your next staff meeting with a bit more education around it also, please reach out to them Mike thank you so much.
Speaker 1:I'll talk to you soon.
Speaker 2:It's always a pleasure. Thanks for having me, ash.