Rents Hit the Ceiling and PropertyMe Opens Its Data

Opening: Brisbane, Sydney and the run into Christmas

Peter Schravemade (00:05) It's Friday the ninth of October. This is episode twenty two. Twenty two. We're we're there already. I'm joined by my wing woman. She's in Brisbane today. I'm in Sydney. Kasey McDonald. How are you, Kasey? What where what have you been up to this week?

Kasey McDonald (00:19) I am great. Yeah, a bit of a slower week, I think. I think with the public holidays, you know, last weekend and then the weekend before, I think there's still been a many with also school holidays being on leave. So I've just noticed in the real estate world, whilst there's absolutely lots going on, in terms of, I guess, you know, connections, maybe a little slower than we would all like, I think, in a business sense, but there's just so much happening that everyone's kind of so busy that they just can't actually get to what they need to to focus on their businesses at the moment, I think.

Peter Schravemade (00:57) Yeah, I feel like we're also entering the run into Christmas, you know, and that

Kasey McDonald (01:01) We are. Yeah.

Peter Schravemade (01:02) Sounds sounds weird in October, but I'm looking at my schedule and it's packed out till the end of November, which is not unusual, but it it it is, you know, it it it's gonna be a hectic run, I think, this year. But this week, we have in stories we've got a rental shortage. There's stats on that out from Domain this week. We've got one of the major property technology companies has has released an MCP server, which is is super cool. We'll talk about what that is and how that works. Victoria has a new tranche of rental law, which is starting on the next Monday. LJ Hooker has an interesting article out on them. It's just sort of weird left of centre, but kind of cool at the same time. We've got the we've got a story about a Gold Coast mansion that has a mortgagee sale, which is weird. And a a Main Beach principal doing the wrong thing, I suppose. And then we've got a got a weird story about your favourite TV show and you know, The Block to round it out. And that that's that's kind of an action packed kind of an action packed episode for us, starting off with the rent hitting the ceiling.

Peter Schravemade (02:14) So this the first story for this week, which is about rents, I do remember that we spoke to Tim Lawless in March and he had used the words well, he had said, I don't believe tenants have any more elasticity in their budget to afford higher rents and that was way back in March and we're really seeing the I guess that has come home to roost. We're sitting in October a good six months beyond it and this Domain rent report is absolutely saying that there are tenants going without some basic luxuries, you know, Netflix subscriptions, kids' sports, kids' musical lessons, things like that are going out the window because they just can't afford the rent. And I I think bit of a sad state, when basic shelter sort of overrules any kind of I don't know what you would call it, comfortable living. Maybe that's a a good phrase. What do you what do you think about this?

Rents hit the ceiling: Tim Lawless's March call comes home

Kasey: 7.7 per cent in a year, and the Gold Coast at $920 a week

Kasey McDonald (03:13) Yeah, look, I think it was always something that was anticipated. And we've certainly seen rents rising for so many years now. But it was always forecasted that this was going to be the state of play, right? But to Tim's point, back then when rents weren't obviously as high as they are now, I think what I'm reading just quickly in that article now is that we've seen a 7.7% year on year growth in capital city houses. So if we look at, I guess we're not, you know, the whole way through the year, but if we're just looking at that kind of I guess, figures of what people could afford back in March versus now, what that affordability actually looks like, it says that Gold Coast is the most expensive city for houses at $920 a week. Now, whilst that's slightly come down, if we actually think about the income, so the wages versus the rent ratio. And I think that's the concern as well here that Nicola Powell from Domain actually draws out in the conversation is that we've got a massive disconnect now in vacancy rates. We've got a disconnect in wage and affordability. And we've now just got renters that just simply cannot afford.

Kasey McDonald (04:09) And whether that's afford to stay where they are, and/or afford to also purchase, right? Because they're needing to save more and more as interest rates rise also.

Minimum-wage arithmetic: $26.44 an hour, $920 of a $1,000 week

Peter Schravemade (04:41) And if you just think about it, that that that that you just brought up of Gold Coast rents sort of the average being nine hundred the average. So that's that's yeah.

Kasey McDonald (04:47) Twenty. That's the average. Correct. Yeah.

Peter Schravemade (04:50) Which is, you know, in plain terms, it's it's a it's fifty thousand dollars a year. So what do you need to be earning in order to and there are people who who are on much higher than that. And but even, you know, like let's say you're a barista on the on the Gold Coast. How the hell do you afford that? How do you how do you you kiss goodbye to fifty thousand dollars of your rent every year? And what do you want? Are you on seventy? Are you you know, what's the minimum wage now? Is it sixty five?

Kasey McDonald (05:21) Yeah, like I I'm not sure what they get, you know. I think it's like thirty, thirty-two an hour or something like that, right? For for baristas. But when the most of them work casual hours, that's not a full-time role sometimes. In most cases, they have to work the weekends in order to get certain penalties to increase that that income ratio. So if you've got two people in a home or two or three people even sharing in a home and they're only earning that minimum. Where's there's still looking at such a high ceiling of affordability for three young people being able to rent and be comfortable to also be able to pay the other bills that are associated and also to, of course, live their life, right? Yeah.

Peter Schravemade (06:00) Yeah. Yeah, I just googled it. $26.44 an hour. A thousand

Kasey McDonald (06:05) Right, there you go.

Peter Schravemade (06:06) Dollars a thousand dollars a week, that is. So you're you're earning minimum wage, you're earning a thousand dollars a week on the Gold Coast, nine hundred and twenty on average is going to rent, which leaves you a total of eighty bucks per week. I mean, it's it's a that's a really harsh line. I mean I know and I know people choose to live on the Gold Coast for a reason, but yeah, it you know, it comes back to I think we were talking about it last week, the the the gap between you know, the the wealthy in society and wealthy might mean you you own a house. It's it's not a it's not a huge barrier anymore and and poor might mean you don't. And I I feel like that's been extended. But it's yeah, look, that they they're saying that growth is still Blacktown, North Lakes in Brisbane, Darwin, Hobart, affordability is pushing all of the demand outwards. So people are living further away, which which probably needed to happen, but I don't I don't think it needed to happen in in the way that it that it has here. So yeah, like it's it's a very sobering and sad state of affairs where we we we look at this.

Peter Schravemade (06:56) And you know, I I had an a a travelling American with me this week and he can't quite believe the prices of houses here. He's from Springfield, Massachusetts. And you know, he's saying that you can get yourself affordable houses over there for well underneath, you know, almost at half price compared to what what they are over here. And yeah, I mean I always thought I always thought America was more expensive, but in housing at the moment that is not the case.

Five Australian cities in the world's top ten, and Brisbane past San Francisco

Kasey McDonald (07:47) No, well, and I think I saw on the news a couple of weeks ago actually that I think it's five of our major cities are in the top ten. I don't think New York was even in that top ten if I can remember. And in fact I think Brisbane outpaced San Francisco. And I don't I I mean, I don't think that that's probably ever been the case, right? Not from certainly what I've probably known in the past about America. You go, you know, San Fran, LA, New York, the price is there. And maybe that's inflated by the media and all of those reality shows, but still, for pretty much the most of Australia to be I guess the highest to buy. And now, in accordance to this, we're we're certainly on the high bracket of rentals. But I I think for any property managers as well, you know, listening now is the time for you to be truly understanding your local market that you're working in and understanding exactly what is going on. Down to that street level, understand the data and be presenting the truth, those facts to your landlords. And I, you know, respect and appreciate that investors have investment properties to get the highest rental yield that they possibly can.

Kasey: street-level data, honest landlord conversations, two families in a four-bed

Kasey McDonald (08:51) But we also don't want to put great people out of homes. And we also need to consider how in which we can support them. So we don't, they don't end up in that situation. And that might simply be that it's a four-bedroom home. And therefore, then we're going to be okay and allow for two families to reside there. And that might mean it'll be a bit squishy, but that means that we're going to home two families instead of having one fighting to afford to pay their rent every week and you following through on eviction and leaving them homeless. Yeah. So I just think now is a way to be a little bit more strategic in our thinking property managers and principals out there, be really supportive of your PMs in these conversations. Get on the phone and talk your landlords through the data, the facts and what you're genuinely seeing on the ground in your marketplace.

Peter Schravemade (09:50) And also, you know, we had Paul Tommasini from the Tenancy Skills Institute. I'd get across that as well. I think that's going to be a very useful tool to prevent churn in in your rent rolls. So yeah. The the next article, oddly enough, is is a large property technology company. And you know, for the for the sake of this, we're not advertising them, but I'm happy happy to name them. It's PropertyMe, and I think PropertyMe would be a a fairly familiar form of technology to most real estate offices. Either you're using them or you may not necessarily be using them. But for some time I have been saying the new gold standard for property technology companies has been the ability for its users to connect to that technology company via an MCP server, something called an MCP server. Now, MCP server, for those of you listening, I'm gonna try and dumb it down for you.

PropertyMe's MCP server: what Model Context Protocol actually is

Peter Schravemade (10:49) It stands for Model Context Protocol and and it's it's basically a server that sits over the top of a of any kind of technology company and it acts like an API, which most people would be familiar with, like it it acts like a communication bridge between the user and the software, but it understands context is is the important part. So with an API, you know, if if if I'm searching up a contact in my database that is Kasey McDonald. It might have your first name, last name, address, and I might be able to search those things up. In this one, I could say, do you know a blonde lady? I'm not gonna say your age, but I could say roughly this age, who might be into, you know, into property management in some way. It'll search through the database and go, well, do you know do you know Kasey McDonald? That's the difference between a MCP server and and they really are gold standards. So you know, when I spoke to Sarah last time, she was very, very excited about the fact that this was coming out. And so they should be. I haven't tested it, I haven't used it. But it is a massive leap forward.

Peter Schravemade (11:46) And you should really be asking what MCP servers, regardless of whether it's PropertyMe or somebody else. I I actually think if you're dealing with a property technology company at the moment who are not investigating that as a as a future direction that they're already behind the eight ball. And I hear a lot of people come out and say that they've got them. This one is an external MCP server. It's if if it does what they say it does, it it is big news for any any users of of PropertyMe. And and if you are using it, please, you know, I'd love to hear from you. I'd love to hear about your experience. But how the the real benefit is that you can you can use your chosen LLM and in this instance it's it's you know, ChatGPT or Claude and you can quiz it about anything that PropertyMe houses within there, like, you know, what tenants should I be following up? Do I have inspections for today? And it will basically list all of the things that you should be required to do today. So big, big step forward I think for PropertyMe, congratulations to them on on really blazing the way forward on that.

Kasey: the Monday priority list in one prompt

Kasey McDonald (13:05) Yeah, I think that's really fantastic. Cause having used PropertyMe as well before and consulted in the industry to many that do, when you first open that platform, you've, you know, you do have your dashboard on there. And whilst you can kind of see where things I guess are up to at a glance, what you haven't been able to, of course, until now is draw out I guess, those priorities for the day. So you've had to probably click in before to sort of say, well, inspections, okay, I've got 15. What are they? Then you've got to go to the next one. Arrears, what have I got? Let's process that and review it. So you've had to kind of do things individually and sort of, I guess, at your own priority list and work through that. I think this is fantastic that you can use those prompts to say across my entire portfolio, give me a breakdown of what this, this, and this is that I have to do today and what's outstanding from yesterday that I need to follow up immediately. Like so it's about I guess it's also using the right types of language in that query as well to make sure it's giving you the right prompts.

Kasey McDonald (14:01) But I just think this is outstanding and in the next evolution of where we're going in property management.

Peter Schravemade (14:14) Yeah, and and I mean if if it if it does what I I think it does, I you know, I suspect it's even it's going to be even better than that. Like we you know, we've been talking about how do principals safeguard their rent rolls from churn. You could potentially say to it, give have a look for warning signs that our tenants are struggling to pay their rent, or you know, which which tenancies should I be actively having a dialogue with at the moment. Which landlords do I need to have a dialogue with? And you might you technically it it should be able to answer those questions for you. So look, I haven't used it. Full disclosure, I haven't used it. I don't know, but that is the objective of of of an MCP server. So, you know, well done. I'm aware that there's a CRM coming out with one at the moment, but I won't say anything until until there's been a public release. But we're going to be seeing a flood of these. And and it I probably should also warn, you know, listeners, I suspect it's going to be the new AI buzzword.

The next AI buzzword: "you've either got it or you don't"

Peter Schravemade (15:21) You know how everyone goes, we've got AI now pro and and you you know my reaction to that is like, you know, well I've been using AI since nineteen ninety-five. The presence of it in your software doesn't necessarily set you apart from the cesspool of other software that says that they have it. What is your AI? How is it useful? What does it do? I think people are going to be using MCP servers as this. So I've heard, you know, few of the bigger ones who haven't released an external MCP server tout the fact that they've got one, but there's none of the advantages of having one because, you know, they'll say things like, we need to put guardrails in to stop your use of it. Well, you know, there is a little bit of that, but you know, I'm I'm I'm hearing a bit of we've got it, you know, just to say we've got it, but we haven't released it to the public yet. And I'll I'm like, you've either got it or you don't. Like it's not a you know, don't tell us you've got it if you don't have it. Then that just looks condescending. Like so, yeah. We I'm starting to see a little bit of that at the moment.

Peter Schravemade (16:14) So, you know, when you're out there vetting them, I I think it's very important that you do ask the question of any proptech provider is where where does this sit?

Kasey McDonald (16:31) Yeah, absolutely.

Peter Schravemade (16:32) And and I we've got another property management line. I feel like we're property management heavy this week. Don't don't worry, salespersons, we've got one coming for you. But you sent me this article on the Victorian law reform and we've been speaking to a few people. I think we spoke to Sarah a little while ago about the changes that are coming. What's happening in Victoria?

Victoria from Monday: bond-claim evidence, minimum-standards records, two-year checks for every tenancy

Kasey McDonald (16:50) Yeah, so there's a, you know, some more protection coming for renters. Thirtieth of September actually, it came into effect and new changes to the rental laws. But in terms of them being new changes, it's an a an adjustment or I guess an update to some of the existing reforms that have been into play. But starting on Monday, Monday the thirteenth, we've got the bond claims. So what that means is that there's it now evidence required. So for landlord or an agent claiming the bond at Rental Dispute Resolution Victoria, through CAV, there needs to be photos and quotes. They also need to advise and notify the renter in advance of that actual claim. They they can be fined, as in the landlord or the agent can be fined, if they don't, in fact, provide the evidence and they don't notify the renter. So there's some additional steps that are coming into place there in regards to bond claims. Minimum standard recording. So landlords and agents now must keep records showing the property does meet those minimum standards when advertised, offered, and occupied. And they have to produce them to CAV on request. So, Vic property managers, make sure that you've definitely got all of those requirements on file.

Kasey McDonald (18:12) And have them there ready to go if you ever ever ask for them. I think what's a good call out here as well in these changes is the gas and electrical safety checks every two years. Now, there's always been legislation in play in regards to the fact that they've needed to have these checks done. But there's been a slight change to this, including those leases that started before March. I think it's the 29th of March 2021. So all agreements that started before that date are now required to have a licensed gas fitter check the gas ventilation within six months before any draught proofing work is also done. So there's some changes there, guys. Make sure you get across those. They've already been in place, but it's now dependent on when you've got those agreements done. So if they're before 29 March 2021, you need to have a look. There's lots of others that are actually coming into play. And to be honest and quite fair to these property managers in reading this, it was kind of like what we spoke about last week, Pete, of the 500 something odd regulation changes in New South Wales, in just in kind of reading this and getting across it. Like this list is pretty long.

Kasey McDonald (19:25) And this is all coming into play all on the same day.

Peter Schravemade (19:32) Yeah, yeah. I and I got I gotta say

Kasey McDonald (19:33) And it's it's how do you keep how do you keep up with it, right? Like and I think that's where the pressure and the pain is coming for our people in this industry.

Talk to the industry first: Victoria's channel versus NSW's minister

Peter Schravemade (19:41) Yeah, and I mean obviously some of the some of the reform is necessary. Like I I'm looking at one here that as part of this that's a rent rent tech fee ban. So, you know, you people who apply for rent companies shouldn't be charging convenience fee. Some of some of it makes sense to me and others of it just appears, you know, fairly heavy handed. And I I think every single time that we bring up new regulation in any of the states, all we really ask is that there is an open dialogue between the industry operators. And it doesn't that that still doesn't appear to I think Victoria have a fairly good channel to the minister and there's there's there is dialogue in play, but in you know in New South Wales where I am at the moment, the minister's just ignoring the industry and doing whatever the hell he wants. And that, you know, it's it's a I think that's a really broken system. Yeah when when that is the the status quo. So yeah, I think you know, if you're if you're running a rent roll or you're property management based you and and you're in Victoria, you at least need to be across these.

Peter Schravemade (20:46) So you've got some good bedtime reading over the weekend, right?

Minimum energy efficiency standards from March 2027

Kasey McDonald (20:50) Yeah, absolutely. And look, it's not just it's not stopping anytime soon from what I'm reading as well. I'm certainly privy and across the fact that the next phase is now going to be minimum energy efficiency standards. That's going to start to phase in from March next year. And that's going to start looking at the heating, cooling, hot water, shower heads, sealing insulation like just it's covering everything. So not only do they have certain standards now, it the next phase will be around the energy efficiency piece. So yeah, Victorian property managers, you've got some light reading to do. Even so, if you've got a break over Christmas, I would definitely be making sure that you are getting across what's next for 2027, what plans do you need to put in place? What are the conversations look like with your rental providers? Really, really important you stay abreast of this and on top of it. And get it get on the front foot with it instead of it getting to a particular date and going, we haven't really got all of this to the standards that we need them to be at. So really important.

NSW: insulation as a rental standard, and the water-efficiency precedent

Peter Schravemade (21:55) Yeah, and speaking of energy efficiency standards, I think I think that is being considered in in New South Wales. So you know, the well actually our good friend Cecille Weldon is is is across this. She has been a long time advocating for energy efficiency and sustainable practices, at least data standards within property, so we we know what we're gonna get. But you know, this is all done on the premise that you could get two houses next to each other and one of them is going to have a one thousand dollar per month larger heating bill in winter over the other one which which is insulated. And so New South Wales are looking at the fact that, you know, maybe introducing an energy efficiency standard will cause that one on the right to be recognised in the market against the one on the left, or insulation could be considered as a as a mandatory thing. Like if you're going to rent your house, then you have to be more like this house, which has insulation in, this one doesn't. So it might, it might, you know, be another you know, we talk about minimum standards, but energy efficiency is now coming in to to I guess assist assist tenants. And we did this some time ago.

Peter Schravemade (23:04) Do you remember when, you know, back in the day when all tenancies needed water efficient taps and we go we're going back what are we going back fifteen years now, or is it it'd be about that? Remember I thought it was such yeah, yep.

Kasey McDonald (23:19) Yeah, easy. Yeah. Yeah. All the shower heads, taps, toilets, everything needed to be water efficient. Yeah.

Peter Schravemade (23:25) Well, in order to charge the tenants for the water, that's what you yeah, that's what you needed to do. Which

Kasey McDonald (23:28) Water. Correct. Mm-hmm.

Peter Schravemade (23:32) I think is fair enough, it's accepted now. And maybe this insulation standard and the energy efficiency standards that New South Wales are considering will just be like that, where, you know, older houses who who who don't have it are really gonna have to do some things about it to you know, to bring it up to scratch. I don't know what your thoughts

Kasey McDonald (23:50) Yeah, look, I think there are a lot of homes that are probably not to standard in in talking to Cecille, she does call it and you used it before, that I guess comfort level. And that many tenants are living in probably uncomfortable situations. And if we think about there's not enough insulation, so therefore their home during summer or they haven't got that cooling, therefore then their home is incredibly warm. But instead of, you know, maybe popping that air con on because they're afraid of what that electricity bill is going to look like, they're kind of living in those conditions or they kind of put up with it, right? So I think this is going to certainly change the way our tenants are are looking for property moving forward. I think that they're definitely going to be assessing what would then my electricity bill look like? Is it gas versus electricity? Like I feel like they're really going to be assessing more of these details and the features of homes to understand the true cost of it, not just what the rent is anymore.

What it costs a landlord, and the hill Peter won't die on

Peter Schravemade (24:53) Yeah, agreed. And and I I noticed in this article it says that, you know, it it might cost a landlord anywhere between thirteen thousand and twenty six thousand to to bring their home up to scratch. I mean, a lot of landlords yeah, I mean in the older in the older buildings that's a that's a fair hack. Like twenty six thousand. But you know, I'm looking at the cost that renters are paying at the moment and I I don't know that I'm going to defend the landlords in this particular one. I don't know that's something I wanna die a hill I wanna die on, you know, for that cause. So it it it it's more of a watch this space. I know Victoria have already got these things coming in. It'd be interesting to see how New South Wales deal with it and then I wonder whether you know, they always say everything happens slower in Queensland, so I wonder if we're gonna see it and the knock on effect to South Australia and Western Australia and beyond. But yeah.

Kasey McDonald (25:47) Yeah, I think I think you know, from say from an air con perspective, from a cooling, right, or a heating perspective here in Queensland, I think because we've always been, I suppose, that little bit warmer and generally for most of the year, you'd probably suggest that many of the homes have got some kind of air conditioning or fans, that that there is something in there. Not to say that there may not be at a certain standard that they should be, but I think we will find that from some of the aspects, we might not have as many features that we need to look at here in Queensland, but we still have those old Queenslanders that have, you know, not got those capabilities or features in their homes as well. So, but yeah, I think watch this space. But again, property managers, principals listening today, just make sure that you're going through your portfolio and assessing exactly where each of the properties are at and be having these conversations now, earlier. We all know it's coming in in Victoria. It's gonna start to roll out in New South Wales too, to come in Queensland. So let's get on the front foot. Let's not leave it till the last minute.

Kasey McDonald (26:53) And then you'd be shocked and surprised that, there's another change in legislation and we've now got to do this. So we talk about it all the time. Let's be proactive with it. And I get it, some of our landlords and investors might not have the cash flow there either. So talk to them about what other solutions are there to help them also.

LJ Hooker and OHOME: $250,000 backyard homes through 390 offices

Peter Schravemade (27:13) Yep. Our next our next topic is one that we've kind of hinted at a few times. I remember we had Josh on a few weeks ago and he was saying you know, he was doing portfolio analysis for rent rolls and and a lot of them he was kind of recommending things like he was using the term granny flats, which can also be called accessory dwelling units or whatever term you have for them, Fonzie flats I've heard called before. But you know, like there's a way of of Fonzie was it he was on the he was on a TV show and he lived he lived in a self-contained a anyway. Really interesting article to me, which is LJ Hooker has has partnered with a a company that basically provide these things, exclusively partnered with them. So they're the exclusive distributor of something called OHOME, which is a factory built secondary dwelling for existing residential lots. Rollout starts in Sydney and then across the other the other offices. But I I don't recall ever having seen anything like this in in my real estate career, Kasey. Not even in you know not even in the States or the have you ever seen a franchise partner with a a granny flat distributor or a

Kasey McDonald (28:28) No, no.

Peter Schravemade (28:31) It's interesting. I'd like I I actually think I think it could be cool. Like that's a really front foot move from LJ Hooker whereby they've recognised that a lot probably that a lot of the the properties that they're selling and also the ones that are tenanted could have a another source of income. And hey, we're now distributing these. So apparently the the software allows you to jump online, see if your lot would allow for that kind of thing, whether the the council would allow for it, whether it's going to fit, and then you get a quote and and off you go. Bob's your uncle, you know, I'm I'm assuming they're prefabricated. Yeah, it looks to me like on the website, it looks to me like a kit home. That that's you know, in that in that

Kasey McDonald (29:17) Yeah. It says two beds, sixty square metres. It includes the furniture and appliances delivered and installed.

Peter Schravemade (29:26) Yeah. Yep. And and that it it gives us a price, right? Two hundred and fifty thousand? Is that is that what you're reading?

Kasey McDonald (29:30) Yeah. Yes, that's what I'm reading. Yeah.

Peter Schravemade (29:34) It I mean, on on the face of it, that sounds expensive to me. But I you know, I don't know what quality. The difference between a one fifty and a two fifty it could it can be everything, you know, like is it insulated? Is it does it the what's what's the flooring like? What are the appliances that you put in there? Why so but I I find it I find it interesting that they've they're providing a solution in this area for their for their customers. I I think that's I think that's commendable under the in the circumstances. I think they've really identified a need and I'd like to see a finished product. Like I'd like to I hope they they come back with a news article to say Bob and and Jane Smith have just installed this and this is what it looks like and this is what they spent and now this is the rent that they are getting off that or this is, you know, maybe it's not rent, maybe it's about having the you know, that son who's still living at home in his away from them or, you know, an elderly an elderly loved one. But very, very interesting. I can't ever recall anyone having done this.

Peter Schravemade (30:35) Maybe you guys know that this has been done before. Feel free to drop us a line at hello at Before the Weekend and let me know. I I just can't recall. I've heard, you know, I know that there are franchises that have deals with construction companies. I think Ray White's got its own construction arm for developers. So I know about that, but a a kit home fabrication like this this seems left of centre. But I don't know. I don't know, let us know. What do you what do you think? I I I think it it it's cool.

"New thinking and practical solutions": retention, adult kids and whether a commission is baked in

Kasey McDonald (31:08) Yeah, I think it's cool too, actually. And I love I had the quote from Christine, LJ Hooker CEO, and she simply just states Australia's housing supply challenge requires new thinking and practical solutions. And I think this is definitely outside of the box. And this is thinking about, well, if we can't have the I guess the government can't supply the housing fast enough and support that construction costs are high from a from a standard build perspective and you know, even to do renovations and works on your homes is costing more, that this is then an additional solution that people can be considering, of course, if their land can support it. So I actually think that it is really good. And being the fact that they have partnered with them, what great, what a great conversation both sales people and property managers can be having with their clients about this to say, hey, have you considered this or let's consider this? This is what it looks like, and here's what the potential sale result could be if we did this, or here's what the potential rental result could be. So there's a retention piece, I think, that plays in here as well. Like you just said, you could have adult children who simply cannot save that deposit.

Kasey McDonald (32:08) So this is where mums and dads could be looking at this as an option, popping them in there and getting some extra rent for their own home. Like I actually think it's a really cool idea.

Peter Schravemade (32:34) Yeah, that's a that's a really good point. I I wonder whether there's commission baked in for the the successful property manager or salesperson who refers somebody to one of these.

Kasey McDonald (32:42) Maybe. Yeah.

Peter Schravemade (32:44) I mean it's not it's not stupid. So yeah, it's

Kasey McDonald (32:46) Well done, LJ Hooker. Hey.

Mermaid Waters: 80 per cent built, back to the bank

Peter Schravemade (32:52) The the next one's a mortgagee in possession article that I picked up. Yeah, look on the face of it, it's it's not really that much. I know there are lots of mortgagees in in possession of houses that haven't been built and that's what's happened in this Mermaid Waters house. It's eighty percent completed. The bank is is in the process of of of auctioning it off. So somebody's been unable to complete the the construction. I I suppose the house at a minute at the moment that was very much that. The the couple had separated and been unable to complete the build. And and you know it was our our to our advantage we picked it up at at a a vastly discounted rate as a result of its unfinished status and I think that's what we're seeing here. I I I suspect I mean that they're putting this on interest rates. They're saying that, you know, the these people have bought the block of land, they're eighty percent through it. They've obviously been unable to pay the interest and the construction costs at the same time and it's it's gone it's gone back to the bank.

Peter Schravemade (33:56) So I I suppose we're we're looking at this because you know, not only is construction under fire, not only are we in rising interest rates, but you we've got we've got these families trying to actually provide a house for themselves and and it's being handed back to the bank. I don't suppose that we would be talking about this in in any other scenario than the one that we're currently in. And and I wonder if it's a sign of things to come. I mean, this this one seems Mermaid Waters is not a place that you expect to see a mortgagee in possession of a construction site, right?

Kasey McDonald (34:33) No, definitely not. I I you don't see a lot of it at that stage. You certainly see it, you know, probably once it is completed. And then, you know, they're they can't continue in owning that home. But I've not yeah, and they can't

Peter Schravemade (34:45) Can't sell it. Mm-hmm.

Kasey McDonald (34:47) Sell it, right? So then it's sort of sitting there. But there's something that I don't know if this is in the article and maybe you can clarify it if I'm maybe reading or totally interpreting this wrong. But you mentioned the interest rate before, Pete. And there's something that's indicating at like twenty-three and a half percent of an interest only during this construction phase. Am I reading that incorrectly or misinterpreting that? Because I just feel like that's really high. And is that is that why this is situations occurred? And so is it a really out of the box situation? Or is that in fact the possible interest rates during when you are, I guess, going from an interest only through construction?

Interest-only at 23.5 per cent of new lending, and what it costs to hold

Peter Schravemade (35:25) Yeah, well that they're suggesting that if you're on interest only and and you're a you're a developer looking to build for a landlord, that that that is where it's twenty three and a half. Yeah, well,

Kasey McDonald (35:38) That's the sitting. Wow.

Peter Schravemade (35:40) On interest only, yeah. I mean most people choose principal and interest to pay, but not not in the area of investment. So you know, when you're when you're going to sell it, you would just take the smaller amount of interest rather than paying it down. And if that continues to rise, and we've had four rate rises like that, this block of land that they're talking about is 1.24 million. So it's not a walk in the park for most people. You know, most people would love to buy a house for that and then that they've got the construction loan on top of it. The interest rate bill on on that kind of build, well, that'd be, you know, you're we're talking probably two point five million dollars in total costs at twenty-three percent. You do you do the math on that. It it's it would be incredibly hard to hold that for an ongoing period. And I think they purchased the land in twenty twenty two. So they've been paying interest on that since then. They got approval in twenty twenty three, eighty percent done. Now the bank's in there, you know, selling.

Peter Schravemade (36:25) So yeah, I look I I mean I understand and I think I think the article is highlighting the fact that we're gonna see more of that. Yes, this is an expensive build in a in a in a upper market location where we know that the rents are the highest in Australia, so yeah, I I can understand. I think that's why it's sort of come to our attention this week is that most people wouldn't be able to hold this for the period of time that these guys have.

Kasey McDonald (37:04) No, no. Yeah. And I think it I think it's a great one to talk about so people kind of understand what you just shared as well. To give some clarity there.

The Block's $1 million asylum: "I'm calling BS on that straight up"

Peter Schravemade (37:14) Yep. Yeah, over to your favourite TV show. Your favourite TV show. I

Kasey McDonald (37:17) What's next?

Peter Schravemade (37:20) Don't I don't I I refuse to watch it. I'm not watching it anymore. I think I think it gives people a wrong idea of of the housing market. I know that you watch it with your I know to to get design ideas and yeah.

Kasey McDonald (37:29) I I just like it on the Sunday, just once yeah, it's just a kind of, that's a really that's a really great how they did that, or that colour tile, or maybe pulling those design ideas together, right? Because it's always at this time

Peter Schravemade (37:43) Well, what what do we

Kasey McDonald (37:44) Of the year that I say, my god, we should do the kitchen or my god, we should do the bathroom.

Peter Schravemade (37:48) What what, what are we talking about, Kasey? Which show is it?

Kasey McDonald (37:52) The Block, of course. And the Victorian government has confirmed that their next series will be based at the Sunbury asylum. And they sold it to The Block, or the producers of The Block, for one million dollars. Yeah. So basic the the asylum, the old asylum the old asylum. So you

Peter Schravemade (38:13) And yep. And this is this is the this is the reason I brought this article. There's

Kasey McDonald (38:21) So yeah, you tell me. Why did you bring this to the forefront today, Pete?

Peter Schravemade (38:25) It's it is so low. That pricing is so low. There's something going on here. Like, you know, if that property, if you have a look at the property, it is a beautiful property. It's huge. How the hell?

Kasey McDonald (38:35) Yeah, it's massive. Yeah. It's it's on the heritage register, I believe.

Peter Schravemade (38:41) Exactly, this is a public transaction. How was this not put out to tender? How does a block at this for a million dollars? Like, this is a I would be raging at a time where the Victorian government is like you're they're short of pennies. And they've basically just gifted The Block for entertainment purposes a a beautiful property. A beautiful I would have bought this for a million. No no joke. If this was coming up at a million, if this was a public tender process. So I think there's there's going to be and there is a considerable amount of outrage. People going, well, number one, you're selling you're selling assets that that belong to the public. So you've got to try and get the highest possible price. They're going to look at that. But yeah, no, if you'll if you're listening to this and you wanna know what it looks like, I'll put the link in so you can go and have a look at this property. But yeah, look, I saw this

Kasey McDonald (39:35) Well, Department of Transport and Planning reckon that they've sold it at market value. And the price was in fact determined by independent valuers. They were certified by the Valuer the Valuer-General. And that's what they used and used comparable land sales as a part of the comparison.

Peter Schravemade (39:56) Yeah, I'm yeah, but I I'm looking at the houses that that are selling nearby and there's none of there's none of them under two million. And they're not as big or as grand as this, nor do they have the, you know, the prestige of this kind of property. Now I'm well aware that it's probably on some kind of heritage list or or yeah. And they're saying that it's been discounted because of that. But look, I'm I'm just not buying it. I I think somebody should be losing their job over that sale. There's no way that The Block wouldn't have paid two million for it. Even as a block of land on its own, it'd be worth that. So I like I just there's the you know, you know how you look at something and you go, that shouldn't that shouldn't be like that. I know it's your favourite TV show, you're gonna be watching an asylum done up for the next year, yay. But yeah, I'm I'm looking at that sale and I'm calling BS on that straight up. There's just not a chance.

Kasey McDonald (40:53) Well, it happened after you know, Ben Carroll was newly appointed. So potentially there could be some something a little funny going on here.

Peter Schravemade (41:02) You think you think I think what do you mean the Victorian govern they couldn't be corrupt? Anyway, anyway, it's not my state. I'm really sorry, Victorians, if you're listening to that. You need to go and have a look into that and ask ask why they're they're diddling you out of taxpayer money. I suppose we have the yeah, so here in this this next one, another we were saying last week, why are they all on the Gold Coast? Why are they all in Queensland? You know what? This week I went looking for you know, stories about agents who were doing the wrong thing and I couldn't find any outside of Queensland. There's one from WA a couple of weeks ago. But yeah, this is another one. This is this is a sad one because the it it it's a real estate principal. I'm not gonna mention his name, but he's he's been done for DV assault. I think he I think he pleaded guilty. DV assault deprivation of liberty, Gold Coast agent. And yeah, he's he's basically admitted to it. He said, he I I think he fessed up and said this is exactly what happened. Yes, I did commit this.

A Main Beach principal pleads guilty, no conviction recorded

Peter Schravemade (42:01) So I don't know I don't know that we need to talk about this, but yeah, why why can't we just do the right thing, Kasey? Why can't we I mean I'm not I'm not perfect. I yeah the I know you've never claimed to be, but the no, I don't know. I don't I don't know. It would this here's a question for you. Here's a question. Would this be in the paper if the guy wasn't a real estate principal?

Kasey McDonald (42:38) Look, I I I think so, but maybe I'm just feeling like our industry at the moment is under such a spotlight, like regardless of what it is. And I so I do think that it's I guess more highlighted than probably what it has ever been before. But, you know, if this was you know, standard person, small business owner, not in real estate. Would it have been in the media? I think it certainly would have been positioned there, but I don't know that it would have been on highlight, spotlight, everywhere on social, you know, the number one article in the Gold Coast Bulletin as an example, right? So I definitely think think at the moment we're just under scrutiny. We're being watched no matter what it is. But it and I and I don't defend this in any way, but I just feel like there's lots of pressure. There's lots going on in our industry and there's lots of pressure. And I think that people are maybe acting out like they've never acted out like that before. And I don't know. I'm I'm not fully privy to what this case is, but there just seems to be a lot of these situations occurring now within the industry.

Kasey McDonald (43:36) So it's what is also happening is is there is there mental wellness situations, you know, is it all all of those things are happening behind the scenes, financial pressures, businesses are failing. You know, they can't afford to keep their businesses afloat, they can't pay themselves, they're struggling to pay their own mortgages, all of these things, right? Then can lead to people, unfortunately doing really silly things.

Peter Schravemade (44:17) Yeah. I well

Kasey McDonald (44:19) But yeah, we are definitely under scrutiny in the real estate industry, no matter what it is. But yeah, it it's really alarming. I don't condone this behaviour in any way, shape, or form. And it's really, really sad. But yes, I just think that we're being watched.

The licence question: fit and proper, and why "no conviction" matters

Peter Schravemade (44:36) Well one what one thing out of this is like you do you remember the the Bulimba agent we talked to about a couple of weeks ago who had a a criminal charge from thirteen years ago. Yep. And and I as far as I know, I haven't heard anything else on that, but I don't believe his licence has been reinstated in that scenario. So

Kasey McDonald (44:56) Yeah, I haven't heard anything yeah.

Peter Schravemade (44:57) This this bloke had no conviction recorded, which which is a big deal. I believe he had he had the conviction recorded, he would lose his licence because that of that clause in Queensland you need to be a fit and proper person, which means so I I I think I think you know if if he the the the the real thing that he got out of this is the no conviction recorded which allows him to continue trading. So it's it's it's interesting that that would be an outcome of this like pleading guilty to domestic violence, assault and deprivation of liberty, I would have thought I would have thought that sits right in the hitting zone for a conviction, but I I'm guessing because he he pleaded guilty and showed remorse he didn't get it. So yeah, big difference there. We got a we've got a few minutes left and I just want to take you over my good mate Rob Mandanici from Perth has just been announced as the the new president of the Real Estate Institute of WA. So big congratulations to Rob Mandanici.

Rob Mandanici is REIWA's new president; thanks to Suzanne Brown

Kasey McDonald (46:00) Congratulations, Rob.

Peter Schravemade (46:02) Yeah, and and also a farewell. Well, not a farewell, but a thank you for your service to outgoing President Suzanne Brown. She was she was excellent. She took the reins at a time where

Kasey McDonald (46:09) Mm-hmm. This is amazing. Mm-hmm.

Peter Schravemade (46:12) Yeah, where where the well where they had a changing CEO and they've now got Blaine on there over there as the the Western Australian CEO. Not sure if you've ever spoken to him before, Kasey, you probably know it because he has the thickest Scottish accent. It just doesn't suit the the REIWA brand. It's like it you you you know, all of a sudden I'm in the highlands of Scotland drinking whisky every time I have a chat to him. But it's a Rob is Rob is great for this role. He was over I last I saw him was at the the Austros auctioneering contest. He was across here and he was really also because he he's been Suzanne Brown's deputy, so if if you want to call it that, I don't know if there's such a thing, but I I believe he was you know, in waiting for this position. He was really assisting Blaine in finding his feet at the Austros and the National Awards for Excellence this year. So big congratulations to my good mate Rob. I know he'll kill it. He'll do a really, really good job over there in West Australia. I've got another in the smile file for you. This one doesn't affect us, but Irvine, I think that's California.

Smile file: the Irvine agent arrested as an alleged Chinese agent

Peter Schravemade (47:16) I'm sorry if I've got that wrong, Americans. A real estate agent has been arrested. And is alleged to be a Chinese spy. So obviously, obviously alleged. I mean, yeah, it is Irvine, California, licensed real estate agent with IC Pacific Capital. I don't even know who that is. On according to a Zillow profile, 130 sales and listings and 126 sales, averaging 3.3 million. So her husband is actually an agent at the same firm and he he doesn't know anything about it. So this is like this is you know, this is you wouldn't read this in a book. But arrested arrested on October the fourth at at Los Angeles airport, boarding a flight to Shanghai. And the charge is acting as an unregistered agent of a foreign government up to ten years imprisonment. She's in custody, so she hasn't she hasn't got through there. But I'd like her husband doesn't know it like imagine imagine being a husband and wife at a real estate agency and then having your wife arrested for being a a foreign spy. I mean, I like it it's funny. I'm I'm hoping it's all just some kind of joke, but I don't I don't know that I don't know that it is. Anyway, I had to bring that.

Peter Schravemade (48:24) I know it's not as I know it's not Australian. We're our news is boring compared to the American news.

Kasey McDonald (48:46) Yeah, I know. I'm just like, I'm actually reading some of this in this article. I'm like, I've got no words other than to laugh. Like the FBI director said, foreign adversaries, take note, America is no longer a safe place to run your espionage operations. Like wow.

Peter Schravemade (49:01) Exactly. Exactly. How does it how does it work? Like she showing a person a house and then slipping them secret FBI documents at the same time? Like I'll I'll just do sign those over to you. But the way the way

Kasey McDonald (49:10) Yeah. That's funny.

Peter Schravemade (49:17) That she's been arrested suggests that she knew they were on to her and she went she went on the run and they were like, no, no. So I'd like to I I I don't know. I don't know. Have we ever had an agent arrested for being a spy over here? I don't know that we've had. We've had a few spies.

Kasey McDonald (49:31) I think so.

Peter Schravemade (49:34) Real estate doesn't seem to be the industry that you would enter if you were gonna do that. Like, isn't isn't it like IT or biomedicine or something like that? Engineering. I don't I don't know. Anyway.

Kasey McDonald (49:45) Something where you can manipulate the data. I mean, I don't know. Yeah.

Peter Schravemade (49:48) This is this is where I'm at. I but I thought it was a good one. And look, the that kind of rounds it out for us this week. I suppose we've you know, to cover it off, we've we've heard tenants unaffordability as far as rents are concerned, landlords are hitting theirs with interest rates you know, twenty three and a half percent and which is extreme in that instance. The Victoria's raised the the rental regulations on Monday. PropertyMe and its MCP server. LJ Hooker selling the backyard to houses as well. I'm maximising that. And then your mates at The Block doing doing dodgy deals with the the corrupt Victorian government. All alleged, all alleged. Call me Channel Nine. Call me. Do you need he need a new anchor for The Block? I'm pretty sure Kasey's got a hand up for that. He can see you going through the houses going, I really don't like what they've done with this bedroom here. We could do it. We could do it.

Wrap: the week in one breath, and Channel Nine, call us

Kasey McDonald (50:49) We could absolutely do it. Let's apply. Let's absolutely apply.

Peter Schravemade (50:54) Yeah, yeah, yeah. Well is it what is if they're gonna ditch Scotty Cam for me? He looks he looks like he he's done some work with a hammer. You know. But but yeah, that's that's our that's our week rounding out the Friday, the ninth of October. I hope wherever you're listening from, you're gonna have a great weekend ahead. It looks like fantastic weather here in Sydney. It's really turned it on. A bit of a mild October, if I'm honest. It I thought it would be hotter by now, but you got any plans for the weekend, Kasey?

Kasey's birthday and the REACH Class of 2026 graduates

Kasey McDonald (51:25) Yes, it's my birthday. So a few champagnes, no doubt. But yes, I was the same. I was like, I just

Peter Schravemade (51:31) What what date's that? Is that tomorrow?

Kasey McDonald (51:34) Sunday. I was like, I just wanna sit by the pool, but it's not hot enough. Like, I'm like, this is crazy. Yeah. Champagnes by the

Peter Schravemade (51:40) Yeah. Yeah. Well my

Kasey McDonald (51:42) Pool, and but yes, no, it's not like it's beautiful outside, but it's not looking likely.

Peter Schravemade (51:47) Well, happy birthday. I'm not gonna ask what number, but that cake must be pretty fire hazard these days.

Kasey McDonald (51:49) Thank you. Yeah, there's a few there's a few candles. Not as many as yours though.

Peter Schravemade (51:59) Well that's true. I've got I've got a my cohort are graduating this week and you know, I'm from from me to them, congratulations. I know we have a graduation ceremony, but nobody really ever leaves the REACH program if I'm honest. I'm pretty sure you know that. But but the this this particular bunch of five companies have been an absolute delight and pleasure to work alongside this year and I'm looking forward to seeing what impact they have on the property industry moving forward. We got that tonight and then yeah, I I think we're it it we're into award season and as

Kasey McDonald (52:33) We are.

Peter Schravemade (52:33) You've put it in the past, everyone loves the good award season, so I'll expect that I'll expect that those will be hitting. And and I I suppose that's it for me this weekend, or this week. As we head into the weekend.

Sign-off

Kasey McDonald (52:48) Yes, everyone, enjoy your weekend. Happy selling, happy leasing. Enjoy any time that you get, of course, with your family and your friends as well. Have a champagne for me and have a champagne for the REACH cohorts who are graduating this evening. And we wish you all the best on Before the Weekend, and that's a wrap.