Podcast 99: Long-term rental will tempt tenants

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This week we returned to a topic we raised in the last podcast, namely build-to-rent and specifically the new Liv Indigo building at Sydney Olympic Park.

They held an open day last weekend and we went down to have a look and chat to … well, anyone who was interested in talking to us.

You can hear the results of that in the podcast (or read the transcript at the end) but this build-to-rent block does seem to be a game-changer, although it’s not for everyone.


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Why not?  Well, it’s between 10 to 30 percent more expensive to rent there, for a start, although a lot of that can be offset by having no power bills, having whitegoods provided as well as saving on gym memberships and suchlike.

But the most important thing is that tenants are the main game, not an afterthought.  It still amazes and bothers me that tenants are treated as second-class citizens in some strata schemes, considering they make up more than 50 per cent of apartment residents, across the board.

So, however the sums add up, being treated with consideration and respect would be worth spending a few dollars more.

Complaints

And it removes a couple of obstacles to a happy life that exist in strata.  There is no rental agent to go through when there is a problem. 

Too many rental agents in Australia see their job as being to protect the landlord from being bothered by their tenants.

So legitimate complaints go unanswered – often because the landlord isn’t even aware of them – while tenants constantly teeter on the edge of the dreaded six-monthly lease renewal and rent rise.

Yes, I know there are bad tenants out there.  But one bad tenant makes life difficult for one property owner.  One bad rental agent can make life miserable for dozens of renters.  And, trust me, there is more than one bad rental agent.

And then there’s the strata committees, or lack of them.  In build-to-rent, the developer, or a single investment entity, owns the block so it’s not strata and it doesn’t come under strata law.

For anyone, owner or renter, who has felt excluded from the decision-making process in their building, there wouldn’t be much difference in moving into a renters-only environment.

If your strata committee is a closed shop, and actively discourages communication in either direction – as many do –  then you wouldn’t notice living in a building where there is no committee.

Engage

Actually, that’s not fair, because the management team at Liv Indigo – if their sales pitch is to be believed – actively engage with residents, partly so that problems can be dealt with promptly, before they become “issues”.

We can only go by what we saw with our own eyes and, unless Mirvac had hired actors, people seemed to be comfortable and happy. 

The plusses for many renters at Liv Indigo are pretty obvious beyond the bells and whistles of gyms and mini-cinemas.

Pets are allowed, you can decorate the apartments to suit your tastes, leases are for 12 months, there’s a maintenance team on-site, faulty appliances are replaced immediately and short-term lets are strictly forbidden.

Meanwhile, there is no bond required and you only pay for the parking and storage that you use, which you can vary according to your needs at any given time.  For the environmentally conscious, the building has a very small carbon footprint, generating solar power and using grey water in its toilets.

Premium

Liv Indigo is Australia’s first real build-to-rent scheme in terms of the overseas model where renters pay a premium for high-end facilities and services. Mirvac is planning to roll out more purpose-built schemes in Melbourne and Brisbane over the next couple of years.

It’s not for everyone.  In Sue’s story for Domain, she quotes one couple for whom the rent was too high and another potential renter who didn’t want to live in a building with so many people in it.

Even so, it does offer a very real choice for renters whose lifestyle is more important to them than their location or, indeed, the uniquely Australian obsession with owning property.

You can find out more at the Liv website and be aware that this scheme has nothing to do with the short-term holiday Liv apartments in Haymarket in the city.

And just in case you are alarmed by the unusually positive coverage in this, a resolutely sceptical website, I should point out that this article wasn’t paid for by Mirvac, in any way, unless you count a free coffee and a couple of cakes.

The transcript in full

As ever, transcribed by a computer, kneaded and massaged by a human collecting stacks of Brownie points.

Flat Chat 99 Build-to-rent 2 (edit)

Sun, 11/8 10:16PM • 51:06

SUMMARY KEYWORDS

people, apartment, residents, rent, area, big, renting, built, building, nice, live, facilities, renters, amenities, place, herb garden, sydney olympic, olympic park, mirvac, rental

SPEAKERS

Sue, Jimmy, Elliot, Leigh, Andrew, Greg

Jimmy 00:00

We took the podcast on the road this weekend.

Sue 00:03

We certainly did!

Jimmy 00:04

Or into the field, I think we’ll call it. Field recordings. Except, it wasn’t a field; it wasn’t anything remotely  a field. After last week, chatting about the new build-to-rent place out at Olympic Park, lo and behold, there was an open day.

Sue  00:19

Yes, so we decided we’d go along and have a look at what it was all about.

Jimmy  00:22

And wouldn’t you’re just walking around, having people stuffing cakes in your face, and cookies…

Sue 00:28

Very Pleasant

Jimmy 00.29

It was. There’re worse ways to spend a Saturday morning. I’m Jimmy Thomson.

Sue  00:33

And I’m Sue Williams.

Jimmy  00:34

And this is the Flat Chat cWrap.

Jimmy  00:50

We should probably preface this by saying this is not an advertisement for Mirvac.

Sue  00:56

No, it was just… we’d both heard about this. Australia’s first purpose-built, build-to-rent apartment building, so I think we were really curious, what it was really . We know what it is…

Jimmy 01:08

What it’s supposed to be .

Sue 01:09

but  going to it and having a look…

Jimmy 01:12

Yep.

Sue 01:13

It taught me a lot about what the premise for build-to-rent really is.

Jimmy 01:17

Yes. And there seems to be at least three different models in Australia, either in existence or coming up. Because there’s already a build-to-rent in Brisbane; a build-to-rent apartment block. But that was an apartment block that was going to be sold, apparently; the apartments were going to be sold. Nobody wanted them, or not enough people wanted them. And so, they decided to keep ownership of all the apartments and rent them all out.

Sue 01: 46

Okay, well, that’s not build-to-rent, then, is it, really?

Jimmy 01:47

No, that’s sort of give-up-selling-to-rent.

Sue 01:50

Because I guess sometimes when developers can’t sell apartments for enough money…

Jimmy 01:55

Yep.

Sue 01:56

They make hotels out of them, and they put them on the serviced apartment market. So, this is an alternative, I suppose.

Jimmy  02:02

Yep, or they’ll just hang on to the apartments that they don’t sell and say “okay, well, we’ll put these out.”

Sue 02:06

Wait for the market…

Jimmy 02:08

These days, it would be on Airbnb, probably. And then there’s the one that we were at yesterday, which is the Liv apartment block in Olympic Park.

Sue 02:20

Sydney Olympic Park.

Jimmy 02:21

Sydney Olympic Park, yes, and it’s fantastic. Now, it was a block that was being built for apartments for sale, and they decided; it’s in a complex, I think of four blocks?

Sue 02: 34

four or five.

Jimmy 02:36

And they decided to take two of them; one big one, one small one and repurpose them, while they were being built.

Sue  02:43

So they changed a lot of specifications.

Jimmy  02:45

Absolutely, and did very nicely. To the next phase (apparently, when they build the next ones), which are going to be in Melbourne and Brisbane. They’re designing them as build-to-rent from the ground up.I didn’t notice any compromises in the place we were in yesterday. But they’ve got things  they’re gonna maybe have an indoor golf course and stuff  that,  some of these really fantastic places in the USA, especially.

Sue  03:13

Because it’s based on the hospitality industry, isn’t it, really? They aim to be a bit more  hotels with the facilities rather than…

Jimmy  03:22

Except that you stay for a year, rather than three nights, and they don’t have Airbnb. They’re not allowed to have Airbnb. They don’t want Airbnb. And there’s no strata committee, because it’s not strata.

Sue  03:35

Yep, so that was interesting, because we said well, how can you have a little bit of democracy if somebody says, “oh, we want something changed?” Normally, there’s a clear path to that. And they were saying they have a monthly meeting with residents, developers, and they disguise it as a party. And they have drinks and things, but they take feedback from people. And if people want things changed, then they’ll  listen to them. And if they think it’s a good idea, they’ll go along with that.

Jimmy  04:00

And they also have heat patterns that show which areas of the building… the common areas get used most, and the least.

Sue  04:11

and that technology was mostly developed for offices to work out how people were using offices, so they could design them for the future. But now they’re doing it for homes as well.

Jimmy  04:19

See, I thought it had been designed for football teams to work out who was working hardest and where they were doing most of their play.

Sue  04:30

I suppose it started in the theatre of war, didn’t it really? Those heatmaps. A bit scary, really. But so this build-to-rent is really interesting, because basically, you have a lease for a year. And you can extend that for for the rest of your life, so you can’t get kicked out as long as you pay your rent. It’s a bit more expensive than most normal rent. Yes, because you have fabulous amenities. You also have all the white goods supplied in the apartment. It’s pet-friendly and there’s no bond.

Jimmy  04:59

There’s no bond and they let you paint the walls, whatever color you want.

Sue  05:04

absolutely. So that’s the difference really, I think.

Jimmy  05:07

and we spoke to a couple of people. There’s a big element of trust there. Because they don’t have a bond, if you damage the apartment, but  it’s  they’re looking at the people coming in and going, “hmm, is this person ly to be a problem?” Because they seem to be very, very, very much geared towards a sense of community.

Sue  05:30

because they have managers on site all the time, don’t they? They have a maintenance team on site. And they have a help desk,  a concierge service, almost.

Jimmy  05:40

24/7, I believe. One of them said to us, and it may be in the interviews coming up, “there’s no point in having our management here during office hours, because during office hours is when everybody who lives here is as at work.” So, I don’t know if it’s 24/7, but it’s certainly more than office hours, that’s for sure. So, I am just trying to recall the things we saw yesterday. We looked at a couple of apartments, which I thought were pretty fantastic, really nice. Obviously, they’re brand new, they’re really quite roomy, great views, and some of them, all the way to the Blue Mountains,

Sue  06:15

Lots of storage, really nice balconies.

Jimmy  06:18

There’s something they spoke about; you don’t have a car space attached to your apartment, but you can rent a car space for 20 bucks a week. And if you have a visitor or you have five cars, then you can rent more space, and you don’t rent it when you don’t need it.

Sue  06:40

It’s interesting when you compare it to the regular rental market, they’re brand new apartments. You don’t have a strata committee, so that’s a plus for some people. And you don’t have the hassle of dealing with a real estate agent who might say, “oh, the owner doesn’t want to do this; don’t want to fix things.” Because they’ve got the maintenance team there. So, they’ll fix things immediately.

Jimmy  07:02

And they even said that, as you said, they supply the white goods, but they keep spares. So, if you say “oh, my washing machine’s broken down,” or “my microwave’s broken down”, they just come in, whip it out; put another one in. Pretty cool isn’t it?

Sue  07:16

and if I was choosing to rent, it’s a fantastic option. But it is Sydney Olympic Park. If you don’t want to live in Sydney Olympic Park, that’s an issue, although there is good transport around there. And it is more expensive. I think it’s about; they said it’s 10 to 30% more expensive than another.

Jimmy  07:36

But I was surprised a one bedroom flat. What was it? $525?

Sue  07:41

$535, it starts from.

Jimmy  07:42

Right, and there’s one right next door to us, which is more than double that. Okay.

Sue 07:47

Where we live?

Jimmy 07:48

But we’re in Kings Cross, and it has fabulous harbor views, so you’re paying for that as well. But I was surprised at how reasonable they were, and…

Sue  07:57

The amenities are astonishing, because you’ve got a co-working space on the ninth floor. You’ve got a theater, you’ve got, which is a movie room, really…

Jimmy  08:07

Movie room, but it’s also got Xbox built in. So, you can go there and blast away at your enemies, until the wee small hours.

Sue  08:13

It’s got two gyms. It’s got a big dining room with a huge dining table. And somebody (as you’ll hear from one of the interviews), said he had his mother-in-law’s 60th or 65th birthday there, a big birthday party.

Jimmy  08:25

And a big space, and really nicely set-out communal kitchen area that you can use. There’s one gym for the whole complex, which is, lots of grunt machines, things  that. But their little workout gym was a kind of; it’s  a yoga gym and it had spin bikes and a big TV screen where you can get workouts on demand. So, you want to do a step class, or a pump class or whatever, it comes up on the screen, and you can  do the class there and you can book the gym. Just to do it on your own if you want.

Sue  08:59

Great place for lockdown. Let’s hope we don’t get into lockdown!

Jimmy  09:03

and I’m trying to think what else was there on that, because it’s basically… You got to think of it as a tall building 23 stories, and a smaller building of nine stories, and the top story of the nine story building, they call the deck. That’s where the gym was; where the big kitchen and dining area was.

Sue  09:19

Outdoor barbecue area. There was a kid’s playground/playroom.

Jimmy  09:23

Yes.

Sue  09:24

And outside there was a playground and a herb garden.

Jimmy  09:27

Yes, but the kid’s playroom had a little lounge seating area. So, you could put the kids in there.

Sue 09:34

Shut the door.

Jimmy 09:36

Yes, and let them; and just sit there with the other mums and have a cup of coffee.

Sue 09:40

And dads

Jimmy  09:41

And dads. Ah, there’s a library, which is a book exchange. So, you’ve read a book, you go in there, you leave it, you pick up somebody else’s book, which is good.

Sue  09:51

One thing that a few people mentioned to us; they’ve also got a big printer; a big commercial printer. A lot of people have got their laptops, but they don’t  have the other infrastructures, so that’s pretty handy too.

Jimmy  10:03

Well, I was surprised that there’s a door, just next to the shared office space, which is basically for computer terminals. And there’s a door with a printer symbol on it. And I said, “What’s that, the printer room?”  She said, “oh, a big printer; big commercial printer in there.” That’s pretty good. So, it sounds  I said before, this is not an ad for… I’d love to be able to tell people that when we set out with this project, that we were going to do interviews, but we were on our way out, and I went, “Oh, should we take the tape recorder?” So, we did. So, we’ve done a few interviews. They’re not what you would call radio quality. They’re a bit lumpy and bumpy in places, and there was a lot of background noise, because there lot of people turned out. There were people there, who looked around and then called up their friends and said, “you’ve really got to get over here and have a look at this place.” So, and then we saw the people who were the friends, who had been called in. So, there was a lot of excitement. oh, probably got something to do with all the sugar in the cakes they kept giving us!

Sue  11:08

It was interesting, because there were lots of different ages there. We talked to some young people who were in their 20s. I talked to some people who are in their 60s. and apparently there are a couple of people who are leasing there in their 80s. Because for downsizers it’s  quite good, because you can sell your house; release the equity in your house, and then just rent for the rest of your life.

Jimmy  11:29

And they corrected us, the management person we spoke to, they said “we’re not downsizers we’re right-sizers”. Oh, that’s a phrase that might stick. Okay, so our first interview after this is with a young couple who moved in – among the first people to move in – Leigh Harlett and Elliot Almario. That’s after this.

Jimmy  11:54

Can you just give me your names, please?

Leigh  11:57

Hi, I’m Leigh.

Elliot  11:58

And I’m Elliot.

Jimmy  12:04

So how long have you lived… in the building; how long have you been here?

Leigh  12:08

that’s right. We moved in on the third of September. So, we’ve been here around three months now. It’s lovely. The staff are wonderful. The apartments themselves are so beautiful. There’s so much  extra facilities and stuff it’s just a lovely place to be.

Jimmy  12:26

What was it that attracted you to this building in the first place?

Leigh  12:30

There were a few different things. There was the community aspect (which was really advertised on the site), that appealed to us. We wanted to move somewhere that was encouraging people not to just live in the same building together, but  form  relationships with each other and be proper neighbors. Instead of just everyone living in the same space, you  get to know people. That was something that really appealed to us.

Elliot  12:54

and we’ve met some really lovely neighbors and  it,  it works here.  we’ve got mixers,  every month or so. And you get to meet  all the new neighbors and reconnect with all the other residents here. And it’s been, it’s been quite fun.

Leigh  13:14

There’s also the fact that it’s pet-friendly. So, we got to bring our lovely little dog along with us and meet other dogs, which is good. The gardens outside are perfect for walking your dog around; it’s just a lovely area. And all of the animals really seem to be enjoying it, as well as the humans, which is good.

Jimmy  13:32

Did the actual experience meet your expectations?

Leigh  13:38

I would say, exceeded expectations.

Elliot 13:41

Surpassed it.

Leigh 13:43

Yes, as Elliott said, surpassed it. We were hoping for just a nice, easy place to live and we found somewhere that’s not only easy, but a fun and exciting to live.

Jimmy  13:51

How about the rent? it’s a bit more expensive than the market value. It is it worth it?

Leigh  13:58

We would say so, for several reasons. The peace of mind for one. You are really encouraged to make this into your own place, and that you are given that level of security. There’s also a few extras included  the facilities around the apartments. So, you can use the gym, the cinema room, the public areas; that’s all included in your rent as well. I believe the water and the gas are also included in the rent. So, you do get some basic utilities as part of that as well. We do understand that its maybe a little more than what people might expect for the area. But for what you get, we definitely think it’s worth it.

Elliot  14:36

I think um, especially if you’re interested in community living, it’s definitely worth checking out and , comparing it, because if you’re going to live , on your own, it’s a bit much, if you don’t want to talk to other people; that’s fine. But I think it definitely brings something that a lot of people probably have been looking for. , just  connecting

Leigh  15:01

You’re paying for more than just a place to live; you are paying for the experience of living here as well.

Jimmy  15:07

I should point out that these two are not on the sales staff! What dog do you have?

Leigh  15:14

Um, he is a havanese- cross. He is a little, fluffy, white puppy-looking thing, who’s  11 years old, but still acts very nice and springy and puppy-.

Jimmy  15:23

Do you guys work near here?

Elliot  15:28

I work, not too far away. It’s just  about a bus trip. It’s pretty good.

Jimmy  15:33

Is it convenient?

Leigh  15:35

I’m good, as I work in the city. It’s very easy to get to the city. I just take a bus to Strathfield and then the direct train. Or if I’m feeling  I want to walk, it’s just a nice walk to Concord West through the parks as well. It’s really lovely in the area.

Elliot  15:48

we were surprised  it’s, it’s quite accessible here.  there’s transport readily available.

Jimmy  15:58

Thanks so much for your time. I’ll let you get back to doing your search of the building.

Leigh  16:03

I hope you enjoy your tour.

Jimmy  16:04

Thanks, thanks. Well, they’re obviously very happy with their choice. really, they were… they were wandering around the open day, and it just so happened that we pounced on them.

Sue  16:19

It was extraordinary, because Leigh  works in Sydney, so she travels all the way from Sydney Olympic Park into Sydney every single day.

Jimmy  16:26

But it’s not that hard these days. There’s a train, and then they reckon when the new metro opens, it’s just going to be  15 minutes to the city. It was interesting also, that we spoke to somebody about people renting in the normal building next door going “ooh!”

Sue  16:47

They were renting an owner’s apartment.

Jimmy  16:49

they were on a private arrangement with a private landlord. And then they saw what was happening across the other side of the herb garden, and thought, “we’d quite  to be over there, .”

Sue  16:59

with all those amenities, because I think they’ve got more amenities in the build-to-rent than they have in the build-to-sell.

Jimmy  17:05

They sure have. Okay, the next person we spoke to was another resident, and he’s a chef, and a restaurateur. And he had come in, and he was very excited about the idea of being able to do big parties there. and I think he was the one who had his mother-in-law’s 60s?

Sue 17:24

Jimmy 17:25

But just the idea of being able to have a big dinner party. for a chef, obviously, you want to show, really sort of push the border thing when you’re cooking for a large number of people, and he’d be able to do it.

Sue  17:37

But if I lived there, I’d have a big party and I’d get him to cater for it.

Jimmy  17:41

Exactly. In fact, we mentioned that to him. His eyes lit up. He went, “oh, right!” So, his name is Greg Barkley. And again, he’s somebody that we just grabbed and started talking to and stuck a microphone in front of. So, your name is?

Greg  17:55

Greg Barclay.

Jimmy 17:58

You are one of the original residents?

Greg 18:00

 One of the originals. So, it seems  we go back a long way. But it’s only a month.

Sue  18:07

Where were you living before?

Greg  18:09

I was I was in Dundas Valley, with the wife. So that’s more towards Carlingford way and Epping. So, we had a house there and since I was opening a new business around the corner, in Wentworth Point, we had to be close.

Jimmy 18:27

What apart from the location, what attracted you to this particular setup?

Greg 18:30

It was this area, which is the dining area, the upstairs, lounge room, kids play area, the theater is always good, as well, the office space, I saw that they had a big printer here as well. I think they’re trying to facilitate a better environment for the residence and having a printer there that you can use; the big production printer, it  helps. It helps me, so it was part of it.

Jimmy 19: 04

Actually, living here, is it a good place to live?

Greg 19:06

Yeah. And it’s dog-friendly as well. We had a couple of dogs. We were looking in Wentworth Point for a place, but renting, the landlords aren’t giving you an opportunity to have pets. Well, a lot of them. So that was a deal breaker for us.

Jimmy 19:25

And it’s a bit more expensive.

Greg 19:26

It is, yes.

Jimmy: 19:27

Is it worth it?

Greg 19:28

Yes. No questions asked.

Jimmy 19:33

Do you really use the facilities?

Greg 19:34

At the moment, because I’m so embedded in the business, not at the moment. But when I am able to step away from that, of course I will.

Sue  19:42

So what appeals to you about having a dining room? Does it mean that you can cater for guests and things? That would be a little bit of an adjunct to your business?

Greg  19:49

Yes, um, it’s more family for us. We’ve hired out this section before, when we had my mother-in -law’s 60th birthday.

Jimmy  20:04

So, we’re looking at seating for 12? comfortably seating for more than that? Yes, 12 to 15. Yep. In a big, big table with a picture on the right side. So, this is a bigger size?

Greg  20:14

it really was, but not just to be able to have the space when you’re in when you’re in your own home. You can  break out and you can come and spend some time looking at a movie or they’ve even got Xbox facilities here as well, which I’ve dabbled in a little bit, until about three in the morning! You can BBQ; have that area, as well in the view.

Sue  20:47

So, you have a two-bedroom apartment.?

Greg 20:48

Yes.

Sue 20:50

And you pay about $900 or something  that?

Greg  20:53

No, we’re around mid- $700.

Jimmy  20:55

Okay, thank you so much. It’s a brave man opening a new café in these times. Is it Wentworth Point, he said?

Sue 21:04

That’s right. Wentworth Point.

Jimmy 21:07

but it’s, he’s got a passion for food, obviously. And for service, so good on him. And I hope somebody in his building does go, “ooh, we’ve got a caterer in the building.”

Sue  21:18

He’ll probably be catering for all those monthly parties that the developers throw.

Jimmy  21:25

Finally, and our next chat is with Andrew Hanson, who is the National Director of Operations for build-to -rent at Mirvac.

Sue  21:35

He was incredibly enthusiastic about the place, wasn’t he?

Jimmy  21:37

He was great, and we were able to relate it back to places that he had seen and experienced in the States, although he was working in hotels, and the place I mentioned in during the interview, in Washington, and we realized we were on the same page with that, which was good. So here’s Andrew. This is the first purpose-built, build-to-rent in Australia?

Andrew  22:02

That’s correct.

Jimmy 22:07

Obviously-well, maybe it’s not obvious-but you didn’t necessarily just wake up one morning and say, “hey, wouldn’t it be cool to have an apartment block that only has renters in it?” So, is there an overseas model or models that you’ve looked at?

Andrew 22:20

Yes, there is, and Mirvac have been working on this to, for five to six years. They initially went on a study tour over to the US, the UK, and Japan, and looked at build-to-rent. Where it’s most established in a similar type of model is the US, where it’s the arguably the second largest asset class of a commercial asset class, and is huge, they’re building up to 300,000 new dwellings per year to keep up with demand in that market.

I worked over in the US for seven years, managing portfolios of between 15 and 25,000 units across the whole country. And so, I had experience over there, but as you can hear, I’m an Australian. So, when I moved back, Mirvac hired me to set up their first operations platform. And this is the first of its kind, being a full operations platform. Where we know that we’ve opened our first one, we can keep going we and we can do it anywhere in Australia now.

Jimmy  23:33

You are planning more developments in Melbourne and Brisbane?

Andrew  23:36

Correct, yes. So we’ve got about 1500 apartments in the pipeline in Melbourne. And we’ve just won a bid with the Queensland Government to provide build-to-rent in our project in Newstead in just near Brisbane City. And as part of that particular project, there is a 25% requirement for key worker housing, which we’re really excited about because we’re working with the Queensland Government to provide this key-worker housing, we’re really excited because this is truly a community that we’ll be delivering in Brisbane.

Sue  24:17

So that’ll be affordable renting that 25% for key workers like nurses and doctors and police officers and stuff.

Andrew  24:24

Yep, correct. So, fire brigade police, as you say, it’s those types of workers with a 25% discount off the market pricing.

Jimmy  24:33

We’ve spoken to people here about what attracted them to the building which is pretty obvious. the facilities and the whole setup. What do you sense is the resistance to build-to-rent from the tenant’s point of view?

Andrew  24:51

I think they need to see it. We find we’re getting between 20 and 25 leads per day, which is phenomenal. And we’re delighted by our launch, our brand, and being able to  show something. But unless people come and see it, it’s very hard to explain what we’re doing. Once we break down the value of having appliances included, of no bonds, of the amenities that no gym memberships require those sorts of things, you really start to build that value. So any premium is quickly dissolved.

Jimmy  25:29

There are other building around in this area, with good facilities. What would the, that premium how much more people in here than they might for a similar apartment in this area?

Andrew  25:42

So we’re appealing to a lifestyle and an emotional piece, which is people are looking for somewhere to live, but they’re also looking for convenience, and simplicity. So, everything we do is, is about taking away the pain points of renting. So we’ve really sculpted that resident or customer experience to deliver  that extra service. We have a team on site seven days a week, we have maintenance on site. And so we have captured, it’s probably between around on average, a 10% premium on the market, which isn’t a lot once you start adding in all the features and what people will see as value.

Sue  26:28

So, without the features, it seems to be about 30% higher than an average rental for this area. Is that right?

Andrew  26:34

 It can be up to 30% depending on which rental, because there’s a lot of anomalies there as well. But this area has gone through a fairly flat growth period with everything going on. And the COVID-19 didn’t help with that. But there’s no one who we bring through who doesn’t say don’t want to live here.  it’s about finding that personal value for each person who walks through. The parking is on demand, the storage is on demand, you’re not paying for things you don’t need. And so, you get additional value through that. And I think that one of the key differences is the service, people realize that they’ve got, they can personalize their spaces, they can live here as long as they  they can bring their pets, they can hang pictures, they can paint a wall, where we’re really backing what we’re saying. We’re  painting a feature wall for every resident of any color that they choose. So far, all colors chosen have been acceptable. We did have black with sparkles requested. I think that wasn’t, we couldn’t find that color. So…

Jimmy  27:48

One of the pain points that you’ve removed in this system is the strata committee; that doesn’t exist here. But doesn’t that create a level of trust between the management, you guys and the tenants that you are going to look after them?

Andrew  28:05

Our interest is having happy customers live here for as long as possible and looking after the asset because we own it. So, it comes by design of our business model that we are interested in people staying here for as long as possible until retirement and pass that hopefully, and ensuring that they’re satisfied. reputation management, it’s 101 over in the US, it’s something I learned very fast over there. It’s all about that customer experience. It’s all about that value people put on it. We have no reason to not fix a leaky tap; we own it. We’ve invested more into this building, than a typical building would have. Investments in around sustainability, around finishes around technology with the door locks and the online platforms and the resident portals. We’re invested in renters, and we’re not selling this. So, it’s designed and built only for renters.

Sue  29:13

And your team who are here, they’ll be here forever, will they? This is not  just for the first bit to get people bedded in. And then they’ll only be there for a couple of days, from nine to four and…

Andrew  29:25

No, we’re here seven days a week. And we have a team here all day, and we’ll adjust hours if … One of the things I’m very sensitive to is if we’re a nine to five office and everyone’s at work nine to five, then who are we serving? And so, we’ll adapt hours for our residents and ensure that they are looked after and it’s all about the service. Its why people stay; it’s about we know the dog’s name, the cat’s name when they come down, they bring them down to meet us multiple times a day and it’s about that relationship. We also, as we get more and more occupied, we’ll have more and more events and programs, anything from self-defense classes to bringing in a sommelier, having a book club on site. Bringing in chefs, having events, New Year’s Eve, Super Bowl…Anything  that, it will be driven by the residents.

Jimmy  30:23

Well, you say, “driven by the residents.” In certain situations, there may be something that the residents want that you don’t even realize that they want. It’s not that you don’t want to give them it; you don’t even realize that there’s a rumbling of discontent, or somebody says, “that space would be better used for this.” How do they get that message to you in a way that you think, “well, there’s  quite a lot of you, it’s not just one person.” And that’s fine. one person who says, “can we change the herbs in the herb garden,” or whatever. But if, if some people are saying, “well, we want; we don’t want herbs there, we want vegetables.” What’s the process there? Because, it doesn’t seem; there seems to be still be a little bit of a disconnect from the residents as a group, rather than as individuals.

Andrew  31:13

So, we have a specific monthly event to get feedback. We dress it up as a party, but really, we’re doing things  training people on how to use the AV on the amenity floor, because obviously, self-sufficiency, and peer support in these sorts of things is much better than waiting for us to come and turn on the TV and those sorts of things. So, we’re sneaky about this. So, we’re training them to do that.

But we’re also asking what types of things, we’re asking for feedback, we’re asking for what types of programs and events they’re looking for. We also are about to start sending out feedback surveys, and we’ll lead some of those questions based on what we’re learning from the residents.

If in that example, where they wanted to put vegetables rather than herbs in the in the herb garden, we would offer that as an option and see what response we got. And this is this is a property for the residents. It’s not for the team, it’s not for Mirvac it’s not, you know…This is about customer satisfaction, because that drives longevity of leasing, and of the… We have about 100 units leased so far and we know every single person who’s leased very, very well, because we’ve gotten to know them over the leasing period.

And in a way, whilst we let anyone live here, we’re also vetting personalities, so that we know what kinds of people are coming in and what they’re interested in. And so, the relationships that we’ve formed during that application showing and screening is the way you run these types of communities. So that’s how we treat it.  This is not someone’s investment; this is their home. And that’s the model. That’s the customer model that we’re focused on.

Sue  33:08

And this is a permanent asset class now? if prices suddenly leapt up, you wouldn’t think “okay, let’s try and sell it off as individual apartments?”

Andrew  33:17

Absolutely not. Certainly not. That’s not what Mirvac’s doing. And that’s not what we want the sector to do, though, these properties are designed and built for build-to-rent, so they’re not strata’d off. And we don’t want the sector to be a Plan B type of sector This is a redesigned property, from internally, where we’ve changed a lot of the apartments, we’ve changed a lot of the finishes, and we’ve redesigned the amenities and added them and taken out penthouses. But in our future projects we design and build, we will be building them from ground up. So, they are really well-appointed apartments, good technology, really, really good uses of space. And then amenities that are on steroids. It’s going to be amazing. This is really just the taste of what’s coming.

Jimmy  34:22

Now, let me move over to the dark side. I know that I know that you’re you don’t allow Airbnb, or short -term lets, but you just happen to be in an area where, three or four times a year, it would be perfect to for people to rent an apartment, or borrow an apartment from a friend to come and put, you know 16 guys who are going to go to the football, get drunk, come back and get even more drunk. How would you deal with that scenario?

Andrew  34:53

We have what we call resident responsibilities and as I say, we’ve got a team on site. Every day of the week, we’ve got a manager on site, and we encourage our residents to act responsibly in this particular location.

As part of our agreement with Sydney Olympic Park Authority, they have mandated we cannot do any short stay, anyway. So, we have that reinforcement that we can implement those types of rules. It really is about being a good community citizen about allowing people to enjoy their space and in, giving them opportunity for peaceful enjoyment, and everyone gets the same. But we’re here to manage it. So, if you have an issue with your neighbor and the dog next door, or there’s pain points, we’re here, so that resident doesn’t have to deal with that directly. We have those relationships with the residents. And we want to fix that because one person’s selfishness can affect a lot of people. So, we’d  to nip that in the bud very quickly.

Sue  36:09

And how does the quality of these apartments match up to the quality of the build-to-sell apartments just next door, really?

Andrew  36:17

The finishes are slightly different, but they’re the same apartments. They’re very similar, you’re getting a Mirvac quality apartment, which we believe is best in class. There are design differences, only around tiles throughout the living area. Tiles instead of glass splashbacks, the door locks as electronic and Bluetooth enacted, rather than keys. What we’re finding now as a business is the build-to-sell are learning from some of the finishes we’re using as well. So, we have been purposely isolated, so that we have our own personality and character, and we stay true to the build-to-rent model. But now that we’ve got an operating asset, we’re starting to exchange ideas. And you’ll see some of the features that we’ve put into build-to-rent, feed back into our build-to-sell product. Now we’ve got customers, and we’ve got feedback, we’ve got it we’ve got an audience here who are very willing to participate in feedback. And this data that we’re collecting from our customers is gold, no one else has it.

Sue  37:31

Will it also leak over into the rest of the rental sector? Do you think it might lift standards everywhere?

Andrew  37:39

And that’s something that, yes, we’ve picked on some very low hanging fruit in the rental sector, where it’s not always a great experience. But what will happen naturally here is that renting will become better as this becomes a bigger thing, because the competition will be more prevalent, making people feel who give, between 30 and 40% of their income to pay rent.; it’s about giving them an experience where they feel valued and wanted, and I’m sure that will that will tip over quite quickly, certainly in this area.

Sue  38:17

So, this hopefully, is the way; the way of the future for renting, really?

38:21

Hmm, yeah,

Andrew  38:23

I think this is going to be huge. It just takes time to build these things.

38:29

In so many ways.

Sue  38:31

You said there’s no class system, because everybody is a renter. But there’s an outside class system because the other towers they’re built to sell. Will there be enmity between the towers?

Andrew  38:42

We don’t think so. Part of our opportunity here is not to be the community but to be part of the community. Sydney Olympic Park is an amazing place to live. It’s really grown on me. I hadn’t been here since the Olympics. But the parklands, the outdoor area, the lifestyle, the people…The more people you bring into this, and we’ve got a shared courtyard, the better it’s going to be and the better experience our customers are going to have here, and Mirvac customers as a whole are going to have, whether they’re renting or owning in the other building.

So that part of the business, they’re launching Sunday socials where they’re going to have bands and music out in the courtyard, and it’s going to be attended by everyone and their guests and visitors. And I think if that works, that’s going to be really lovely. And then Sydney Olympic Park Authority, they’ve got festivals, they’ve got farmers markets coming, they’ve got night markets, they’ve really starting to, they’re going to open this place up next year. Post-pandemic, we hope, and, and with the events and the sporting activities and all of those sorts of things we’re part of the community.

Jimmy  39:54

I’m thinking about poaching, because half the people in the Soul Department blogs will be the tenants anyway. Have you had anybody coming over here?

Andrew  40:05

Good question. Yes, we have, but we’ve also worked in reverse as well. We’ve had a very, very large marketing campaign that has brought people to this precinct. And when if someone says, “oh, I’m just looking for something a bit more standard,” we have a real estate agency within Mirvac, and we refer them to them, and they’ve referred people to us.

Jimmy  40:34

Right.  So, people say, “I want to live here, but I don’t want to rent.”

Andrew  40:37

Yes, that well, that’s, that’s the other thing we also sell, we rent, we sell, and we have build-to-rent. So, there’s three options. So, we’ve got apartments to sell here. And the value here given that would be the expansion of this area, the improvement of the area, the metro station, which will be 15 minutes into the city when they build it, it’s,  this is a good investment, this is a good place to live. There’s everything here, you know.

This is the poster child to bring government through, to bring investors through to bring customers through and really prove the concept, so that we can go and, open for 10,000 20,000 30,000 of these.

Sue  41:25

But it’s hard, isn’t it? Because in Australia, renters are always second-class citizens, and lots of Australians think renting is just a pathway to buying your own apartment. Is that attitude ever gonna really change?

Andrew  41:35

It should, and I think for some people, they don’t think that, and they’re living here already. Well, the ownership and having a mortgage and being tied down isn’t for everyone. It’s, something that, I don’t I don’t say this, because I’m in this side of the business, I say this, because it’s a growing thing. It’s a growing proportion of a growing population, or what was the growing population. As a proportion, its exponential, how many people are choosing to rent and making it a lifestyle, and in the US, it wasn’t a dirty word. It wasn’t, when I first came back, I was giving some input on a marketing campaign. I said, “okay, we’ll say renters,” and they said, “don’t say the word, renters.” It sounds it sounds bad. As to why, renting is a lifestyle choice. We can invest in our own businesses, we can buy stocks, we can put our money in other places, and some people choose not to, and  there’s so many more things you can do with your money rather than pay the banks.

Sue  42:46

That’s fantastic. Great.

Jimmy  42:47

Thank you so much.

Andrew  42:48

Thank you, it’s lovely to meet you.

Jimmy  42:51

Okay, bearing in mind this is not a commercial,

Sue  42:55

I think we were just both very impressed. But then on the other hand, as we’ve talked, as we said before, a lot of Australians really  to own their homes rather than rent, but this does give people a really viable alternative.

Jimmy  43:11

And I can imagine, it would always color people’s view, if you decided “I don’t need to live in the city centre, I quite like the idea of living out there.” Because there’s a lot to do, especially for people who are active,  driving out of there, there were all these people running and cycling and…

Sue  43:28

There’s a lot of space and Parramatta CBD isn’t very far away, if you’re working there, or if you’re working from home, it would be perfect.

Jimmy  43:35

And it would give people a taste of apartment living. They might get a bit of a shock when they moved into an apartment that they bought, where there weren’t as many facilities and people weren’t quite as nice and friendly. But it might be a nice introduction to people and that long lease thingThey talk about it being a home.

Sue  43:56

And they put a real emphasis on community building, which I think was really nice too. the site team that are there all the time are really into introducing people and getting people together. They’ve got people babysitting for other people’s kids, they’ve got people looking after people’s dogs for them, and that was a really nice feeling, I think, and that’s what the people who were living there now, all said they really appreciated and other people said, we find really attractive.

Jimmy  44:23

Okay, so Thumbs up for the Liv … or was it just all the sugar high from all the cakes and things?

Sue  44:31

No, it is expensive. but it’s pretty impressive, really.

Jimmy  44:35

We should give them a call because they gave away goodie bags to people and they had lots of really fun things in them. I’m going to see if we can get a couple of goodie bags to give away to our listeners. Okay, so keep your ears open for that next week. After this, it’s our  Hey Marthas for this week.

Jimmy  45:01

All right, so what have you got?

Sue  45:02

Well, after we’ve been out to that place, I thought I would be really interested to compare it to a regular rental with a private landlord. So I looked up on domain to see, if there are any inspections for later that day, and I went out to one of them in the area of Potts Point where we live, and I went and rang the doorbell of an apartment building that was meant to be showing at one o’clock, and it was freezing cold; it was really windy on the street. And the doorbell didn’t work, right. And so, I was knocking on the door, and nothing happened, nobody appeared. There was a real estate,

Jimmy  45:42

billboard

Sue  45:43

Outside. So I was obviously at the right place. But it had no phone number on it; it just had the name of the real estate agent. It didn’t say whether it was Potts Point, Elizabeth Bay, or where it was based. And I stood there and stood there for 15 minutes. And nobody came, no real estate agent came down. And I thought “bloody hell! this is this is a real contrast with the people who went for an inspection at the build-to-rent place.”  And then later on, I thought, “well, that’s not very fair. I’ll go and have a look at another one.” So, and you only get 15 minutes to have a look. they’re saying at the build-to-rent place, you can look at the apartment for around four hours; you can look at a different floor plans and different sizes.

Jimmy  46:26

you might be saying “oh, this isn’t right, for me, it’s too small or I want more of a view,” and they say “well, we’ve got other places that you can look at,” so you spend a lot of time there.

Sue  46:36

So, with these, with the private rentals, you go and you queue up and you’re just let in a few at a time because of COVID so you know that’s life really. But the real estate agent, often just takes your name and your phone number doesn’t really talk very much to you. And the apartment I went to look at unfortunately was unfurnished, which always shows an apartment not particularly well. And it was unrenovated. It was old, and it was dingy and it was dark. It was on the ground floor. And it was hard not to compare it to the apartments, we had just seen that were so bright and breezy and open with big sliding doors and fabulous views out to decks and things. So it was an interesting comparison.

Jimmy  47:18

And compare it as a one bedroom, barely. In so many ways to find $475 a week compared to 535.

Sue  47:30

so a very similar price, obviously different area completely. Goodness me. Big contrast. And how about your Hey Martha for the week?

Jimmy  47:39

Well, a few people have been reading my bulletins on the bathroom renovation,

Sue  47:47

which you wouldn’t have to do if you rented.

Jimmy  47:50

That’s true. Okay, I tell you it was tempting, over the weekend. And those who have been reading it know that we tried to escape with our cats, which didn’t work out, too well. So, the other day, and we were back, the builders are making pretty good progress, . And they came in the other day to put down the membrane.

I got to get that in my brain, the membrane, so they put down the membrane and they came back next day and put down the screed which is basically concrete which is mixed on site and flattened out and smooth out and put on at the right angles.

Sue  48:34

In a painstaking way, the man’s on his knees, you know with his hands making it so smooth and beautiful.

Jimmy  48:41

Absolutely perfect until one of our cats, we didn’t see this. We didn’t witness this. But you can tell from the footprints in the concrete that one of our cats wandered in and went “oh, shit, I shouldn’t be here.”

Sue  48:59

Oh, thought “well, I’m gonna be Hollywood. I’m gonna stay.”

Jimmy  49:03

“I’m doing this. And I don’t know how to write my name. Can somebody write my name here?” We know who it was, Pepper. So, in time in some time in the future, the next people to renovate our apartment will be digging up the tiles, and they’ll go “oh, there’s a fossilized cat pawprint.” So that was my Hey Martha for this week. Well, we’ve crammed a lot into this week. Hmm. And it has been very interesting. So, keep your eyes on the website, for we’ll see if we can get something. I know that they’re doing a promotion, that if you recommend somebody to go and see the apartment, and rent an apartment and they sign up, they’ll give you a gift card for 100 bucks.

Sue  49:47

Are you trying to get a gift card for a hundred bucks?

Jimmy  49:48

If we could get lots of Flat Chat people to sign up, we could be millionaires by the end of the week. Seriously though, it was really, really interesting. If you are thinking of renting and if you are thinking of getting out of the city centre, go and have a look. It’s a pleasant way to spend a couple of hours on a Saturday morning and there’s lots of nice cafes and restaurants out there as well.

Thanks very much Sue, for that.

Sue 50:10

Pleasure Jimmy

Jimmy 50:15

And we’ll talk to you all again next week. Bye.

One Reply to “Podcast 99: Long-term rental will tempt tenants”

  1. Avatar Jimmy-T says:

    If you want to start a discussion or ask a question about this, log into the Flat Chat Forum (using the link above). More people will read it there and you can more easily keep track of responses.

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