“Tough times don’t always last but tough people do”
Key points covered in this webinar:
The industry is getting a heads up – Right now the real estate industry is faring fairly well, Saturday opens last weekend were still well patronised, contracts were still being signed. Real estate is fortunate to be getting a heads-up through the lens of industries like hospitality. So what should you do now?
- Find your break-even point – Your break-even point is the most important number in your business and it’s critical you get to the heart of it really quickly.
- Levers to pull – When we know the break-even we know what levers to pull.
- Wages – One of the big costs of real estate will be wages. Although now is not the time to desert your staff, it is the time to help each other out and that may mean talking with your staff about taking leave, going on leave without pay for a period of time, or temporarily reducing staff wages by 20 per cent and turning positions into three day a week sort of employees.
- Subscriptions – Go through your subscriptions and consider whether you really need them.
- Rent – If you rent your premises, ask for some room to move on the rent
- Advertising – If you’re not getting your advertising fees paid by your vendors up front, that means you’re paying for them. Maybe your advertising providers are able to provide some deferral or relief for a period of time.
- Look at income – In addition to looking at costs, look at income and particularly property management income. This could be a time when property management becomes a more important part of your business to provide a fixed income.
- Landlords not paying rent – Landlords will be asked to give room to move on rent. To make up for this shortfall, what about other charges that you haven’t been recovering. Are there other rent rolls you could be acquiring?
- Arrears discussion – You will be having arrears discussions. This will be a tricky balance. Try to get it right between landlords and tenants.
- The human element – A lot of this pain will be pushed down the line. Don’t forget the human element. It’s an opportunity for your brand to be authentic and real.
- Bank packages – Should initiatives come to pass that enable people to pause or delay business and home loans, these will reduce your break-even point.
- Wiggle room – Over the next few months there might be wiggle room available and this could be useful for your business. Some people are asking for a rent relaxation on their commercial business, which they are adding on to the end of their tenancy.
Meanwhile, agencies like the ATO are being very understanding, so deferring an ATO debt could be worth investigating.
Subsidies
The government has announced two rounds of subsidies broken down into a series of areas.
Here’s how that’s likely to apply to real estate:
PAYG – If you’re a real estate business with a wages bill, the minimum that anyone who qualifies will get is $20,000 and the maximum they’ll get is $100,000.
Banks offering cheap money to business – The RBA has made $90 billion available to banks which they will charge minimal interest on. That allows for government guaranteed loans of up to $250,000.
There are two ways to look at this debt. Have we hit the bottom of the dip? And if so, is this an opportunity to scale up? However, even though the money’s cheap it still has to be paid back.
This is an opportunity – This is an opportunity for clarity and creativity. What the industry looks like could be really exciting.
Resources from Elite Agent
https://eliteagent.com/covid19 (bookmark this page)
Resources from Business Depot
https://businessdepot.com.au/blog/government-cheque-book-to-ease-pressure-on-coronavirus-economy/ (updated regularly)
