I would like to find out how much I should be renting my investment property for.
I have had a few PM’s give me an estimate & when they saw I wasn’t happy they bumped up the price by $10….
Do I rely on the PM’s word as rent estimate is part of their job or is there a way to find out what the market value is ?I have had a look at some internet sites , local papers & found similar properties but nothing that is a direct comparison to my property.
Can anyone advise me on how to approach this issue as loosing $10 per week makes a big difference over a year .
Some people might say the answer is Market Research & I agree but the question is HOW !!!!
[confused2]It depends primarily on how much a person is prepared to pay to live in your property. Where is it located/features etc
Yorker
I agree that the amount of rent depends on the location ect…What I am wanting to do is to determined if I am getting the current market rate in a suburb.
There are allot of successful people out there who are or have been in this situation & I imagine different people have a different approach.
The great thing about forums like this is the share of information , sometimes you can’t see the forest for the trees & all that is needed is someone to point you in a direction.
I have thought of approaching Agents & looking through properties they have for rent but I still may not come across one that is comparable.
I have also though that I could monitor the advertised rent in a number of property in an area , work out the average & assume that plus or minus $10 is ok.
But I am assuming , does anyone have any other approach ??
Originally posted by Domo:Can anyone advise me on how to approach this issue as loosing $10 per week makes a big difference over a year .
Possibly losing $10pw (and having a stable tenant) is heaps better than losing $100-200pw by having a vacant IP.
I have followed Domo’s approach in looking at rents.
I looked at online to let ads and rental lists. Then sorted them by type of property (eg 2 br unit, 3 br unit, 3 br fibro house, 3br brick house).
You soon get a rough idea of what is reasonable, though expect some variations (eg a new 2br f/f unit might rent for much more than an older 3 br house).
Note that some will stand out as being cheap or too expensive, so look at the majority around the middle.
Look at rental lists 2-3 weeks old and ring PMs to find out which have been filled – those that remain vacant could either be badly presented, badly located or have the asking rent set too high.
One of my places was to let for a while at $220pw with no takers. I dropped it to $210pw – again no takers. The vacancy rate had increased somewhat (it was the middle of winter).
My earlier research had similar places advertised between $200 and $240pw. However four weeks later $200 was the most commonly asked rent. So I dropped it down to $195 (ie slightly below the $200 median) and got a tenant. (maybe people doing internet searches clicked on $100 to 199 not $200-$299 option and/or $200pw was a psychological price point for many people).
Regards, Peter
Peter
By following your approach you can work out an estimate of what the rent should be , there is quite a bit of work involved to keep the data up to date.
Wouldn’t it be easier to take the advice of the PM , which is an estimate & if there is no takers drop the rent ???If you are not planning to be a PM is it worth trying to understand what they do ??
Or is it better concentrating your efforts on finding a good PM.
Once a good PM is in place your energy can be spent on looking for another property which involves allot of research. [computer]Originally posted by Domo:I have thought of approaching Agents & looking through properties they have for rent but I still may not come across one that is comparable.
Hi Domo,
Is this your FIRST rental property???
You seem to be focussed on the fact there is nothing “comparable”; are you allowing bias to cloud your practical judgement??? Of course we all think our properties are the best, or better than the next place, but realistically to a tenant, nice is nice, and nicer is great, but at the end of the day, it basically comes down to $$$ affordability.
I think you are on the right track though; do your research, check out what the going rental rates are, and work with this. If your place is so out of the others’ league, maybe you need to focus on campaigning these differences, and really promoting its uniqueness. But you have not stipulated what these differences are, hence I tend to think, you are allowing your emotional attachment to the property blind you to market demand (which BTW is an oversupply of rental properties at present).
As stated, you may need to drop your price in the short term in order to secure a long term tenant. This is not unusual under the current market.
All the best,
Jo
“here is quite a bit of work involved to keep the data up to date.”
Buy the local newspaper and look at rentals – quite easy.
Or go to the web site and find the nearest suburb:
http://www.realestate.com.au/cgi-bin/rsearch?a=bhp&t=renRgds.
Lucifer_auDomo,
It sounds as if you’re having a bit of analysis paralysis around this renting issue. You’cve asked about relying on PM’s to give you an estimated rental value, and it seems they have all given you the same figure- ten bucks less than you want. PM’s know the market- that’s their industry. As peterp said, forgoing the extra ten bucks a week, is preferable to having your place vacant for a few extra weeks per year.
In terms of choosing a PM… well, they’re just people trying to do a job like the rest of us- much of a muchness, I reckon. Problems often start when a tenant falls behind in their rent… and that’s a problem with the tenant- NOT the PM. I think PM’s panic when that happens too- but sometimes it’s hard to get blood out of a stone. Sometimes the problems can be with the owner- not the PM. Mutual respect goes a long way.
What are you basing your extra $10 figure on? You must have developed it somehow. Has your property got any additional features that others don;t have? If it has a LUG or something other properties in the area don’t have, then you could justify it to a tenant. But if you’ds just like an extra $10 rent… then you might have to be a bit more realistic about what the market will pay.
kay henry
Originally posted by Domo:Peter
By following your approach you can work out an estimate of what the rent should be , there is quite a bit of work involved to keep the data up to date.
Wouldn’t it be easier to take the advice of the PM , which is an estimate & if there is no takers drop the rent ???Yes it can be a bit of work, but it’s all part of due diligence and I regard it as important. I do seek advice from my PM but ensure that it’s not my sole source of info.
Because yield was an important reason for buying this particular IP, it was important for me to establish which types of properties have good yields and low vacancies BEFORE I purchased.
Also the PM I proposed to use was from the same REA agency as I purchased from. Therefore I considered it desirable to do as much independent research as I could. Also note that selling agents will often give a slightly higher rental estimate than PMs.
I hate vacancy. For as long as I have a vacant IP, I will be comparing the rent I set with others to ensure that mine is attractively priced compared to others.
But when my properties are all full, I’m not contemplating further purchases in that area, and there are no lease renewals for a while (like now!) I slacken off and don’t look at rental lists too often : )
Regards
Peter
Monopoly
When I say I can’t find a property that compares , I mean one that looks similar.
When I looked up rentals on the internet , I searched on 2 bedroom unit with garage , there was a difference of $60 per week between the lowest & highest . So I thought I would try to find one that looks the same , I couldn’t so I had nothing to compare with which took me back to square 1 an estimate.I am starting to see that the market makes the decision & once the price is within the market rate there will be takers.
Hey Domo,
I understand what you mean (well, sort of). That is, okay I understand you are trying to get a fair comparison between yours and other 2 bedder units with a LUG, and I would assume others do exist as you have mentioned. But what do you mean “that looks similar”??? I mean, is yours an architecturally designed facade, or what EXACTLY is it that makes it unique, other than it is yours???
A house is a house, and a unit a unit (basically) sure there are differences, some rendered, some older styles (say 60’s or 70’s) or tuscan or contemporary etc etc.
All in all, most tenants don’t care what the outside looks like, it’s what the place has to offer. For instance, in your unit’s case, the garage, 2 bedrooms, fully furnished??? or maybe polished floor boards??? or euro stainless steel kitchen appliances??? You have not really said WHAT it is that distinguishes it from the others; in short, why would I as a potential tenant be more impressed with yours over the one down the street, which is also a 2 bedder with a LUG????
To say, it simply doesn’t compare because nothing else LOOKS LIKE IT doesn’t make practical sense to me at all!!! [blink]
Jo
Hi Domo!
Ring up a few PM in your town and tell them you are thinking of moving out there soon due work oppurtunities and tell you need a 4 bedroom house with garage etc (Whatever your house has) and then ask them what they think that you will have to pay in rent for a house like that…
Do the same thing for all the agents and you should have a fairly unbiased idea of what rent you can expect…
I have found that when RE agencies provide rent valuations for lenders they more often than not under quote – as they do not want to put anything in writing that they can not easily achieve and justify should something hit the fan later on.
Hi Domo
You would get close to the mark if you did all your homework as per the other posts, then spend a Saturday looking at 5 rental properties which most closely resemble yours.
If you can’t find 5, then you are in luck, because the tenants won’t find them either.
Then choose rent level in conjunction with your chosen PM, set a rent review for 6 months hence, and get it on the market asap, so it can start working for you.
good luck
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Originally posted by Monopoly:Hey Domo,
I understand what you mean (well, sort of). That is, okay I understand you are trying to get a fair comparison between yours and other 2 bedder units with a LUG, and I would assume others do exist as you have mentioned. But what do you mean “that looks similar”??? I mean, is yours an architecturally designed facade, or what EXACTLY is it that makes it unique, other than it is yours???
A house is a house, and a unit a unit (basically) sure there are differences, some rendered, some older styles (say 60’s or 70’s) or tuscan or contemporary etc etc.
All in all, most tenants don’t care what the outside looks like, it’s what the place has to offer. For instance, in your unit’s case, the garage, 2 bedrooms, fully furnished??? or maybe polished floor boards??? or euro stainless steel kitchen appliances??? You have not really said WHAT it is that distinguishes it from the others; in short, why would I as a potential tenant be more impressed with yours over the one down the street, which is also a 2 bedder with a LUG????
To say, it simply doesn’t compare because nothing else LOOKS LIKE IT doesn’t make practical sense to me at all!!! [blink]
Jo
Monopoly
You have made a great point people live inside & the features inside will be the selling pint !!!!
[thumbsupanim]So would it be more realistic to find a place with the same features eg 2 bedroom , lockup garage, find out what it’s renting for then if my place has extras eg polished floor boards …
adjust the rent if possible.When you are on a mission it is easy to have tunnel vision & it’s a great help to have someone point out a few obvious things , thanks for the help Monopoly [thumbsupanim] [thumbsupanim]
Originally posted by Grreg:Hi Domo!
Ring up a few PM in your town and tell them you are thinking of moving out there soon due work oppurtunities and tell you need a 4 bedroom house with garage etc (Whatever your house has) and then ask them what they think that you will have to pay in rent for a house like that…
Do the same thing for all the agents and you should have a fairly unbiased idea of what rent you can expect…
I have found that when RE agencies provide rent valuations for lenders they more often than not under quote – as they do not want to put anything in writing that they can not easily achieve and justify should something hit the fan later on.
Grreg
It sounds like a good way to get a rent estimate.
You could then get a few PM’s in to look at the place & at that point discuss any extras that may justify raising the rent from the initial estimate.Thanks
Things are starting to become a little clearer !!!![specool]Originally posted by thecrest:Hi Domo
You would get close to the mark if you did all your homework as per the other posts, then spend a Saturday looking at 5 rental properties which most closely resemble yours.
If you can’t find 5, then you are in luck, because the tenants won’t find them either.
Then choose rent level in conjunction with your chosen PM, set a rent review for 6 months hence, and get it on the market asap, so it can start working for you.
good luck
cheers
thecrestthecrest
You have made a great point , if there are not allot of properties that look the same or have similar features this may be an advantage as the property may stand out & make it easier to rent.
[specool]No problem Domo,
Always (as are most people here) happy to help.
Let me give you an example (I should have done this earlier).
I bought a place not long ago; a 60’s style house, very run-of-the mill type that you would expect some little old lady with blue rinsed hair to step out of. Except for the manincured garden with its beautiful floral arrangements, the house was pretty much as all the others in the street; simple, solid, but moreover just “average”. HOWEVER, when you stepped INSIDE that was another story!!!
The whole house had been gutted, with a total kitchen reno (euro stainless steel appliances, dishwasher, sensor lights, high gloss cabinets with glass panel doors with lights inside the cupboards…very swish!!!) The bathroom likewise housing a full spa, latest trendy tapware, double shower; the lounge/family area had a gorgeous open fire place with rendered mantel-piece; throughout the house were polished floor boards that you could see your reflection in!!! You with me??? Basically the whole house looked like a display home showcase!!!
The bottom line was, I had people offer me more than the rent I was asking, one couple even offered $50 p/w more (but alas, I had agreed to sign it over to another applicant!!!)
Tenants want COMFORT (heating, cooling, carpets), CLEANLINESS, NICE is good (which is what mine was), but PRACTICALITY is BETTER!!! If your 2 bedder unit has for example 2 living areas, open fire place, polished floors, lots of storage, brand new/updated kitchen appliances, modern/update bathroom, LUG with say remote control (instead of manually opening garage door) it stacks up to attracting potential tenants. The way I look at it, ask yourself, “would I or is it nice enough for me to live in it???” and if you can answer honestly “yes” then you should be pretty right!!!! You see where I am going???
Finally, yes people live INSIDE and that is what matters, at the end of the day, the exterior, albeit may have street appeal, it won’t keep them dry and/or warm when it rains!!!
I know this is pretty long winded, but I hope it helps!!!
Jo
Monopoly
You have helped heaps.You have started me thinking [tired] !!!!!!!!
My next step will be to list what I think are the features of the property so that I can point them out to the PM & so that I get into the mind-set of looking at properties from a functional point of view…. [thumbsupanim][thumbsupanim]
I have received lots of help from this forum , I hope I am also helping some people by asking these obvious questions & getting some great responses…
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