I seem to be having trouble getting people in to see my property. So therefore I am finding it difficult to rent out.
I must be advertising to high. What is the right price.
I repay $550 a week for my mortgage and my strata is high at $75 a week. Equals $625
How much should I be advertising for to get the right return?Any advice would be very helpful.
The market rental value has no bearing on your mortgage repayments. Have you had a free rental assessment done by a potential property manager or looked at comparable rentals on the web ? This is what I would be doing to set the rental value.
Link us the property then you will get an answer. Maybe the price is wrong/the photos are bad/it's not worded properly/it's in a poor location/it's too small???
Anybody's guess.As mentioned your repayments have NOTHING to do with it.
A RE agent asked me "how much rent do you want?" I said $1000 a week. She said "WHAT!!". I said yes what I want is irrelevant isn't it.
Look on RE.com and see what the rents for the area ARE.
Catalyst wrote:Look on RE.com and see what the rents for the area ARE.That would be the first place I’d be looking.
What are comparable properties in the area renting for? How long have they been on the market for?
Can you provide a point of difference such as allowing pets?
I suspect your problem stems from the price you’ve got it listed at. As others have mentioned – your repayments, etc have no bearing on the rent that should be charged. That’s determined by the market – the market is telling you that the property is either priced to high, is not appealing or both.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi maz_lc
The correct answer is know your market. I suggest you take an open eyed look at your local fruit market for a good guide .. its a commodity market .. a different commodity … but its a good idea at how to deal with a commodity (in your case rent)
The fresh fruit .. unbruised .. ripe .. looks great? Its always at a premium .. it goes quickly and its easy to sell.
The last of the bunch .. end of the day? The grocer wants to get rid of it before it goes rotten .. he marks it out at a discount.Your property may not be finding its niche, you may not be advertising it correctly. And your thought that the amount you pay should have some bearing on the renter .. is irrelevant. The renter will pay market rates .. or if its more desireable (fresh fruit) he'll pay a premium for it. The amount you pay to the bank is between you and the bank, not the renter.
At a certain level you'll get people in the door. As long as the property is well located .. well facilitated and is easy to live in .. people will only be too happy to pay the going rate to get in there. If you want to make comparisons .. go to a real estate agents window (or rental list) to get an idea of where your property sits in the current rental market. Advertising well above the market rate .. people can make comparisons. You are operating in an active and comparable market and supplying residential accomodation .. you should respond as such.
I'm with the rest of the rabble:
- What you are repaying/outgoings has no bearing on the rent that can be earned (ie that's called negative gearing if there is a shortfall between rent & costs)
- Check out the competition/research – what is on the market in the area? how does it compare to your property? what is the vacancy rate in the area/demand?
- Get a second opinion – ie speak to a couple of the local real estate agents, waste their time & get their opinion. You never know, you might end up using one of them.
- Adjust your asking price according to your research/agent advice.
- Drop the rent to get a tenant, you will never get back the value of 2-3 weeks lost rent when hanging out for the last $10 per week.
- Swap to an interest only loan to reduce your repayments.
Didn't you do the research first? I can hear at least one bubble popping.
I did the research prior to purchasing and continue to check online at add in the area. My agent said he would be able to get $490 for it. It is now advertised for $470.
I have decided to change agents at the end of the week, as I think they are letting me down in the advertising. They won’t listen to my suggestions and I have had a number of them.
I have an add on gumtree that I placed and that is getting more notice, in comparison to the agents add on websites such as Domain.
Other properties advertised are in a similar price range and there aren’t to many listed in the area.
My question about the return is regarding negative gearing, you can’t claim more than you pay on tax, so if your rent is to low you are not earning income, you are spending additional income. So then there isn’t room to claim on deductions such as wear and tear.
Thank you all for your advice, I will take it all on board.maz,
does you agent collect fees from you even if the place doesn't rent?
Ummester, As an ex real estate agent, I have never heard of Agents collecting fees when a place is not tenanted. They charge you letting fees, but not holding fees when empty.
regards
No they don't charge up front fees. However if you terminate the contract they may charge you one weeks advertised rent.
However due to them getting one person through the door, I think they will let that fee go.A common mistake made by novice landlords is a lack of preparation or work on the home before putting it on the rental market. The reality is, however, that the most discerning prospective residents, who normally are your ideal renters, demand attention to detail.
Outside condition of the property. This is the part that will formulate a “first impression.” Make sure the shrubs and trees are properly trimmed; the grass is cut and tidy; the walks and driveway are edged and groomed. The exterior paint condition is critical as well. Peeling or dirty exterior paint is a sign of an untidy house and not what you want to convey in your first impression.
brokersperth wrote:Make sure the shrubs and trees are properly trimmed; the grass is cut and tidy; the walks and driveway are edged and groomed.Well said. When looking for a new tenant (after a friend had been in it for 5 months or so), the garden at my place was not in the best condition. I made the mistake of not doing the gardening before the agent scheduled an open for inspection. In the hope that my previous tenant would have done the gardening, I potentially lost out on most of my applicants.
The result? I had over 20 groups through (more than 40 people) in a single inspection, all of them who were visibly impressed and in awe at the condition of the house inside, and at how cheap the rent was (to the point some were wondering if there was anything wrong with the house) but they then stepped out into the massive overgrown backyard and thought, 'This is gonna be a full-time job!'
In the end I had 6 applicants, if that, the vast majority of whom I wouldn't consider renting to for one reason or another (ie. potentially 'high-risk' type tenants). I got the gardening all done at my own expense before the new tenant moved in. Cost me less than $200 even for a day of work (which amounted to nearly 20 large bags of green waste). Of course, currently I'm blessed with a great tenant, but I sometimes imagine what could have been achieved if I ensured the gardens were tended to before I had the OFI.
maz_lc wrote:My question about the return is regarding negative gearing, you can't claim more than you pay on tax, so if your rent is to low you are not earning income, you are spending additional income. So then there isn't room to claim on deductions such as wear and tear.What????
Must be crazy !!! to claim more than tax you pay.
It depends the location of your property…
one of my IP 2006 = $320/week; currently $495/week and will increase it to A$550 next year… hopefully will be cash flow positiveIt depends on the location; value; proximity; condition; presentation; real estate management; supply/demand; etc
"In the end I had 6 applicants, if that, the vast majority of whom I wouldn't consider renting to for one reason or another (ie. potentially 'high-risk' type tenants)"
what do you consider high-risk tenants?
Wynyard wrote:what do you consider high-risk tenants?To flip the question around – I find the better tenants tend to be those with property manager referees. Having a chat with a PM that can vouch for a potential tenant goes a long way.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Wynyard wrote:"In the end I had 6 applicants, if that, the vast majority of whom I wouldn't consider renting to for one reason or another (ie. potentially 'high-risk' type tenants)"what do you consider high-risk tenants?
Like people who were in a job whose wages were barely able to cover just the rent, let alone their daily expenses. For their sake, I wouldn't rent to them. It's just insanity. Why rent something you can barely afford?
Even a young boyfriend and girlfriend moving in for the first time can be high risk. They suddenly find that they don't like each other anymore, don't like staying with each other, have arguments, do damage to the house or even break their lease.
That said, even the 'best' tenant (on the surface) can become very high risk. All our circumstances in life stand to change. We could lose our jobs, get involved in an accident and be severely crippled, or we could be the target of a lawsuit that causes us to lose everything. The process of finding the 'best' tenant is really a process of reducing risk to a level we can tolerate.
I have always left it to the PM to nominate the rents and select the tenants and so far that has worked out well for me.
Just an update.
Out of no where I had a number of people come through the property this week. Most off my add on Gumtree.
The real estate gave out at least three applications that I know of. So things are looking up. However I am pretty sure I have done most of the work.
So I have been doing a lot of research on 'getting the right rent', which many of you have enlightened me that it's not an aim it the current market (other similar properties in the area are still at a higher advertised rent). I now realise I could drop the rent further and I will still be getting a good ROI. I am pretty happy about this.
I also surveyed people at work about which add do you find more appealling. I found people were appealling more to the photo's I had taken with my poor quality camera and furnished apartment. In comparrison to the sales photo's. I was surprised about this.
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