I am looking to undertake a renovation on a unit that i may purchase this week, and will look to rent it out thereafter. Do you know the best way to gauge what the likely new rental rate could be? Can you ask a real estate agent from the rental department to make a suggestion even though you have not signed them on a property managers (yet)? And could you utilise their knowledge and take them through your property to get a better idea of what they think is worth renovating or not (ie what will bring in my rental income or is it just overcapitalising) and to help understand most likely target market?
thanks!
The best way to judge if an improvement will make the difference in a purchase is to gage the market properly.
How do you make that judgement call? Off existing knowledge. Thats a mix of agents .. listed rentals .. and previous rentals.
So what you grab is a snapshot of the market at this point in time .. and what your comparables in the market or recent listed rentals have been. Thats the only way you verify your expectations.
Sometimes not renovating is the best call in tighter markets. Simply because the market changes from greater expectations to working more towards value renting .. bang for buck. Asking more may not produce the desired results. Validate for yourself by talking to agents and property managers especially whether there exists enough demand in your NEW range for your property to lettable at this new price. But upgrading for the long term .. improves value. Make the better judgement calls by questioning the current market and future demands. Thats the type of knowledge that an agent has.
You can do that but I find mostly Real Estate Agents don't have vision. ie -they can't see what it WILL look like. Look on the net at what's available for rent. That will give you an indication. Look at what renovated places go for. It's hard for an agent to know because they don't know the quality of your work. You may say "new kitchen" but it may be a cheap laminate one.
Also you'll get different rates from different agents. Some are lazy and rent cheap so they don't have to do any work. One we did, one agent said $300pw. There was NO WAY I was renting it for that./Another said $330-340. We put it on at $340. First person that saw it took it.
Whenever I've asked the agent they always saysa price. But when they see it finished they go WOW! you'll get more. We have always got above average rent for the area on our renovated houses. We do a great job (even if I say so myself) to a high standard. Our last 4 have rented to the first person who have seen them (we ask top rent for the area).
Thanks for the feedback. I had taken a look at other properties in the area of similar finish and offering and they are renting out for $400pw. The agent that is selling the house says is rental agent thinks it could get 465-$475pw, but i haven't found any evidence yet. Think I'll speak to them direct and ask them to show me examples or justify where they get these figures from.
taIf you are talking to the selling agent, forget it – all is rosy (deduct about 20%). Talk to a property manager either from that same agency about vacancy rates, demand, waiting lists etc or preferably speak to a PM from another agency and say you are looking to either lease out a X bedroom refurbed house or looking for a rental and what range you would be willing to pay.
I agree with Scott. Selling agents often have NO idea of rents (honest ones will tell you that).
You need to speak to someone in the rental section.As a former agent who is also a property investor- Scottnomates, Xndrew and Catalyst are all correct. Well not me of course but agents I worked with or came across had no vision, no idea about investing and no idea about what you need in rent. Best way as Catalyst suggests is to go to another agent and ask what rental yield- and look on the net at comparative rental prices. You also need to take into consideration who you will be renting to and what they can afford. For example – a unit with 2 bedrooms might get more than a 3 bedroom house in the same area because the house will more likely rent to a family with 1 income- the unit to a childless couple with 2 incomes.Bigger does not always = more rent.
Your all right, I called a property manager from another agency and even to get $450 is not really possible. For what the selling agent quoted (“up to $475”) for, the PM said $400 – $430. ….a lesson learnt from me.
p.s. the property agent was very helpful, happy to have a chat so will be good to bounce these rentals off them from time to time till i make a purchase.
Thanks WomenInPropMelb for the inside from an agents perspective…..good point on the 2 bedder may be better than a 3 bedder.
I love lessons learned without having to make mistakes to learn them.
Keep asking and learning.
The saying "you learn from your mistakes" is true but I prefer to learn them BEFORE I make the mistakes. Or learn from others mistakes. This is where forums and meetups (networking) are invaluable.Catalyst wrote:You can do that but I find mostly Real Estate Agents don't have vision. ie -they can't see what it WILL look like. Look on the net at what's available for rent. That will give you an indication. Look at what renovated places go for. It's hard for an agent to know because they don't know the quality of your work. You may say "new kitchen" but it may be a cheap laminate one.Also you'll get different rates from different agents. Some are lazy and rent cheap so they don't have to do any work. One we did, one agent said $300pw. There was NO WAY I was renting it for that./Another said $330-340. We put it on at $340. First person that saw it took it.
Whenever I've asked the agent they always saysa price. But when they see it finished they go WOW! you'll get more. We have always got above average rent for the area on our renovated houses. We do a great job (even if I say so myself) to a high standard. Our last 4 have rented to the first person who have seen them (we ask top rent for the area).
Hi Catalyst
I disagree. As a property manager prospective landlords often consult us for advice on renovations and possible rental return. At Realmark, we work quite close with our sales department to help investors with such projects. I personally am very active in advising my clients how they can add value and increase their yields.
regards
Veritytiger_ra wrote:I am looking to undertake a renovation on a unit that i may purchase this week, and will look to rent it out thereafter. Do you know the best way to gauge what the likely new rental rate could be? Can you ask a real estate agent from the rental department to make a suggestion even though you have not signed them on a property managers (yet)? And could you utilise their knowledge and take them through your property to get a better idea of what they think is worth renovating or not (ie what will bring in my rental income or is it just overcapitalising) and to help understand most likely target market?thanks!
Hi Tiger, yes absolutely you can contact agents to provide a rental estimate on a prospective purchase. I often get asked to provide two estimates – one as is and another with refurbishments. As with any industry there are good and bad property managers or perhaps I should say experienced vs inexperienced. If they dont appear confident in their estimates with you, seek another opinion but most importantly, always do your own research as well.
regards
Verity (Realmark Real Estate)VerityHodge wrote:Catalyst wrote:You can do that but I find mostly Real Estate Agents don't have vision. ie -they can't see what it WILL look like. Look on the net at what's available for rent. That will give you an indication. Look at what renovated places go for. It's hard for an agent to know because they don't know the quality of your work. You may say "new kitchen" but it may be a cheap laminate one.Also you'll get different rates from different agents. Some are lazy and rent cheap so they don't have to do any work. One we did, one agent said $300pw. There was NO WAY I was renting it for that./Another said $330-340. We put it on at $340. First person that saw it took it.
Whenever I've asked the agent they always saysa price. But when they see it finished they go WOW! you'll get more. We have always got above average rent for the area on our renovated houses. We do a great job (even if I say so myself) to a high standard. Our last 4 have rented to the first person who have seen them (we ask top rent for the area).
Hi Catalyst
I disagree. As a property manager prospective landlords often consult us for advice on renovations and possible rental return. At Realmark, we work quite close with our sales department to help investors with such projects. I personally am very active in advising my clients how they can add value and increase their yields.
regards
VeritySounds like you are great at your job but unfortunately you are in a minority. Just because you do it doesn't mean everyone does. So you can disagree with me but what I said is based on my personal experience and that is fact (for me). Many agents I deal with don't know what the other department are doing. One place I bought the agents hadn't transferred the rental over. Silly me assumed that as it was rented by the same agent it would be done. The sales team didn't think to notify the rental team. Then they were surprised when I rented it with another agency. They still ring me everytime I buy a new property to see if I'll go with them.
Catalyst wrote:VerityHodge wrote:Catalyst wrote:You can do that but I find mostly Real Estate Agents don't have vision. ie -they can't see what it WILL look like. Look on the net at what's available for rent. That will give you an indication. Look at what renovated places go for. It's hard for an agent to know because they don't know the quality of your work. You may say "new kitchen" but it may be a cheap laminate one.Also you'll get different rates from different agents. Some are lazy and rent cheap so they don't have to do any work. One we did, one agent said $300pw. There was NO WAY I was renting it for that./Another said $330-340. We put it on at $340. First person that saw it took it.
Whenever I've asked the agent they always saysa price. But when they see it finished they go WOW! you'll get more. We have always got above average rent for the area on our renovated houses. We do a great job (even if I say so myself) to a high standard. Our last 4 have rented to the first person who have seen them (we ask top rent for the area).
Hi Catalyst
I disagree. As a property manager prospective landlords often consult us for advice on renovations and possible rental return. At Realmark, we work quite close with our sales department to help investors with such projects. I personally am very active in advising my clients how they can add value and increase their yields.
regards
VeritySounds like you are great at your job but unfortunately you are in a minority. Just because you do it doesn't mean everyone does. So you can disagree with me but what I said is based on my personal experience and that is fact (for me). Many agents I deal with don't know what the other department are doing. One place I bought the agents hadn't transferred the rental over. Silly me assumed that as it was rented by the same agent it would be done. The sales team didn't think to notify the rental team. Then they were surprised when I rented it with another agency. They still ring me everytime I buy a new property to see if I'll go with them.
Poor communication (like between your sales and Pm team) is the number one complaint in the industry. You definitely get what you pay for. Unfortunately there are some agencies out there who let the reputation down for the rest of us who actually have a career in the industry – not just a job. I am also an investor with two properties under my belt so a little personal interest in these matters helps! Your welcome to contact me in the future if you like
VerityHodge wrote:Catalyst wrote:VerityHodge wrote:Catalyst wrote:You can do that but I find mostly Real Estate Agents don't have vision. ie -they can't see what it WILL look like. Look on the net at what's available for rent. That will give you an indication. Look at what renovated places go for. It's hard for an agent to know because they don't know the quality of your work. You may say "new kitchen" but it may be a cheap laminate one.Also you'll get different rates from different agents. Some are lazy and rent cheap so they don't have to do any work. One we did, one agent said $300pw. There was NO WAY I was renting it for that./Another said $330-340. We put it on at $340. First person that saw it took it.
Whenever I've asked the agent they always saysa price. But when they see it finished they go WOW! you'll get more. We have always got above average rent for the area on our renovated houses. We do a great job (even if I say so myself) to a high standard. Our last 4 have rented to the first person who have seen them (we ask top rent for the area).
Hi Catalyst
I disagree. As a property manager prospective landlords often consult us for advice on renovations and possible rental return. At Realmark, we work quite close with our sales department to help investors with such projects. I personally am very active in advising my clients how they can add value and increase their yields.
regards
VeritySounds like you are great at your job but unfortunately you are in a minority. Just because you do it doesn't mean everyone does. So you can disagree with me but what I said is based on my personal experience and that is fact (for me). Many agents I deal with don't know what the other department are doing. One place I bought the agents hadn't transferred the rental over. Silly me assumed that as it was rented by the same agent it would be done. The sales team didn't think to notify the rental team. Then they were surprised when I rented it with another agency. They still ring me everytime I buy a new property to see if I'll go with them.
Poor communication (like between your sales and Pm team) is the number one complaint in the industry. You definitely get what you pay for. Unfortunately there are some agencies out there who let the reputation down for the rest of us who actually have a career in the industry – not just a job. I am also an investor with two properties under my belt so a little personal interest in these matters helps! Your welcome to contact me in the future if you like
Yes poor communication is a big problem. Not MY sales and PM team thank goodness. I have bought properties off them (I buy for price not who's selling it). Mind you I have achieved some great bargains because of bad sale people.
I'm picky with my PM's. A poor PM can make the difference between making and losing money, not to mention the hours of wasted time and energy fixing unnecessary problems. I'm happy with the PM's I now have (the ones I wasn't happy with, I got rid of).Where are you located?
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