Hi,
I have recently purchased an IP from an agent, who estimated that property would rent for $330pw as indicated by their property manager. The property, whilst clean and tidy was very dark due to wood panelling etc and is approx 30yo. On the bright side it is (I believe) very well located and in position to provide good future capital growth. I decided on minor renovations, including plastering, extensive painting, new lights, and appliances ($10k). Looking much better now! I reviewed rentals in immediate area and believed that $330 was achievable, if not more due to the renovations. The same agent is now managing, it has been vacant for a month and telling me that $330 is too much for the property, have dropped rental advertised to $300 with no luck. I speak to PM twice a week and feeling somewhat disappointed.
I am aware of buyer beware, and had believed that I was entering into a very good property, now I am feeling somewhat unsure. Have had another agent through who had indicated a range approx $50 – $80k higher than my purchase price.
Would appreciate some advise, commentary around this situation.
Perhaps the rental market is quiet in your area.
I think I would be speaking to some other PMs to see what they think is possible. Check the advertising and also have a look at what is available for similar money.
Remember that to let it for less can often be smarter than having it empty for an extended period.
I hope it all resolves shortly for you.
Kindest regards,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks for your response. Been vacant for one month now, getting jittery, considering putting on the market????? and see if it is worth selling and taking short term profit. I did buy it for the long term though. What are your thoughts on this?
Sounds like a reaction born of fear. It will rent. Maybe at a lower price.
Keep sight of your original plans and goals.
Remember to learn stuff as you go along and keep cheerful regardless!
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Much appreciated, will hang in there!
Hihopes,
This has happened twice to me before. I solved the problem by taking immediate action. My suggestion is do not sit there waiting for your PM to “promise you the world and deliver squat”.
This is what happened the first time…
Bought house from agent who told me it was a wonderful family home which would rent for max of $ 420 p.w. At settlement when I pushed them harder they said the market had changed slightly and I wouldn’t be able to command any more than $ 400 p.w., but more realistically $ 380 p.w. Talk about conditioning me down !!!
Decided to leave them with the downward spiralling promises and advertised the place myself for $ 450 p.w. Placed one ad which cost $ 16. Went to a great extent and spent 4 hours in the morning sweeping up the front yard and inside…didn’t spend anything except sweat. Five couples came through in the hour it was opened, and that afternoon signed up a Shell ex-pat engineer for 2 years, starting at $ 450 p.w. with an escalation clause in there at CPI or 3%, whichever was greater, for the 2nd year. I grew in confidence that day in negotiating with people and my estimation of PM’s went through the floor somewhat.
Second time around….
Bought a small but tidy 3×1. Agent’s PM said they would love to manage the place during the settlement. They issued a written quote that the prop. would command $ 230 – 250 p.w. We were unsure of the figure, but calculated what we would get after all their deductions…worked out at $ 207 p.w. – not happy….Fell back on my intuition and experience.
Advertised the place the next Saturday (cost another $ 16…not happy) for $ 380 p.w. and signed up a tenant for 12 months on $ 350 p.w. PM found out about it when she called to ask if we wanted to sign up…she commented that “Oh, you’ve done OK I suppose”.
Makes my blood boil every time I read their brochures where they extol the virtues of only by using a professional PM can you maximise the return of your IP…poppycock I say !!!
As I’ve posted before, there is only person who is really interested in your IP – you.
Bottom line….take control of your situation – you’re in charge, not them. Don’t meekly sit by wringing your hands in frustration that they have not rented it out yet.
Go get ’em tiger.
Cheers,
Dazzling
“Go hard or go home”
Hi Hihopes
Why not try giving a weeks free rent at the higher end of your asking price. You could be surprised with the response to this.
Kerwyn.I agree with Kerwyn. A week goes quickly! Perhaps mention that for reliable payers each 6 months they get $100 voucher to spend on making the house their home?
Redhaven.
“I alone know the plans I have for you, plans to bring you prosperity and not disaster, plans to bring about the future you hope for.” ~ GOD ~ (Jeremiah 29:11)
Agree with DAZZLING have a go at taking matters into your own hands if you are not happy..you could probaly write a better AD for your IP anyway. Bill (from this forum used to write some beauties)PLUS your motivation is higher-you own it! I’d rather take a $20-30 loss each week than a $300.
LASTLY compare your IP and rent to similair IP’s in the area“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorRedwing and Dazzling are spot on. You need to go out and get some accurate information about rental values in your area as a starting point. Armed with this information you will be confident of the product you are showing to prospective tenants.
.
Is the property local to you, interstate or overseas?Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Remember that at $300p.w. and 7% management fee the PM is only making $21 a week from managing your property. Hardly an incentive to leap out of bed each morning and shout the praises of your IP from the rooftops.
You could perhaps give them a deadline to get a tenant (and also set a minimum rent) then move on to a different PM if they can’t do it. Or advertise it yourself. You can even engage the PM just to manage it and take care of the day to day issues after you have secured the tenant. You shouldn’t have to pay letting fee in this case.
Would be a good idea to do some research on current rental rates in the area. Not sure where it is but realestate.com.au has rental listings, and you can always try the local paper.
Regards,
eeshole
I do fully concur with buyer beware. I asked a real estate agent for a +CF property and they gave me a 1 bedrm 1 bthrm resort type apartment… the thing was it was designed for tourists that have a short stay and rent return was really good; approx AU$500 for 3days but was based on best case scenario.
hihopes,
We had a similar situation to dazzling. We bought our recent IP and rented it through the same agency because the selling agent told us we could have 2 months free management if we go through them (the rental team apparently don’t like him doing this). Well, you get nothing for free and it’s what we got…NOTHING. No calls, no updates and no tenants. We started to believe that they wern’t doing anything with ours because they wern’t getting any commission and showing other properties instead. After 2 months we changed agents and had in rented within a week.
You soon sort out who’s playing with you.
K&R
You can dream, so dream out loud. – Bono (Acrobat)
Dazzling…you are on FIRE !!! I agree with you too….
Recently bought an IP & apart from the 9.9% in fees the PM offered to charge us for their “expertise”, they said we would only get $315/wk.
We placed a $60 add in the paper 2 weeks before settlement and we had a tennant paying $360/wk + pool maintenance costs, the day after settlement.
cheers,
JasonWell done Jason and Dazzling.
I suppose you culd offer an incentive to the agent as well. eg. Offer to pay a small bonus if the place is rented within X days. etc
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
originally posted by Dazzling:
advertised the place myself for $ 450 p.w. Placed one ad which cost $ 16.originally posted by JasonBourne:
We placed a $60 add in the paper 2 weeks before settlement and we had a tennant paying $360/wk + pool maintenance costs, the day after settlement.Looks like we ned to start an “Advertising thread!
‘Please post your adds here and give the research done prior and the results.Would be good for begginners and experienced alike! Just a thought……..[blush2]
Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonC@34,
Mate – c’mon…a 3 or 4 line add describing the basic attributes of your IP as a hook to prospective tenants…surely people can do that to some degree. Holding people’s hand in a technical matter is one thing – but surely everyone could have a pretty good crack at this simple task themselves. You are denying people the opportunity to grow in confidence and knowledge.
Hihopes,
Wassup ?? Do you have a lease signed yet ??
Cheers,
Dazzling
“Go hard or go home”
Having a vacant property is abit nerve racking especially if it your first property.
We have three IP’s and the first one did not let straight away because we choose the wrong agent. Have learnt now to use a minimum of two agents at the same time to market it. Insist on two month notice clauses so that you have a reasonable time to find replacement tenants and after one month if the place has not gone use your own advertising in local papers too. As I do not live near my IP’s I haveto rely on the agent to show the prospective tenants around and to manage them but if I have found them, I only pay discounted agency fees.Hang in there, your experience will grow
We had a similar experience. Getting really nervous about the property not renting and the agent telling us they were waiting for the right tenant. We waited 4 weeks and just about to shift agents when we got a tenant. But this was no ordinary tenant, this was a dream tenant! went to an inspection once and the house was better kept than mine! Unfortunatley, listening to a financial advisor, we sold. That was 5 years ago and those same tenants are still there. [agro3]
buying with a good tenant in place is also good as they tend to want to avoid the hassle of moving so a reasonable rent hike for minor cosmetic things is on the cards.
I use managers because they are nice to deal with, totally proactive and if maintainance is needed our IPPY agent gets quotes before calling to save me time and hassle. Managed one IP for 6 months and the tenant was always late and the measly $10 we saved weekly wasnt worth the hassle of STD phone charges to constantly chase payment. Got an agent to manage it and she took no prisoners. 4 Months later on her recommendation we kicked them out.
She did the court appearances and it was like gliding on a glass lake, very smooth. So with several properties in 3 states and different areas as well it is worth our while to get it managed. Sure some have been vacant but they dont usually take long to fill.
advertise yourself if you must, but I would include movie tickets and a bottle of wine on a signed contract after references are checked.
Good Luck whatever you do. The more you have the less you worry about the odd vacancy, as percentage wise it is less with 5 IP’s(20%) as it is with 1(100%).
Have fun
DD
PS146 Certified Financial Planner and Buyers Agent
Don’t sweat the small stuff,and it’s all small stuff!!
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