Hi all,
I have recently completed a renovation of a block of four 2 bedroom units in Christchurch. The units have come up really well and on budget. However my rental manager has only managed to let 1 of the units out so far (2 months) – she is suggesting that I drop the rental on them to get them filled which is tempting as each week that passes is eating my profits – however my end goal was to on sell the block and take a profit.
My question is should I hold out for the higher rents that the block should achieve which will provide a higher resale value or just discount the rents and accept a lower profit or hold the property for a while and work on increasing the rents over time before selling.
Any opinions and ideas are much appreciated. Oh and Im in Auckland so Im not readily available to the properties to take control myself.
Cheers
AJBHi AJB,
Can you tell us some numbers,how much you paid for property how much rent are you trying to achieve for each unit. This may help with some of your questions.
Dom [biggrin]
Are the rents you want in line with the market for that part of Christchurch?
Hi AJB,
Is your gut feel that the rent is too high? If not … I’d set yourself a time limit and stick to it – say a month from now – so you can build in a worst case scenario and put it into your budget – and ask full price. The real estate agent sounds suspect if they’re not talking things over with you and offering advise and alternatives. Put some ads in the paper yourself. If there is a hospital or Uni or Tech or something around try putting some ads up on the notice boards.
You could try discounting one of the units when your month is up and see if it’s the rent that’s the problem with them not renting. It could be your REA. Sometimes they’re pretty slack in the lead up Christmas. Maybe get another REA on the case.
If you get the rents you’re after it could be easier to sell them as investment units down the track.
Cheers
Thanks for that numbers as follows:
Purchase of units $520,000
Cost of refurb $70,000
New valuation $680,000The one rented unit is rented at $260 per week. That is what I want to achieve for the others also.
The units are in Linwood which is not the best area in Christchurch but there is alot of redevelopment going on and it is 5-10 mins from the city centre. Close to a large shopping centre also.
Im tempted to agree and give the current rental manager till the end of Jan to get some action – I have been recommended another manager who sees no reason why they shouldn’t achieve the $260 pw asking price (this could be just all talk to get the business though).
Cheers
If you put to much pressure on the agent to rent it either by too high a rent or by threatening to go to another agent you will srew yourself, as they will get you a tennant. But it wont be one that meets the usually stringent criteria. (I used to be a property manager- seen it happen many times).
A strategy that always used to work was offering the first two weeks rent free for a twelve month lease. It lowers your inital rental figure but it makes your rent higher to onsell the property. You might lose $520 in rent but you will pick up $6000 or so (you do the calcs) in your sale price.
Hi AJB
A possible suggestion is to keep the rent at your ideal but to offer a rent free period, say a fortnight. On a per annum basis it may work out the same as a lower rent to the tennant, but would allow you to onsell with the higher rental agreement in place.
All the best
TSorry, just refreshed and saw condog suggested the same idea.
Thanks for all the ideas …. good news over the holiday period my rental manager has managed to rent two more of them. So now with 3 out of 4 gone the property is sitting cashflow neutral. Time to rent the last unit and then work on selling them.
Cheers
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