Once you’ve successfully purchased an investment property, one of the most important factors is securing tenants at the projected rental figures you’ve used to crunch the numbers. Often this is an afterthought for investors, with so much focus being spent on securing a good price.
The importance of rent levels is critical to ensuring you have a solid long-term financial plan for your property portfolio. What if you’d planned to positively gear your property only to find out it will rent for $50 to $100 less per week?
How easy is it to find out a true rental market value? Check out any inner-city suburb throughout Australia and you’ll be guaranteed there’s a list of real estate agents who’d love to manage your property. All of these property managers should be experts on the market in that particular area. But most importantly, if they’re not the agent selling you the property, they won’t have a vested interest in over-estimating rents. This exercise will not only give you an idea of rent levels but also which agencies are switched on and know the market. Realistically the agency that doesn’t return your call for two or three days as a prospective client should quickly move to the bottom of your list of prospective property managers. How long will it take them to respond to a prospective tenant?
Start by contacting two or three active property management agencies in the area. Tell them exactly what your plan is and supply them with a copy of the floor plan or a link to the online ad. Don’t tell them what the sales agent has projected, as you don’t want their appraisal influenced.
Properties that already have a tenant in place may seem like a safe bet, but there are questions you need to ask. How long is it since the tenancy commenced? If tenants have been in a property for three years with annual rent increases, you may get a distorted view of rent levels once they’ve vacated – it’s quite common that their rent will have “overshot” the market. Also, the original rent achieved may have been in a buoyant rental market or it might have taken the agents six weeks of open inspections before they found a tenant willing to pay over-market rent. This, coupled with regular increases, could result in a nasty shock to an investor’s wallet. Even if there are tenants in place there’s no harm in still getting a property manager’s opinion.
For more information go to http://www.rentaltrends.com.au