The usual way that property managers will estimate the rent return you should expect to receive from your property is by seeing how much rent is being charged by other investors in the neighbourhood. We take a very different approach.
We do a whole lot more than examine what tenants are paying for comparable properties. We have access to very smart data which will provide an insight into the suburb in which your property is located. By understanding your target demographic with careful consideration of their average income, we can set the pace and frequently achieve far better returns for our investors.
For example, we recently assessed an investment property in Belair where the owners had been told the best rental they could expect was $475 a week. We were able to rent that property for $550 per week.
Another example is a unit in Forestville where the owners were advised the most rental income they could expect was $290 a week. We found excellent tenants who were happy to pay $320 a week with a scheduled increase to $330 a week six months later.
Most property managers will secure a tenant on a fixed-term lease and then make life easier for themselves by letter that lease roll over to a periodic lease. We see this a lot with properties we take over from other property managers in Adelaide.
We do things differently.
We will renew every expired lease with another fixed period lease. Sure it’s more work for our office, but the benefits to our clients include better income through incremental rent increases and more notice required from the tenant if they want to move on, allowing us to minimise vacancy rates.
You’ve probably heard the same old advice many times; better to have a good tenant on a lower rent than a succession of tenants who pay more per week. Well our experience is very different to that traditional view.
We find that better quality tenants are usually hooper to pay more. And provided the rent increases are in small increments in line with market prices, there’s less chance of them going through the hassle of moving to save a few dollars. The important point, of course, is finding the right tenants.
Many landlords aren’t even aware of the disadvantage they could face by keeping the rent low “for a good tenant”. Inevitably most tenants will want to move on sooner or later. To do this, they will often choose to not wait for the expiry of their lease.
This will place the landlord in a legally binding position where they are required to find a new tenant at the same rent. Invariably it will then take 12 months or more to move that rent up to a fair market value, often resulting in a significant loss of potential income.
For example, we recently acquired a client in Torrens Park who had to replace a previous tenant at $240 a week instead of being able to advertise the property for fair market value of $280 a week. Their ultimate loss over 12 month will be over $2,000, far more than the turn-around cost of securing a new tenant.