Agents inflating rental prices

I went to check out a few properties today.

Saw the below house

https://www.realestate.com.au/prope...au/property-house-nsw-south+penrith-123466826

A bunch of others were there and I was staggered at the supposed rental that the agent was telling prospective buyers they would get for it. According to the agent you can get $430 pw. If you look on real estate for rentals in the area it's quite apparent that $430 is a dream. You might get $360-$400 max.

Then there was the "granny flat potential". People were sizing up the yard but failing to see that the side access is pretty crap for a granny flat and expecting a tenant to share a backyard with another tenant is a recipe for disaster. Especially if you're expecting premium rent for the area for that type of house.

I'm new to this but I've heard enough horror stories now with dual income and tenants coming to a blow over their differences. I personally wouldn't rent a house where I am expected to share a backyard with a stranger.

I reckon there's a lot of people getting ********ted to and not taking a good look before they leap into their grand plans. Just my 2 cents.

 

Yeah, this is pretty standard stuff out there. Buyer beware and all that.

 

Agents do not create the market, if it rents at that price then that's it's price.

We all push for as high as possible - yes I'm guilty of that, sometimes I get a dream price, other times I need to adjust. But I do push at the beginning of a marketing campaign.

 

The way i read Newbie1234 original post

Is that the property for sale is being "hyped" as able to get $460pw rental (in the market/for that area)
Hence why it is necessary to do your due diligence when buying an IP.

Hype to drive the selling price up, by any means..........

One could call this missleading

(My mother recently viewed a new corner development in Geelong, she was saying to the agent how she could have side gates put in so her caravan could go in the back yard, made a $735k offer that was accepted, gets the contract and there is a clause saying "absolutely no access from that Vic Roads street to property" )
Contracts returned unsigned, with a
Anything for a sale in some cases

 

lol newbie.....

I was there today, I overheard someone talking about the rent........don't you love how well the carpets etc come up in the snaps

I do not know what it would get, I was thinking maybe 4's the way it is (full use of all property), but I spoke to the main guy (not the one with the oil slick or the other, I think there was 4 of them) anyway, he did not BS me when I was asking about various areas.

I never listen to a sales agent regarding rentals.

Lot of people looking out west for investments, looked at another where the young guy exclaimed how good the return would be at nearly 4% .....

Also you could do a GF probably, but it would be bit cramped, but I have seen them in some pretty crappy spots all over Sydney.

 

Small world! Haha I was the lone lady with the pony tail and glasses, say hello next time we visit the same Penrith houses.

Did you see the deceased estate at Baronesa Rd South Penrith earlier in the day? Looked like brick but it was a cladding, you could hear people's disappointment. Tiny kitchen, definitely needed an extension but if you sunk 50-100k you'd struggle to get your money back. That area of south Penrith is a bit hit and miss.

15 Upton would struggle to get rent in the 4s - the rental market has slowed down as per a few property managers I was speaking to along with investar data showing rentals are sitting vacant for longer. There's a lot of choice for your money out this way and I wouldn't pick that house to rent if it was in the 4s.

I reckon a granny flat on that house would be a mistake. Ideally with a granny flat you should have a separated yard, entrance and parking spot to avoid tenants having to share anything. I had a guy at my work almost end up in jail after having a blue with the tenant in the front house who was dictating who could use the shared driveway. That's the last thing you want - plus seriously if you had a choice would you as a tenant want to share with a granny flat tenant? I know I wouldn't personally unless the rent was low to compensate for my troubles. I think people reckon they can plonk a granny flat on any block 500 Sqm + and all of a sudden it's going to be roses and rainbows. Pretty expensive mistake if it's done wrong.

See you around, I'll be hitting the open homes after our Gold Coast trip next week.

 

Was that you staring at me when I said to the agent your underestimating the rent bud ? lol

re the other, no, we were driving past after looking at one that was a bit out of our way & had 30 mins to kill, so just dropped. We covered the South West, West and into the mountains. I was hoping to go much further West, but not today.

I agree, I am not really up with the rentals in the area, but seeing so many are buying to invest, it seems a logical outcome. I also expect agents to talk things up, they win either way, but to be honest I have found many out West to be pretty good, sales agent wise that is.

 

Hi,

Just a couple of quick things! Rent is definitely determined by the market and as you said $430 is above market. However, every bell-curve has outliers on the top and bottom. Depending on how you present the house (especially the amenities that are important to renters) it shouldn't be too tricky to get the rent you want which I think is really the issue here not what the real estate agent says. It is the same with buying cars, just let the salesperson talk in the background while you decide for yourself and ask questions with quantifiable answers for example: how big is the block? how long has it been on the market? why is it being sold?

There are granny flats in Western Sydney that rent for $360-$400 a week purely due to location, the fact they are new, and they have good internal laundry facilities, kitchenette etc.

In regard to dual income: it could potentially be a good idea to "lightly fence" the different zones, this shouldn't cost too much either.

Best of luck with your search.

 

I've seen For Sale listings that contain rental estimates that are too high or too low.

My only guess is that the too high ones are to either:
- entice investors along with good returns, or
- secure the management post-purchase as they can achieve higher rent than other places have appraised.

Its worth ignoring the fluff in sales listings and doing your own market homework. It needs to be based on what others have rented for in the area, how long they've taken to rent and what features you have / haven't got. Using a PM only agency can be advantageous for this as getting optimal returns is their sole focus.

 

Yes I come across this a lot, stupidly over estimated rentals from selling agents. I ignore them and get an external appraisal to confirm my own.

A fair number of properties in my focus areas are being targeted by interstate investors sight unseen, and the selling agent are hoping for an uneducated buyer to purchase at the inflated selling price based off the inflated rental in the ad.

 

I recommend asking the agent to give you data to support the 'rental listing price' - request a comparative rental analysis of achieved rents over the past six months. It is very important to go to market at market rent to ensure a property does not languish on the market and become stale, every week vacant costs you a week's rent whilst waiting for an additional $10-20/week.

Evidence is what you require to make an informed decision

 

I take little attention to what the advert says rents are except as a starting point.

Typically they are 10% lower but sometimes they are correct.

End of the day as part of the DD is I look at what is on the market for rent and see how it compares to this property.

 

Have to admit I've been on the other side of the equation as a seller...

We sold a (vacant) property last year that we had had rented out at $470pw. Our sales marketing material said what it had most recently been rented out at. The new owners tried to rent it out at the same rate, but with no takers ended up dropping the rent quite a bit (maybe $440??)

Not really sure whether the rental market had pulled back significantly, a different rental agent, or the house wasn't well presented (we had staged when we initially rented out), but I can imagine the lower rent and the vacant period would have been a disappointment to the new owner.