Is it time to lower the rent or find a new property manager?

Hi everyone,

I'm after some advice. Our rental property in Ipswich has been vacant for nearly 6 weeks and I'm wondering whether it's time to look at moving to a new property manager or dropping the rent. I think the rent I am asking is reasonable. My current property manager agrees and I have spoken to another property manager who I am considering moving to, and she agrees the rent is reasonable. I'm just not sure why it hasn't rented yet.

I'm after suggestions about how I can get the place rented out. Could it simply be a case of the rent being too high, or is there just an over supply of rentals in the area? I'm after any suggestions from people who have been through similar situations. The property is a 2 bedroom duplex and I'm asking $255 a week which seems to be in the ballpark when I compare it to other available properties.

Also, if anyone familiar with the area has recommendations for a property manager I'd be interested in that too.

Thanks.

 

Are you okay with pets? And if yes, is that fact clearly visible in the advertising?

 

What has feedback been from people who have seen it so far? Have you taken on that feedback?

Does your PM keep stats on quantity enquiries / people who see it / people who apply ? The ratio can answer most of your questions.

 

In choosing a PM, be sure that they not only know the area, but also the intimate details of your property. As your existing PM what did they say to prospective tenants? ie how did they "sell" your property, and like the others have said, what were the feedback? Nothing worse them keep swapping PM. There was a couple of properties near us, and the signage keeps changing. Neighbours are amazed.

 

Drop the rent - better to take $240 next week than $255 in 3 weeks time.

 

I recently had a problem with a property. Turns out that it's a townhouse but had been listed as a stand alone house. It wasn't coming up in townhouse searches and looked small compared to free standing stock.

Try figure out how your property is being perceived by the tenant. Do a search as if you were looking to rent your type of property in that area. That way you'll see what the competition is and how your property compares.

 

Suggest you ask someone to contact PM on your behalf saying they are looking for townhouse/ duplexes and see how they are treated and how the PMs are promoting your IP. Also look at visibility of advertising ie on site/ net/ agents window etc- good luck,,

 

Have you taken a step back and evaluated the situation? What's the ad like? Why not post it hear and we can criteque it?

Are you asking the agents loaded questions? Something like, my place is worth $255, rather than what is the place worth? $250 might be a price barrier point.

 

Any chance of posting a link to the add?

 

Is this the one?

2/20 Ellenborough Street, Ipswich QLD 4305 - Apartment For Rent - $255

Could be reflective of the time of the year, with things then gearing up again as summer rolls around and people move/start new jobs. Have your managers had many people through the properties? Are they providing any feedback at all? Have you had any issues with vacancies there before? What types of people have been renting your property in the past?

If people are still showing interest and being shown through the property regularly, and if you're not in a rush, give a few more weeks. Otherwise yes, I'd lower the price to secure tenants, even if it's under market value, and then raise rent after a short lease when its a busier time of year.

The only drawback I see is that my research indicated most demand for 3bd + houses with backyards, and they can be found for not much more than your asking price (270+ a week). So unless you lower the price enough for someone to turn their heads and consider downsizing, you might have to wait a bit longer until the market segment you are aiming for gets to a busier time of year.

 

When things are taking time to rent, I ask what the feedback has been from those at opens, when you get no answer, you know what the go is.

Also, think about the price point, they are 200, 250,300.... using 255 pushes you to the next search bracket

 

Without information on how many people are coming through and interest + their comments we are all shooting in the dark.

Two things I would have changed if you property was linked before;

1. Price - $250 pw sounds better than $255 pw (of course $24x is better) sometimes things are a mind set. I recently saw a TV advertised for $11,998 at JB with +$69 for delivery. Shows you something about being just below $12k or $70

2. Fix the date available from - this could cause you issues when you do manage to get a tenant or tenants as they might be seeing the date available and thinking to themselves 'there is something wrong here'. Just available now is all they really need.

I think addressing these two things probably wouldn't hurt your chances.

 

With my IPs, I don't focus on how much the rent is per week; the important thing is how much do you get in a year.

This IP has been vacant for 6 weeks. You have missed out on $1,500+ of income.

I always use the following rental strategy for vacant property:

1. Set what you/your PM believes is fair market rent and hold the first OFI.
2. After the OFI, review the asking rent. Strongly consider reducing it by $5pw if people came to the OFI but no-one submitted an application; strongly consider reducing it by $10pw if no-one came to the OFI.
3. Hold your next OFI.
4. Go back to Step 2 until it is rented.

Recently, I had a Unit that was being vacated. It was rented for $365pw and we/our PM thought that was at fair market rent (we own the whole complex and others are paying up to $385pw).

At the first OFI, no-one attended (even though some said they would). We dropped the asking rent by $10 to $355pw. At the second OFI, people attended but no-one submitted an application. We dropped the rent by another $10 to $345. It was rented for 6 months as a result of the third OFI.

Some will look at this as we lost $520 (26 weeks x $20) in income. To me, $520 is 10 days rent (at $345pw); if the property is vacant more than 10 days, I would have lost more than this.

Guess what I will be doing in 6 months time. That's right, attempting to increase the rent to the then current fair market rent; hopefully it is $355, $365 or maybe even higher.

 

This single post makes so much sense it hurts.
Its cracker posts like this that keep me coming back and learning.
Thank you.

 

Very good post Kieran, glad you got it rented and would be interesting to know what happens in six months time.

 

Here's an extract from our newsletter which we released just today that might provide some assistance also:

Active Leasing

Certain types of property and geographical areas in Brisbane are presenting a challenging leasing environment. A recent experience highlights the important roles both agents and landlords play in the success of the leasing process. We recently secured the business of a client whose property had been vacant for five weeks with another agent. MyPropertyPro secured a tenancy within 72 hours of client transfer. There were a range of items that contributed to this “success story” influenced by both the landlord and the agent that always form a part of our strategy.

What we do as agents:

• Provide a realistic price indication based on market conditions
• Maximise exposure by suggesting a Highlight Listing Package (depending on location the cost of this is recovered by reducing vacancy by three days)
• Provide private and open inspections at times that suit the potential tenant
• Listen carefully to and act upon market feedback
• Promptly process applications from potential tenants and keep them informed through the process
• Provide approved tenants the required documentation promptly

What landlords can do

• Approve the Highlight Listing Package
• Approve professional photography
• Respond to market feedback
• Be conscious during the leasing process of monitoring communication methods and responding as soon as practical to agent requests for information and/or approvals

 

I also wrote an article on our website entitled "Reducing the rent if necessary" - unfortunately site rules prevent me from linking directly but it's under the 'For Investors' > Investor Articles tab on our site.

Cheers!

- Andrew

 

Run a search on ipswich threads and PM some members here that have property there.

get a recommendation from members off here for a property manager located in your area.

change Property manager or at least get them to evaluate it and make a decision from there

Ipswich suburbs

 

Hi Everyone,

Thanks for some good tips and advice. I had decided to drop the rent this week, but the property manager secured a tenant on Friday at the advertised $255.

They held regular open for inspections but they didn't really seem to get too many people through. I received some feedback from the people who attended. The only negative comments related to the tired state of the paintwork. We had hoped to have the place painted before the new tenant moves in, but none of the painting quotes organised by the property manager came through, so I am going to make sure I have something organised for next time the unit is between tenants.

I've decided to stick with the property manager for now. Apart from this vacancy they have been pretty good to deal with. I would certainly look at lowering the rent much earlier next time to secure a tenant as suggested by a few people above. I have also spoken to another property manager who seems promising if I do decide to leave my current one.

We had four applications for the unit, including one in the very first week it was advertised, but three of the applicants weren't suitable for a number of reasons (affordability, lack of rental history etc.)

 

Glad you got it rented and hope you keep staying around.

However knowing that there were 3 other applications would of provided you with different feedback and you might need to loosen up how strict your criteria is.

Again we don't have the information but affordability on $250 p/w is rather crazy and lack of rental history everyone needs to start somewhere and $250 p/w would be more of an first time renter compared to $500.