PM's recommended rental price

Me complaining again..

Just want to get thoughts on this, my lease renewal came up a few weeks and on the letter my PM recommended I leave the rent at 400 a week despite the fact that markets had dropped significantly. A few days later my tenant decides to hand in their notice. The rent in that area is now low 300's, my PM did not bother to offer the existing tenant a lower price to try retain them. Is this some how a breach for me to end my management contract with them??

 

If there is no tenant. There is no contract

 

I thought that too, but I extended my Management lease till April 2017.
Can I get rid of them while I have no tenant?

 

I'm not sure what a "management lease" is.

I would think there is only contract with the PM when they have a lease with a tenant. When that lease ends you can then stop using the pm.

Since your house is empty pretty sure you can stop using the PMs services

 

Sorry management contract*, hopefully can terminate their services without any complications

 

I don't think it could be seen as a breach, but certainly very poor management.

Property is vacant and therefore not generating income for PM anyway, I'd approach them and tell them you're unhappy and whether they'll let you go.

I don't understand other states and fixed contracts, load of bull IMO.

 

I don't know about other States but, in Queensland where we have our IPs, we sign a property management agreement. The default termination period is 90 days; I always change this to 30 days before I sign it.

If you have such an agreement, you need to check the termination clause.

 

Anyone know the rules for WA?

 

The point is that you agreed with the PMs recommendation. If you knew the market had softened to that extent then why not speak up at the time?

At every lease renewal we always checked comparable properties on the Internet to establish the going rates, then phoned the PM and discussed the situation before agreeing on whether to maintain, increase or decrease the renewal rental amount. We also took into account how "good" the tenant was. To me, to retain a good tenant was worth $5 or $10 per week, cheaper than a PM new tenant charge plus possible vacant time.

The PM manages the property. You have to manage the PM unless you are remarkably lucky.
Marg

 

Hmm..true, but alot of people don't have the resources or time to research on behalf of a PM their paying for, if that was the case I'd rather self manage.

 

I'm sorry you are having this experience. Yes it was poorly managed

 

What is the new advertised rental?

 

It doesn't take long. 5-10 minutes on the Internet checking places for rent, maybe 5-10 minutes on the phone to the PM.
Marg

 

Sure enough easy to do, but she recommended to retain the rental price of $400 knowing well the market had dropped. So I am more annoyed about the service she has been providing

 

I bet there's another PM in the area who would have recommended dropping the rent to match the market and the landlord/owner would have said NO I WANT THAT MUCH!

So it can go both ways I guess. Generally whenever providing advice on something, it should also be backed up with evidence - eg in this scenario show comparable properties, what they've rented for and how long they've been on market for because then that shows whether your property could be increased/decreased/kept the same, etc.

 

So what was your opinion after doing your own checks?
If your opinion was different to hers, did you ask her to justify her stance?
In the end, the PM would need your agreement to the suggested rent price.
Marg

 

Sorry I agree with @Marg4000 you have some accountability in it, you gave them a green light to advertise at 400 pw and as your words were despite the market dropping.

If you cannot spend 10 minutes managing your PM perhaps property investing is not for you.

When a PM gives me the expected rent I also want their CMA of how they came up with that. If I feel it is too generous or too demanding we can discuss and get feedback as why they don't feel the property is worth $xx more or less p.w.

If you are looking at min/maxing your investment you need to be active in your portfolio otherwise you will not be getting the maximum return.

 

To be fair to PMs, telling an owner that rents are dropping cannot be popular news, and I do know of landlords who refuse to lower their asking price. Sure, they usually do get their price, but often after a lengthy vacancy or the acceptance of a less-than-ideal tenant.

I remember hearing the relief in a PM's voice when I counter their hesitant suggestion of a possible $5 reduction with the reply would that surely a $10 or even $20 reduction would secure a far quicker result. It always did.

And in a 12 month lease you can include an increase after 6 months.
Marg

 

But you don't just offer a rent decrease. You might sound them out and ask "are you intending to renew?" If they say "yes we love it here" then sign em up at full rack.

 

Agreed, there is some accountability on my behalf for not asking for further evidence. However I was not advertising to potential tenants, this was a lease renewal letter to tenants that had been in the property for 3 years. I disagree about having to manage a PM, I pay a service fee for a reason and I don't need to be told whether or not property investing is for me thank you. I guess you learn from your mistakes, I can assure you I will never rely on a PM's 'recommended' rental price without my own investigations .