I am looking at an IP that has a rental guide of approximately $750 pw in QLD. This seems a bit high but it is a premium property about 10 years old great location, 4 bedrooms 6km to CBD. There aren't many similar houses on the market or for rent so it is very hard to judge how accurate the rental appraisal is. The house has always been owner occupier. Is there anyway to see what similar houses have recently rented for and how stable the rents are ? The house is in the 800K bracket so I am wary of jumping in without verifying the rent return.
I would be careful. I know of two houses local to me (Coorparoo), both similar range, and they are having trouble getting $700. Rents have softened in this area and we've learned that ourselves, with a recent drop of over $100 (but realistically, it was more like a drop of $50 to $60 as we were getting good rent). We dropped from over $600 to $500 to get a tenant (Bulimba/Balmoral area). The house we sold a year ago was similar to what you are describing and we also found it hard to get the sort of rent for it that the agents were suggesting. We were told initially (four years ago) it should rent at $850 but we ended up getting $750 or maybe $700. Then next tenant was $750 and most recent one was $800 or $850 (cannot recall). It seems to fluctuate more once you hit this type of house and the higher rental range. Go to http://house.ksou.cn and look for "sold" or "rented" to see sold or rented prices. Also keep looking at the houses for rent on re.com to gauge where your potential purchase sits compared to what others are renting for.
Wylie's suggestions are good. Also call a couple of property managers and ask for their opinion. Ask if they've got similar properties on their books, if they're ever vacant for extended periods and how much they rent for. If there's a genuine chance that they'll win your business - they'll usually be happy to help. Cheers Jamie
I'd add also that the house we just filled, was getting a little over $600 and with it empty, we tried $580 and then $570. Local agent said it was worth that but not in this current soft market. She had one place she was offering a week's free rent, and I also watched another very similar house dropping in tandem with ours. I've left on my re.com search and each day there are other houses that I would have chosen over ours at $500 and these are for even less. I know photos can be deceptive, but I'm very glad we grabbed the tenant when we did. I've been a landlord for over 35 years and have experienced having to lower rent a couple of times, but never such a big drop. I think (and the agent thought so too) that the very low interest rates right now mean people are buying rather than renting. Repayments (after a 10% or $70K deposit) would be within reach of the same people who were renting it. They could have been paying a mortgage instead of renting. Even full borrowing with a loan of $700K interest only would see the same money spent on repayments as the rent we were getting. All that is needed on top is rates and insurance. The two nearby will be interesting to watch. One has been empty for nearly six weeks and they would be better served to lower the rent. The other is owned by a friend who has asked my opinion and will be more realistic. I'm surprised at the way rents are going down right now in our neck of the woods.
thanks Wylie, I have been told by a few agents that the rents are a bit soft at the moment but they said it was seasonal. Two separate agents have said that I would be better off getting a 6 month lease as a higher rent can be achieved later in the year. These agents didn't seem to have much of an agenda as both houses I called about were already under contract. My wife thought the same thing about high rental properties - why would someone rent something so high when they could buy ? It would only be if they couldn't get a deposit together. Very different story from sydney - $650 will get you an apartment 10km from the CBD but you will have to line up with a bunch of other hopefuls
[QUOTE="Logan, post: 9528, member: 467"My wife thought the same thing about high rental properties - why would someone rent something so high when they could buy ? It would only be if they couldn't get a deposit together. Very different story from sydney - $650 will get you an apartment 10km from the CBD but you will have to line up with a bunch of other hopefuls[/QUOTE] Yes, for that money you can rent something just above average in Sydney, but approaching executive accommodation Brisbane. Your tenants in that price/style place could be young aspiring professionals climbing the coporate ladder. With that career aspiration often comes the necessity to move cities (either to BNE, or out of BNE). That is often why people rent a house at that price range when they may be able to afford to buy - they only intend to be in town for a year or two. The transaction costs and loss of mobility make renting a better option.
