Carnelian Property Management Newcastle
  • Home
  • Contact
  • About
    • New To Renting Your Property?
    • Info For Experienced Investors
    • About The Team
    • What We Do
    • Testimonials
  • Suburb Profiles
    • Adamstown Suburb Profile
    • Cameron Park Suburb Profile
    • Cardiff Suburb Profile
    • Charlestown Suburb Profile
    • Hamilton Suburb Profile
    • Mayfield Suburb Profile
    • Merewether Suburb Profile
    • New Lambton Suburb Profile
    • Newcastle Suburb Profile
    • Wallsend Suburb Profile
  • Rental Appraisal
  • Switch to Us
  • Now Renting
    • Properties For Lease
  • Blog
We provide expert property management in Newcastle and Lake Macquarie.  Based in Charlestown NSW, we have been delighting property investors with our personal, professional service since 2011. If you find this article helpful or enjoyable, please subscribe or share it with someone else who may benefit.

Should I Choose The Agent That Estimates The Highest Rent For My Property?

13/2/2018

0 Comments

 
australian rent money - carnelian property management newcastle
When looking to rent out an investment property, landlords with inevitably ask "How much rent do you think I can get for it?". We covered the intricacies of attempting to work this out yourself in the article What Can I Rent My House Out For?

Unfortunately, in efforts of wooing a prospective landlord, some real estate agencies will provide an inflated and at times unrealistic estimate of rental return. In this article, we wanted to break down what this means for the landlord.
But first, it's important to consider that rental estimates aside, the quality of property management services provided by most real estate agents is notoriously poor. 

Research Shows Most Real Estate Agents Are Terrible At Property Management

The consistent high turnover of property management staff, lack of motivation and lack of experience of property managers in Australia is not just anecdotal, it is backed by research. 

Just some of the findings from Rockend and Elite Agent's 2018 Voice of Australian Property Management Report, a nationwide survey of 1,034 property management professionals, revealed:
  • 54% of property managers have less than 2 years experience
  • 63% of property managers do not enjoy their career, yet they choose not to leave
  • Only 1 in 4 property managers feels positively about their career
  • 43% of those working in the industry believe their next role will be outside property management
  • 30% of property managers are expecting to move to a sales role, seeing property management as a training ground to progress
  • Out of 6 options, retaining staff was ranked the lowest priority by agency principals ​

​As the report concludes, "When employees are disillusioned and unhappy it impacts training costs, onboarding and loss of business knowledge resulting in a poorer service to owners and tenants as teams constantly struggle to be on top of their workloads".

In summary, a higher rental estimate is rarely indicative of greater market knowledge. In fact, it is sometimes an indication of a lack of experience. 

3 Reasons To Be Wary Of High Rental Estimates

Naturally, a landlord will want to achieve the highest rental return possible from a quality tenant. For this reason it can be tempting to select the property manager who has provided the highest rental estimate for the property. 

​But there are reasons to be wary of this, including:
  1. A poor property manager may be providing an unrealistic estimate of rental return in order to secure management of the property
  2. Even when a higher rent may be achievable, the quality of the tenant filling the property is more critical for your piece of mind and the wellbeing of your investment. We covered this separately in our recent article on rent bidding
  3. Holding out for the highest possible rent can actually be a poor financial decision

This third point seems counterintuitive. Let's go through an example.

How can holding out for higher rent be a poor financial decision?

​Occasionally we have been unsuccessful in securing management of a rental property due to the landlord receiving a higher rental estimate from another agent. As the saying goes, you can't win them all and we are always respectful of the landlord's decision in such a case. 

However, we have seen instances of a rental listing being managed by an alternative agent at a higher price than we estimated, only to find that the property has remained listed on the market (i.e. vacant and not generating income) for weeks, despite a buoyant market. 

As an example, we recently estimated a rental return of $400 per week for a property, and another agent promised $430 per week. Our estimate was based on knowledge of the area, rental history and trends in the surrounding location, and our understanding of the landlord's needs around cash flow (speed of commencement and financial commitments).

Unfortunately, the lure of $430 rather than $400 per week was too great and we were unsuccessful in working with the landlord. However, the property remained advertised at $430 and vacant for a minimum of 5 weeks before the listing was removed. It could have still been longer before the lease period commenced and rental income began flowing. 

In this case, the difference in rental income per week was $30. The property was vacant for 5 weeks. Based on our experience in the area across many comparable homes, we would have had the property filled with a lease commencement within 2 weeks of listing. 

Having set a higher rent, the property remained non-income generating for at least 3 weeks longer than if a more comparable market rate was set. Had the property been filled, the property would have generated a minimum of 3 weeks x $400 of rent i.e. $1200. Instead they received no income from the property. 

You may think "but what about in the long run?". Well, that additional $30 per week equates to roughly $120 per month in rent received. It would take 10 months of higher rent to make up for the 3 week vacancy up front. 

Additionally, a rental price more comparable to the market would have secured a greater pool of potential applicants, enabling the selection of the highest calibre tenant (not just the highest paying) from a broader pool. 

When rental appraisals vary, who do you believe?

Continuing to be completely frank, we are the owners of the business, not simply employees in a real estate agency. It is a direct objective of ours to achieve the optimal rental return from an investment property, just as it is the landlord's. We will estimate optimal rent based on return for comparable properties in the area, rental history and trends in the area, demand vs supply of similar properties and more. 

However if it is highest rental return only which determines your choice of property manager, we are very likely a poor choice of property management for you. Our focus is more broadly on the acquisition of the highest quality tenant, from a large pool of suitable applicants, ensuring the ongoing care for your investment with reliable, sustainable and optimal rental income in return. 
Interested? Let's talk
We provide expert property management in Newcastle and Lake Macquarie.  Based in Charlestown NSW, we have been delighting property investors with our personal, professional service since 2011. If you found this article helpful or enjoyable, please subscribe or share it with someone else who may benefit.
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Carnelian Property Management Newcastle NSW

    We are a family-owned and run Charlestown real estate agent offering expert property management across Newcastle and Lake Macquarie. 
    ​Get to know us here.


    Want More?

    Build your property management knowledge - get regular tips and advice for landlords and tenants straight to your inbox.
    Subscribe

    Categories

    All
    Adverse Possession
    Advertising
    Choosing An Agent
    COVID 19
    COVID-19
    Finance
    Furnished
    Insurance
    Investment Property
    Lake Macquarie Life
    Landlord Responsibilities
    Lease Terms
    Negative Gearing
    Newcastle Life
    Newcastle Property Management
    Pets
    Positive Gearing
    Preparing A Rental Property
    Property Management Costs
    Property Management Statistics
    Rental Appraisal
    Rental Yield
    Rent Review
    Research
    Routine Inspections
    Saving Money
    Suburb Profiles
    Tenant Responsibilities
    Vacancy Rates


    Archives

    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017


    RSS Feed

Carnelian Property Management
1A Chapman St Charlestown NSW 2290
​ph: 02 4062 7458 (tenant / general enquiries)
m: 0407 065 126 (investor enquiries)
Facebook - Property Management in Newcastle - Carnelian Property Management
Instagram - Property Management in Newcastle - Carnelian Property Management
COVID-safe - Property Management in Newcastle - Carnelian Property Management
Subscribe to Email
​Request a Rental Appraisal
Rental Application Form
Lost Keys / Locked Out Policy
​Cleaning Checklist
Submit Maintenance Request
​Tenant Portal
​Investor Portal

Copyright © 2021 Carnelian Property Management in Newcastle NSW | ABN 18 624 074 077. Privacy Policy | Complaint Procedure
COVID-safe - Property Management in Newcastle - Carnelian Property Management
Facebook - Property Management in Newcastle - Carnelian Property Management
Instagram - Property Management in Newcastle - Carnelian Property Management
Subscribe to email
Request a rental appraisal
Rental application form
Lost Keys / Locked Out Policy
Cleaning checklist
Submit Maintenance Request
Tenant Portal
Investor Portal
Carnelian Property Management
1A Chapman St Charlestown NSW 2290
​ph: 02 4062 7458 (tenant / general enquiries)
m: 0407 065 126 (investor enquiries)
Submit maintenance request

​Copyright © 2021 Carnelian Property Management in Newcastle NSW
​ABN
18 624 074 077
Complaint Procedure
Privacy Policy
  • Home
  • Contact
  • About
    • New To Renting Your Property?
    • Info For Experienced Investors
    • About The Team
    • What We Do
    • Testimonials
  • Suburb Profiles
    • Adamstown Suburb Profile
    • Cameron Park Suburb Profile
    • Cardiff Suburb Profile
    • Charlestown Suburb Profile
    • Hamilton Suburb Profile
    • Mayfield Suburb Profile
    • Merewether Suburb Profile
    • New Lambton Suburb Profile
    • Newcastle Suburb Profile
    • Wallsend Suburb Profile
  • Rental Appraisal
  • Switch to Us
  • Now Renting
    • Properties For Lease
  • Blog