"Why Did You Estimate Lower Rent Than The Other Agency?"

Every week we are contacted to provide rental appraisals on investment properties. Over time we've come to realise there is a question many investors wonder but rarely ask - "Why did you estimate lower rent than the other agency?".

We realise of course that when we are contacted by an investor to provide a rental appraisal, we are usually one of many agencies contacted with the same request at the same time. Unfortunately, an agency's response to a rental appraisal is a very one-dimensional way of assessing the value the agency they will bring in managing the investment. This has been covered separately in the article The 3 Criteria Most People Use To Select A Property Manager (And Why They're Flawed).

​We also realise that an investor may determine who they will appoint to manage their property, on the basis of the highest rental estimate received. i.e. if one agency estimates their property will rent for $460 per week and another estimates $440 per week, the investor may choose the agency which provided the higher estimate. 

Our approach when providing a rental appraisal is that we will provide a realistic rather than an optimistic estimate of rental return. What do we mean by this? In our experience we have become very familiar with not only what a property could be rented for, but how long it will take to find a quality tenant at various price points.

An important point here is that as an investor you do not only wish to have the property filled for the highest possible rental return. To put this another way, the applicant able to pay the highest rent is not by default the most desirable tenant for your property. 

The applicant able to pay the highest rent is not by default the most desirable tenant for your property. 

Taking this further, the more realistic and on-balance with the market the asking rent is, the broader the pool of applicants you have to choose from. So, rather than placing the highest-paying applicant into the property, you have the choice to select the highest quality applicant. Potentially an applicant with a stronger rental ledger history, with a track record of exemplary care for the properties they have rented, and with a proactive and courteous approach to maintenance or repair requests of the landlord. 

​We always recommend listing properties for the rental amount which will strike the best balance between strong rental return and strong market interest. Not one over the other. ​

​Being completely frank, as owners of a property management business (not just employees) it is a direct objective of ours to achieve the optimal rental return from an investment property, just as it is the landlord's. However, we always recommend listing properties for the rental amount which will strike the best balance between strong rental return and strong market interest. Not one over the other. ​​

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