Any Valuers on SS??

[Mamaof3]

Hi All,

Just wondering if there's any valuers on SS that may be able to assist answer some questions?

Situation: I need a valuer (not a property manager) to provide a rental valuation.

My question is how or what is a rental valuation based on? i.e. With residential sales, i know the size of a house is considered important. Is the size of a house (in m2) just as important when it comes to rental valuations?

For example, if I have 2 properties in comparable condition on comparable land sizes yet 1 is 62m2 and the other is 43m2...The 43m2 is being rented for $265/week and we're trying to determine the rental value of the 62m2 comparable home.....how would the valuer then determine the rental value of the 62m2 house?

 

[Aaron_C]

Why don't you get your broker to get an upfront valuation done on your 62sqm house and the valuation report will have a rental estimate there.

 

[Peter_Tersteeg]

I'm aware that at least one currently active member is a valuer, but where is your property located (it's kind of important if you're looking for someone to perform a valuation).

I'm also wondering why a valuer is required for a rental estimate as opposed to a property manager. No offence to valuers, but I've often found the property managers to be more accurate.

I also agree with Aaron, brokers can also get valuations ordered for far less than you can get one done privately.

Corey Batt (CJay) is a good broker in Adelaide and posts of Somersoft.
08 7200 3898
www.xlfinance.com.au

 

[Mamaof3]

I'm more interested in the technique applied to derive a rental valuation.

I believe a PM would be a better way to go and more accurate given they are doing it day in day out but unfortunately our 'Tenant' requires a rental valuation conducted by a 'licensed valuer'

Bit complicated but a 'normal' rental valuation won't stack up because we've got a specialised security and only 1 other comparable security (the 43m2 unit) that exists.

 

[Jake D]

I'm more interested in the technique applied to derive a rental valuation.

Both of the valuations I've had done this year they asked the tenant what they were paying and wrote down that number.

 

[Mamaof3]

Thanks for that Jake...thats good to hear actually because that sounds like whatever my rental valuation comes in at now, so long as someone's willing to pay that level of rent then its unlikley a valuer will dispute later down the track (when a re-valuation is done in a few years time).

 

[Peter_Tersteeg]

I'm curious, why does your tenant need a rental valuation?

The last time one of my tenants thought they were paying too much, they gave me the required 30 days notice they were leaving. 15 days later they asked to stay.

I agree with Jake, if you show a valuer a lease or receipt of payment, they'll simply go with that.

 

[Mamaof3]

They're a corporate Tenant and its all linked with the whole NRAS thing so to determine market rent, it needs to be done by a valuer (not a PM).

 

[RightValue]

Ok, so we are talking about a couple of units.

43sqm is generaly a small 1 brm unit

62 sqm is usually a small 2 bedroom unit or a large 1 brm unit.

These ares are living areas, are you including balconies in your floor areas?

A bedroom in a unit is anywhere from about 8sqm to 12sqm.

How much wasted space is there? How much more amenity does the 62sqm provide over the 43sqm unit.

Basically a valuer should look at the rental rates for comparable properties, there may or may not be any relativity between the 43sqm and 62sqm units, but it is unlikey that a $/persqm rate will be applied to a residential unit like is applied to a commercial property.

I trust this helps.

BTW, there is no such thing as a licensed valuer in SA.

What they really want is a Certified Practising Valuer.

I am happy to come and do this for you, but you will find cheaper from a local firm.

BTW, this is a rental determination for determining a fair market rent, the rent thata tenant is paying should be of little or no consequense. .. butif the tenant is paying a market rent, then the rental determination should reflect that.

cheers

RightValue

 

[Mamaof3]

Hi Rightvalue,

Thanks for your thoughts.

Yes you are correct, the 43m2 unit (upstairs in block of units) is a small 1 bedroom unit and the 62m2 is a small 2 bed townhouse (over 2 levels).

the 1 bedder units of 43m2 includes balcony as they are upstairs, our 62m2 2bedders has a ground level small (ok, tiny!) backyard.

everything else is comparable in terms of whats included (they're both fully furnished, same number of bathrooms/toilets, built within 12mths apart, finishing of comparable quality, same target market - in that they're are purely student accommodation). They are also only located a few hundred metres from eachother.

Sorry little confused about your last comment....do you mean that whatever a tenant is prepared to pay for our townhouse is what the market rent will be?

 

[RightValue]

Hi Rightvalue,


Sorry little confused about your last comment....do you mean that whatever a tenant is prepared to pay for our townhouse is what the market rent will be?

No.

It was a comment aimed at others who said just that but it is not applicble in all cases.

What a tenant is paying may or may not be a market rent.

You want this rental determination toi determine a market rent.

However it is possible that the tenant is paying a market rent right now.

If they are paying a market rent right now then a rental determination should reflect this, that means be at a rent that reflects market rent hence is the same as the tenant is paying.

What I was pointing out was that this is a rental determination, the valuer will not just ask the tenant what they are paying andf then put that down on the report. The valuer will determine the reent by reference to other market rents.

In the case of mortgage valuations the valuer makes a rental recommendation. In most cases what a tenat is paying is market rent so the valuer puts that down on the report.

What you want is not necessarily the same as a market rent in a mortgage valuation report and involves a lot more work than simply asking the tenant what they are paying.

 

[Mamaof3]

Oh I see

Just one other question then....so if our property is for student accommodation purposes (what the development was approved as), would the valuer be looking at other 'normal' residential 2bedroom townhomes as comparables? The reason i ask is because there's only 1 other comparable property within the vicinity of ours (that being the 43m2 unit) in that its also approved for student accommodation purposes only.

Or does that not come into the equation and the valuer will look at all comparable properties regardless of their approved use?

 

[RightValue]

Oh I see

Just one other question then....so if our property is for student accommodation purposes (what the development was approved as), would the valuer be looking at other 'normal' residential 2bedroom townhomes as comparables? The reason i ask is because there's only 1 other comparable property within the vicinity of ours (that being the 43m2 unit) in that its also approved for student accommodation purposes only.

Or does that not come into the equation and the valuer will look at all comparable properties regardless of their approved use?

It depends.

If the permit for the development is only for student accommodation then the valuer should look predominantly at student accommodation rents as legally the unit cannot be rented out to other occupiers.

That said, students are tenants and are not obligated to stay only in student accommodation. The rent they are prepared to pay should also relfect market rents for normal properties within the locality.

Do not get hung up on the size of the unit. Just because the unit is 43sqm does not mean that is is less desirable and would rent at a different rent from a 50sqm 1 bedroom unit.

Similarly in your larger unit if a fair chunk of the floorspace is occupied by staircase it may only have the same useable area as smaller unit.

For example recently I valued a 2 bed 3 level townhouse plus rooftop deck. It has a floor area of 108sqm, which is normally the size of a decent 3 bed apartment. In this case, due to the staircase taking up a good 1/3 of the floor area I really had to apply a much lower rate than I would to a unit of this size with all the floor area is useable livign space.

 

[Mamaof3]

Thanks RightValue...that makes sense and your explanation has helped wrap my head around this.

Am secretly hoping for a higher rent val. though for our 62m2 townhouse

 

[Scott No Mates]

As the unit is approved as student accommodation, does it come as furnished? are there other special features making it suited to student accommodation eg power/water/gas/internet/furnished are all part of the rent? Are there common areas for study/recreation/common kitchen etc (typical distinctive features as opposed to standard rental accommodation).

 

[Mamaof3]

Yeah its a little different to your typical student accomodation in that these are fully self contained. No different to any other standard townhouse you would find on the market...its just that its only approved for students.

Yes they are fully furnished but utilities are not included and are the students responsibility just like a normal tenancy.

No common areas apart from an outdoor 'communual' area which is just a space at the rear of the site which has benches and shade sails. Each townhouse has their own private backyard though.

 

[Scott No Mates]

So the approved usage could probably be considered an impediment or restriction on use rather than a benefit (as it would if they had more shared facilities making them unsuitable to permanent residents).