Investors using RE Agents/Property Managers - beware!

[justallan]

I've read investing books state using RE agents to manage your properties frees up your time, you don't want to be cleaning toilets, mowing lawns, etc. However I want to mention something my wife & I have discovered about RE agents the last few weeks.

Recently it became necessary for my wife & I to rent privately, having not done so for around 12 years. We have approached many RE agents in the Newcastle/Lake Macquarie/Maitland/Port Stephens area of NSW. Things certainly have changed. We've viewed and applied for many properties. I won't bore you with all our personal details. Suffice to say we are dream tenants.

Several weeks on, even though we have applied for many properties, we never hear back from agents. Yet we watch and wait as properties lie VACANT - for WEEKS - while the agents muck around, losing investors rental income. The MINIMUM time we have seen a property lie vacant is two weeks. The maximum (so far - and counting) is FOUR weeks!

I can't imagine what these supposed "investors" are thinking... forgoing up to one-twelfth (8.33%) of their yearly rental income every time there's a change in tenants!? I can't imagine they're finding bargains enough to offset that kind of loss. This has not been the exception to the rule either. We have seen it happen again and again with nearly all the RE agents we have dealt with in the above areas.

I read a rough estimate once (I believe it may have been in these forums, but not certain) you can expect to lose ~30% of rental income to management and expenses. If investors have to put up with the pathetic RE agents we've come across the last few weeks, I'd suggest it might be well worth giving them the boot, and taking up cleaning those toilets again. (Up to 30% of costs back into your pocket, plus 8.33% of income lost at every tenant change.)

Moral: Make sure you really DO choose your property manager wisely. Because most Newcastle "investors" certainly haven't. (And I won't even mention the quality of tenant they're choosing over us.)

 

[westminster]

Firstly its is property managers not RE Agents who manage rentals - and none of them clean toilets.

Sorry to hear that you have not been able to find a rental - possibly your lack of rental history if working against you but often people do not get to find out why they aren't chosen.

 

[justallan]

Firstly its is property managers not RE Agents who manage rentals - and none of them clean toilets.

Well, the property managers are just another part of the RE agents. Toilets - yeah I know - it's a Steve McKnight thing. I think he said it in one of his presentations, or perhaps his first book. I think he was referring to cleaning the house between tenants. i.e. The PM arranges for the house to be cleaned if unsatisfactory when tenants move out.

 

[Jamie M]

Recently it became necessary for my wife & I to rent privately, having not done so for around 12 years.

That could be your problem.

Cheers

Jamie

 

[alexlee]

(And I won't even mention the quality of tenant they're choosing over us.)

How do you know who they're choosing over you?

 

[justallan]

In a couple of cases we knew who was chosen. (The same ones that turned up at the inspection.)

 

[Bigtone]

best chance of overcoming no rental history for 12 years is to offer 12 months rent upfront

 

[justallan]

Well, one guy offered $30 more in rent, but the agent wasn't interested. Once he left she said to us, "We don't go in for that sort of thing so I won't be contacting the owner." (Another reason why Newcastle RE agents are pathetic. What investor wouldn't want to know about that.)

 

[handyandy]

Well, one guy offered $30 more in rent, but the agent wasn't interested. Once he left she said to us, "We don't go in for that sort of thing so I won't be contacting the owner." (Another reason why Newcastle RE agents are pathetic. What investor wouldn't want to know about that.)

I would want to know about that but only in as far as a discussion with the RE as to whether we are still on the mark as far as market rent.

We would be asking market rent and anybody who feels that they have to offer +$30 would generally be a very weak tenant who out of desperation feels they have to offer that added amount. The likelyhood of them staying for any length of time if you were to rent to them is low.

As far as your 'we are ideal tenants' this obviously does not ring true as you have been unsuccessful. You need to do some sole searching and do some introspection as to why you are being found not suitable rather than blaming the RE for not recognizing your overwhelming suitability.

Cheers

 

[alexlee]

In a couple of cases we knew who was chosen. (The same ones that turned up at the inspection.)

And you're judging that they would be worse tenants than you because of, what, exactly?

Lack of rental history is a negative but not fatal, especially if everything else (income, especially) stacks up. Your inability to find a place in an area where (according to you) there are some vacancies suggests there are weaknesses with your application.

 

[thepeoplesagent]

Moral: Make sure you really DO choose your property manager wisely. Because most Newcastle "investors" certainly haven't. (And I won't even mention the quality of tenant they're choosing over us.)

I’d be interested to know what makes you a dream tenant. I seem to hear this lot these days.

Property managers are in the business of leasing property. If they don’t lease properties they don’t get paid. They do not leave them vacant on purpose. They don’t reject your application for giggles. Property managers don’t want their managements vacant. The large majority screen applications and try to select the best one.

Granted many property managers may not call the unsuccessful party, that doesn’t mean they didn’t process your application.

Your lack of rental history is more than likely holding you back. But then again, everyone who has ever rented starts with no history.

If you have just sold your home and have the cash, offer 6 months paid rent upfront. Not many landlords could resist that.

 

[buzzlightyear]

Tend to echo the thoughts mentioned previously. As a LL however, I have had a few occasions where the prospective tenants had no rental history. In fact it was other factors that were more pertinent to me such as work history, previous living arrangements, presentation, other applicants, age, finance position all play a role. There are many moving parts.

Personally, success with first time tenants has been no different to long term tenants. In fact long term tenants can be far more problematic, because they 'know' the system.

I can tell from your tone that you are disappointed, and sometimes, the way the PM handles themselves in telling you that you are unsuccessful adds to the feeling of disappointment.

A good PM would in your scenario, if they valued your application, would communicate to you have been unsuccessful but would like to help you find another rental and ask you to consider another property, if they have one available or an upcoming one.

I would ensure that you have all your paperwork ready and updated, professional and engaging with the prospective PM and you will find the 'right' property.

 

[buzzlightyear]

Anecdote from the rejected!

A few months back, my partner and I, thought at least fleetingly to rent, instead live in my PPOR. We only ever saw one property that would fit the bill. We applied and were rejected

We are both professionals, working in corporate jobs, more than sufficient income, she had excellent previous rental history, I was of course living in my PPOR.

I was amazed we were rejected, but there you go. Sometimes, its not meant to be.

 

[westminster]

And from recollection you have 3-4 kids and are on a disability pension. You might be a dream tenant but you aren't a dream applicant.
Most Owners will pick a couple without kids as it's less wear and tear on their property.

 

[The Y-man]

I always thought it would be funny if I applied at an agency that manages my IP's and was rejected....

The Y-man

 

[Ed Barton]

I’d be interested to know what makes you a dream tenant. I seem to hear this lot these days.

I would consider myself a dream tenant. But as the LL I would probably select someone with a good recent rental history over me, everything else being equal. I haven't rented for over a decade, so the references of 15 years ago mean nothing.

OP - Why don't you politely (ie don't accuse them of making the wrong decision) call agents that you have been unsuccessful for and ask them why and what you could do to increase your chances of success?

 

[Ed Barton]

And from recollection you have 3-4 kids and are on a disability pension. You might be a dream tenant but you aren't a dream applicant.
Most Owners will pick a couple without kids as it's less wear and tear on their property.

If your recollection is correct then the plot thickens.

 

[Aaron_C]

And from recollection you have 3-4 kids and are on a disability pension. You might be a dream tenant but you aren't a dream applicant.
Most Owners will pick a couple without kids as it's less wear and tear on their property.

I've been looking at some hotels in the USA for my impending trip and the odd thing I saw was that even 5 star hotels like the Hilton allow pets...

 

[luce.rocks]

We would be asking market rent and anybody who feels that they have to offer +$30 would generally be a very weak tenant who out of desperation feels they have to offer that added amount.

Or someone who has been told previously to offer more rent. We were at an open house recently where about 30 people turned up. When I asked the agent if there was anything we could do to make our application stronger he told us to offer more rent. We did. We still weren't accepted. I hope someone else offered more, or they approved a pair of lawyers or school principals or something, because I'd hate to think they thought we were weak prospective tenants

 

[luce.rocks]

I've been looking at some hotels in the USA for my impending trip and the odd thing I saw was that even 5 star hotels like the Hilton allow pets...

A few years back we stayed at the very schmick Hotel Villa Magna in Madrid with our beautiful cocker spaniel, Otis. Otis was normally pretty well behaved but had never stayed in a hotel before. I think the excitement got to him because the first thing he did when we got to our room was run around excitedly, then jump on the bed, where he peed himself I'm not sure what their pet policy is anymore.

Anyhow, if you're thinking of travelling with a pet maybe get the pet used to it by visiting friend's houses, etc., first.