Whats the figures???

[woody]

From: Steve B


I read a post where someone said, I don't care what colour the carpet is or what shape the building is, just give me THE FIGURES.
What are the figures???
I've just bought my first IP unit (exchanged Friday 18th)in Merrylands in Sydney for $277.500 and i am told it should bring $260.00 rent. I am EXTREMELY nervous at this stage as i don't have a tenant as yet. I keep reading how good it is to have IP's but I'm not feeling too confident right now. How do you make this thing work if your without a tenant for some time???
Can anybody help me along at this stage.
Regards
Steve B.

 

[Sim]

Reply: 1
From: Sim' Hampel


So why don't you have a tenant ?
How long has it been since you started advertising ? In parts of Sydney right now it can take over 6 weeks to find a new tenant - depending on the quality and location of the property.

How are you advertising ? Are you reaching your target market ? Do you know who your target market even is ? Don't be afraid to spend a little more on well written and well placed advertising - $260pw in lost rent will probably be a lot more than you'll spend on advertising. Scrimping here is a little bit of a false economy - but of course don't go overboard.

Are you asking too much rent ? Are there other similar properties for rent nearby which are asking similar or lower rent ? Are there too many properties (ie. glut) available for rent nearby ?

Is there something about your unit which is scaring people away ? Can you take this opportunity while it is vacant to do some minor renovations like a new coat of paint or new carpet, or even new kitchen (only if it needs it and would allow you to rent it out more quickly - need to work out whether the cost can be readily offset by an increased rent).

For example, in the Lane Cove and Artarmon areas of Sydney right now, there are literally hundreds of units available for rent. Many are remaining vacant for lengthy periods of time and advertised rents are actually dropping each week.

However, there are some units which are being rented relatively quickly, and these are the ones which have been recently renovated, are in a nice position and are attractive to tenants.

Just some suggestions, I'm sure others can add more.

 

[WebBoard]

Reply: 2
From: The Wife


HIya Steve,

I thought you were a freestyler member? I may be wrong, but if you are, you should have grabbed someone at one of the meetings and asked them "what the figures" are, someone would have been able to set you in the right direction.

$277,500.00 x 25year loan @ 5%principal and Interest = $405.24 per week repayment.

This is a rough guide, because you would have had purchasing costs, and we havent taken into effect tax deductions, I cant quote any of these, somebody else jump in please.

Steve, If you dont have an inbuilt tenant, then your return is zero, and you should be factoring zero into the equation, and you also be telling this to the person who sold you the property, next time, tell them you will buy it, if the place is tenanted, ( and you want to see the lease and bond recipet). THEN they can tell you in brings in $260 per week. Good bargaining chip. But alas, a bit late for you now, I would suggest spending $150 on a very very good advertisment in the Saturday paper to get your tenant, if there is a real problem getting one.
I have found that having an "open Day" helps a lot, and you obviously need to be there all day and "selling' the property to the tenant lookers. To me this is the extreme end of the 'trying to rent the place out', somebody else may have more ideas.

Good Luck

TW
~I not only use all the brains I have but all that I can borrow. - Woodrow Wilson~

 

[GoAnna!]

Reply: 2.1
From: GoAnna !


I agree with both SIm and TW about the importance of good advertising...and promoting.

The advertisement need to be detailed and promote the positive aspects of your property. What attracted you to the property? Chances are these are the same things that will attract the tenants. Does it have a view? Close access to shops and transport? heating and cooling? ?? Few people get excited at the prospect of living in a 2br, OSP, 12 months lease, no pets.

Which brings me to my next point. How else can you make your property stand out in the crowd if there is a crowd of vacant properties in the area? A weeks free rent? White goods? Preferably something that will cost you nothing and add to your profit.

If your property is being managed by an agent are they doing any of the above? Do they just hand out keys or do they actively sell the property and get to know prospective tenants as they show them through?


GoAnna !
"Obstacles are those frightful things you see when you take your eyes off your goal."
-Henry Ford

 

[Sim]

Reply: 2.1.1
From: Sim' Hampel


Agents in the Artarmon / Lane Cove area are offering between 1 and 4 weeks free rent (negotiable) and one agency is offering a "free holiday" when you rent from them.

Considering the average rental is over $300pw, 4 weeks free rent (if you can get it) is worth $1200 !!

This kind of thing is really going to eat into your returns though - vacant for 6 weeks and then you give 4 weeks free rent, 10 weeks loss of rent = 20% drop in earning for the year.

I don't know if these things are actually helping (especially when most of the properties in the area offer similar incentives).

Personally, I would try and differentiate myself from the rest of the crowd - try something creative.

 

[WebBoard]

Reply: 3
From: Simon St John


If you don't mind pets, make a big song and dance about that fact.....most pet owners are VERY attached to their pet and are very sensitive to positive (and negative) reinforcement in this regard. Cats really do little damage and are good in apartments.

 

[paulzag]

Reply: 3.1
From: Paul Zagoridis


Steve

It's too late to do "the figures". You now have "a situation". Get a tenant fast. Your holding costs will eat you alive.

Advertising is good, but I'm guessing you are using an agent. Search the archives for suggestions on how to motivate an agent to rent the place out. $10 per week below market rent should get you a good tenant for a $520 p.a. loss in revenue. Compare it to your vacancy cost.

Simon is right, Although allowing pets may mean you have to replace the carpets after the tenancy. So make it a 12 month lease to a pet owner.

Having said that we've kept a cat and most landlords/buyers I've had wouldn't notice. There are horror stories to counter this though.

"No pets" policy is stupid and leads to good tenants lying to you or moving elsewhere. Officially we have a stray Russian Blue who is passing through for a few days.


Paul Zag
Dreamspinner
WealthEsteem coming soon at...
http://wealthesteem.dyndns.org/

 

[Waverlybay]

Reply: 3.1.1
From: Waverly Bay


Hi there

Making your IP unit available to pets certainly widens your target audience of potential tenants.

However, if the IP is an apartment/unit, then you may need to check with the body corporate to get their permission. I find most body corporates are ok with cats...although i personally have experienced a knock-back on this request for my tenants in the past.

I think all the above suggestions on how-to-find-tenants are great ! Well done.

I take it Steve that you are using an agent at the moment (ie have already signed a management agreement with an agent?). One thing that worked well for me during last year's "rental crisis" in sydney - was to involve a second agent. Its a pretty desperate measure.... but from the sound of your post...you are open to all suggestions !

Approach the principal of a rival agency in the area and ask if they could help find a tenant for you. Explain to the principal that although you have signed a management agreement with another agency, you will seriously consider moving the management to the principal's agency if they are successful in finding you a tenant. If things are getting real hairy, you may even offer them a cash incentive if they can find you a tenant - like ...TODAY ! The cash incentive (if you think is financially feasible) will be in addition to a "sub letting fee" which your management agent will pay them (this is standard practice between agents in these arrangements).

As a general rule, I find Principals of agency respond VERY WELL to opportunities to pick up a management. They are certainly more incentivised to secure your business than say the property management staff. If you also drop hints like you might be keen on selling the property through them in 12 months time subject to market conditions....that can really fire them up. Property management staff need pressure/incentive to perform.... and who better to give that than the principal of the agency?

The above is just an idea that i found worked well for me personally. But everyone's situation is different. If you implement - however small - some of the suggestions set out in the above posts you will find your property will have just that wee bit edge over other properties in the area...and some times that wee bit differentiation is enough to secure a tenant.

Good luck (cos at the end of day, there is an element of luck involved as well!)

Cheers

Waverly

 

[paulzag]

Pets in NSW Bodies Corporate

Reply: 3.1.1.1
From: Paul Zagoridis


Changes to NSW Strata Titles Management Act or Regulations (I don't have the reference handy right now) mean that the body corporate can no longer deny reasonable requests for pets. That includes dogs and cats.

While it is still necessary to ask permission, it tends to be a formality these days.

Paul Zag
Dreamspinner
WealthEsteem coming soon at...
http://wealthesteem.dyndns.org/

 

[WebBoard]

Reply: 3.1.2
From: Simon St John


And further to Paul's comments, we've shipped out a Golden Retriever, two cats and a bird for the day when in came for inspection time in the past! Mind you, we were very responsible tenants in a house with floorboards and tiles!

I do know there are horror stories around too....

 

[michaelg]

Reply: 4
From: Michael G


Steve,

Search the archives for posts by Michelle Bain on renting (aka Michelle B), she has some good ideas on getting tenants.

Is your place close to a Uni?, maybe sub-lease the rooms under a master lease, build up your cash flow slowly?,

Just a thought.

Michael G

 

[WebBoard]

Reply: 5
From: David Robinson


Thank you all for the informative posts here.

Dave

 

[Sim]

Reply: 3.1.2.1
From: Sim' Hampel


I'm not gonna move the goldfish !