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Why would I accept that rental price?

November 1st, 2017

Why would I accept that rental price?

We all want the highest possible return on our investments – and that is our job as a property management company. Real estate is a numbers game whether you are talking about sales or property management. We advertise on the most sought after websites and increase your properties exposure to available tenants through target marketing and effectively using our client management systems.

So what happens when a fantastic tenant walks through the door but offers less that the asking rental price? Well firstly the application is thoroughly processed and then presented to the owner however, it is a constant struggle for an owner to see their weekly income being reduced. They have a figure in mind that will cover their necessary payments however it is easy to see below that if they accept the lower rental figure now then the rental income for the year will be the almost equal!

Tenant A offers $410 per week (Owner wants $430) and wants to move in on the 1st of October 2017.

$410 x 12 weeks (to take us until the end of December) = $4,920.00

 

Tenant B will pay $430 per week but will not start until 1st of November 2017.

$430 x 8 weeks (to take us until the end of December) = $3440.00

 

When I have in the past had a landlord reluctant to take the lower offer I show them this equation. Also note that rent increase can be put into place – offer the tenant a 6 month lease to begin and after that we can build in a rent increase. It is always better to have income and it is clear to see here that it provides a financial benefit. Note that this is purely our way of closing the gap of current market conditions to expectations of the client. At this stage in Bunbury there is an over supply to demand although not as prominent as in the sales sector it is important to lock in those A+ tenants at market price.

Our advice is do the numbers, see if it is viable. Do not accept a bad tenant at a lower rent just because your property is empty. In the long run you are better of accepting a good tenant at a lower rent to make sure your investment is respected and maintained. Trust your property manager to be forthcoming and honest. Here at Umbrella we pride ourselves on honestly, hard work and customer service. We are calling our tenant databases on a regular basis, we are active community members and we own property so we know what it is like to be on the other end!

If you have any questions in relation to this information or would like to talk to our qualified property manager please do give us a call on (08) 9779 9990. We always like to talk property!

 

About the Author

Celestine has been in the Real Estate Industry since 2002. She has competed in some of the most competitive markets in Australia. Combine her strong negotiation skills and keen customer service to achieve the best results for her clients.

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