One of the most common mistakes we come across and it is usually after the fact is clients being incorrectly informed as to the likely rental that their new investment property will achieve.
Many buyers rely on a rental assessment from the selling agent. The one thing that most buyers forget is that the selling agent’s job is to achieve the highest price possible for the vendor. The selling agent is not working for the buyer! (As much as they may claim to be working in your favour). With this in mind it is possible that the rental appraisal they provide on the property can be to advantage the vendor getting the price they want. This is especially easy for properties that have not previously been on the rental market.
Many of these investment buyers have no relationship with this agent, in fact it is often the first time that they have met or had anything to do with them. Then they ask for a rental appraisal and proceed to rely on this information when making the purchase. The appraisal will usually come from a junior property manager without any written back up or straight from the selling agent’s mouth. Usually just a flippant comment:” it should rent for about $400 per week” No back up documentation or no comparable properties.
Based on this information many buyers proceed to buy the property only to be often surprised down the track that the property does not achieve the rental they were told. Then come the excuses “the rental market has changed since you purchased” or “this time of year is always difficult to rent these types of properties” and the best “if you want to rent it now you will have to drop the asking rental”
Make sure you seek independent advice regarding the projected rental before you buy and get it from a trusted source. Someone that you will want to use to manage your valued asset. Even if they don’t tell you the rental amount you want to hear at least there are no surprises down the track. Make sure the appraisal is backed up with some research, comparable rental evidence and by a rental agent that has knowledge about the type of property you are buying.
Hopefully with balanced advice and evidence to back it up there will be fewer surprises down the track and the new investment purchase will be as trouble free as possible.
Domain Property Advocates can assist you with advice on any property purchase and rental appraisal. Because we do not directly sell property we act as ‘your’ agent to make sure you are getting the right advice at the right time – before you sign on the dotted line. Remember the selling agent is working for the Vendor. You need someone in your corner to make sure you are not paying too much or doing your research based on incorrect information.
Domain Property Advocates can provide rental appraisals within a 15km of Melbourne – so when you are looking to purchase your next investment property, give us a call.
