Landlords are harming their bottom line by refusing to be flexible with the rent they charge, says a property analyst. So how can a property manager help change their mind?
According to Simon Pressley, managing director of Propertyology, too many investors fail to contemplate current market conditions when setting their rent levels.
Mr Pressley believes this poor decision-making is ultimately harming investors’ bottom lines.
“What is the sense in insisting on a particular rental figure at the expense of a longer vacancy period? It is irrelevant how much rent you ‘want’, or how you justify it, unless the market is prepared to pay for it,” he said.
PM coach and Real Plus business manager Hermione Gardiner said she recently conducted a webinar training session on what to do when a property won’t lease, and found price is a significant factor.
“It broke down the different variables as to why a property won’t lease and, generally, what we found was that it will usually come down to price, where the presentation and promotion is on point,” she told Residential Property Manager.
“A good majority of landlords will listen to our advice when pricing a rental property, but there will always be landlords who will have slightly unrealistic expectations.
“Whilst they may think they know the market, they do not always understand the fluctuations that can take place each week, such as seasonal changes and the power of the supply vs demand cycle in influencing the rental price achievable," she says.
Ms Gardiner believes that backing up your advice with cold, hard facts is the key to achieving a realistic rent.
“Our job as the PM is to be skilled at negotiating and educating the landlord with real data and market information that will support our advice both at the time of initial pricing and throughout the leasing process, where we may need to adjust the price to meet the market,” she added.
Ms Gardiner said there's a plethora of data PMs could call upon, including average days on market; average vacancy rates; weekly trends of prospective tenant numbers searching in the area; current comparable properties available; recent leased prices vs advertised price; website page views; enquiries received; viewings conducted; and applications received.
“What I love about data is that it doesn’t lie and, where used correctly, will support the advice we are trying to give when it comes to price adjustments,” Ms Gardiner said, adding, “Using a comparison table to demonstrate the actual and potential loss to them will assist your plight.”
“Of course, despite our best efforts, some landlords will still be stubborn about adjusting the rental figure – often it is an ego game for them.
“I suggest to try talking face to face with them to express your concern. Lay all the data and actions taken on the table and come back to the question of what is most important to them. Ask, ‘Is it more important to you to achieve a higher rent with a long vacancy, or should we slightly reduce the rent for a fast result and minimum vacancy period?’"