Most experienced investors understand that $500 a week for fifty two weeks a year means more money in their pocket than $550 a week with several weeks vacancy during the year. So if maximising income from rental property investment comes from keeping their properties occupied, why do some landlords charge such high rents that their tenants move on whenever they get the chance and new tenants are slow to move in?
It is a fact of life that some investors fail to see the big picture and only look at the money in their pocket ‘right now’. They are blind to the possibility of rent loss down the track and don’t see that they might create dissatisfied tenants who move on when they find a better value option, thereby creating a cycle of high turnover and increased vacancy.
The negative to high rents don’t stop there. Investors whose properties are ‘good value’ get more enquiry and can afford to be more selective when deciding who will rent their property, while those asking over priced rents get fewer and less well-referenced applicants and commonly attract those who are desperate. From experience these people don't realise they cant afford the high rent until it's too late. If a property stays empty because the rent is too high, owners can get desperate enough to overlook a tenant’s patchy references; in the effort to get the highest income, they make themselves more likely to get less because poor references could mean greater likelihood of getting behind with the rent.
New investors can avoid a lot of common errors by making use of the expertise of their managing agent. Many novice investors don’t think of asking their managing agent’s advice until something goes wrong, worse still, some managing agents are too scared of the clients reaction to recommend a rent reduction. Investors who do their homework and advise their agent up front what their needs are find it much easier to keep abreast of what’s happening and avoid confusion. The most important thing is that you select a property manager who you believe has the experience and local market knowledge to give you the most valuable advice.
