Property Investment
4 min read
Author: Tom Greene
Business Development Manager with 5 years Property Management industry experience. Property Investor in Christchurch
Reviewed by: Jess Knight
Business Development Manager with over 3 years of experience in Property Management in Auckland.
You’ll often get a rental appraisal when you buy an investment property.
That appraisal tells you how much rent the property might get. And you use that number to figure out if the property stacks up financially.
But here’s a question I get all the time as a property manager: “Tom, when you say my property will rent for $600 a week … how accurate is that really?”
If you tell me a property will rent for $600 - $620 a week … does that really happen?
At Opes Property Management, we believe that property investors deserve straight answers.
But, to the best of our knowledge, no other property managers track or lease this data publicly.
That’s why in this article, we want to be the first to do just that. So you’ll see our actual data. That includes what we said a property would rent for vs what it actually rented for.
That way you will know whether our rental appraisals are accurate (or not).
We have 2 property management teams at Opes Property Management – Auckland and Christchurch.
Over the last 5 weeks, my team in Christchurch has rented out 55 properties (at the time of writing).
I went back and compared the rental appraisal we initially gave investors ... to the actual rent those properties achieved once tenants moved in.
So if we said that a property would rent for $550 - $570. Did it rent within that range? Or was it higher? Was it lower?
Here’s what we found:
Of those 55 properties, 2 rented higher than the appraised range (4%). 3 rented below the appraised range (5%).
That gives me a lot of confidence that our rental appraisals are accurate. It means 95% of our landlords are getting the appraised range (or higher).
Now, you might be thinking: “Tom, sure, it’s easy to get it right if you just give me a massive range.”
“What if you tell me that my property will rent for $500 - $600 a week. Then you just push me down to accept $500 a week. And that counts as renting within the range!”
Fair point. So let’s look at the data.
The median property (in that analysis) was rented smack bang in the middle of the range.
How close are our Auckland rents vs the appraisal?
Let’s look at the data for our Auckland team. Honestly, the numbers aren’t quite as good. But, I’d rather give you the numbers than hide them.
And there’s a good reason for why they are they way they are.
But, let’s start with the data. Looking at 36 properties we recently rented:
We want those numbers to be better.
But, keep in mind that Opes Property Management is a little different to other companies.
Most of the rental properties we appraise are New Builds. So we give a rental appraisal. Then the property gets built. And we often don’t rent the property for another 12 – 18 months.
Over that time the market can change. Christchurch rents have been flat. But Auckland rents have fallen.
So by the time we’ve come to rent these Auckland properties, rents have dropped.
Compare that to most property management companies. They will give a rental appraisal and rent the properties around 4 weeks later. So it’s the same market.
If we look at the average property we rented in Auckland, it rented at the lower end of the rental appraisal.
So if we said a property would rent for $600 - $650 a week – the average property rented for $600 a week.
If we just look at the properties that were rented under the rental appraisal, they average property came in $20 a week under the lower of the range.
So if we said a property would rent for $700 - $740 a week, it rented for $680. But that’s the average of just those properties that did rent below the appraised range.
These numbers are in line with the wider market.
We are committed to improving these numbers. And we will update these numbers are we get more data.
Some properties rented at the top of the range, some at the bottom. But, on average, if we said a property would rent for $550 - $570 a week – we got a tenant at $560.
We’re not doing this to pat ourselves on the back. Or to beat ourselves up.
Here at Opes, we want to be the most transparent property management business. So we release our internal data to show where we are strong (and also what we’re working on).
That’s why we also release our vacancy rates.
If you’re trusting us to manage your property, you should know whether we set the right expectations. And if we’re delivering on them.
That’s why we release this data. That’s our commitment to you.
Business Development Manager with 5 years Property Management industry experience. Property Investor in Christchurch
Tom Greene is the Business Development Manager at Opes Property Management in Christchurch with over five years of industry experience and is also an experienced property investor. Tom provides tenancy guidance and insight to those both starting and continuing their investment journey.
