The rent reduction conversation is never an easy one between property managers and landlord’s. What it simply comes down to is an open line of communication and an education process on current market conditions. There is always a reason why a property doesn’t rent. To help landlords understand why, Director at iThink Property, Kylie Walker has underpinned the factors which may affect rental income and could trigger the drop in rent.


Three P’s

In our ever-changing digital world renting a property is no longer about simply putting up a sign. With 95 percent of our tenants searching for a property online, it is the primary source of securing a tenant in today’s market. From the start we need to ensure the property is presented well, by that we need to ensure our photos are high quality, any outstanding maintenance or renovations are completed, essentially, is it a property you would live in? We then need to promote it, and this comes in varying forms, but generally via a prominent internet ad on leading real estate websites does the trick. If we still can’t rent it, it simply comes down to the third and final ‘P’, Price.

The Market

The market essentially determines what rent should be. It really is a matter of supply and demand and unfortunately rental prices do not consider how much rent you as the Landlord, need (or want) to cover your investment holding costs.  Whilst the market will ultimately determine the price, getting an experienced property manager to handle rent negotiations for you is beneficial.  Their knowledge of the current market and expert negotiation skills will ensure you receive the best rent possible for your property.


Less rent better than Zero rent

Sometimes lowering your rent to attract/ retain a tenant is a smart move. For example, let’s say your property is available for rent at $400/ week. You decide not to accept an offer of $390/ week from a tenant who will move in right away. If your property is vacant for two weeks, you’re actually worse off in terms of annual rental income received, than if you’d accepted the lower rent straight away.

There’s also a tendency to advertise at a higher rent, with the intention to ‘wait and see’ before lowering it.  If you’ve already come to terms with idea that you may receive less rent this time, you might as well lower the rent now.  It can help to differentiate your property and minimise vacancy time.


The cycles

We all know very well that real estate goes in cycles. Rents go up and then they go down. And then they go back up again. Rent on your property may have fallen recently, but if you’ve had your property for a while, chances are you’ve received good rent in the past, and chances are, those times will return.


Losing out

When it comes to lease renewals the dilemma is always, do we put the rent up and risk losing a good tenant, or do we leave it as is. Ultimately this comes down to the market, advice and negotiation skills of a good property manager. Generally speaking,  it is difficult to justify a rental increase to a tenant if the market doesn’t support it, tenants are savvy these days and know the rental market.


Short term pain, long term gain

This one can be hard to remember, particularly if holding costs have recently risen or you’ve had maintenance issues to deal with making cash flow tight. It’s important to remember your underlying investment strategy, or why you purchased investment property in the first place.  We all need the regular rental income, but is it this, or capital growth in the property over time that you are after? Keep sight of your goals.


Kylie Walker 
0439 895 808


Kylie brings a wealth of communication and marketing skills to the team at iThink Property. She helped launch and develop the company’s rent roll several years ago and has organically grown the business with iThink Properties rental network now spanning Ipswich, greater Brisbane, Toowoomba and the Gold Coast.