Guaranteed Rent – Case Study B

Angela has purchased an investment property which she wants to lease and earn rental income from. Angela meets with LongView and together they compare similar properties in the area and agree the market rent is $480 per week. Angela also meets with another agency who advises her that she can get $520 per week rental income for her property.

Option 1: Angela decides to go with the agency that claims she can obtain $520 per week. Unfortunately, they have priced the rent incorrectly so that they can win Angela's business and the property stays untenanted for three weeks. Angela has lost rental income of $1,500 over this period. Additionally, the Agency informs her that they need to drop the asking rent to $470 per week to secure a tenant quickly so Angela does not lose more rental income.

Option 2: Angela decides to ensure she receives Guaranteed Rent income of $480 per week by giving her property to LongView to manage. Whilst advertising the property LongView decides that they will need to reduce the asking rent to $470 per week, however because Angela signed a Guaranteed Rent contract for $480 per week, she is not affect by this rent drop.

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