A vacant property is every landlord’s and agency's, for that matter, most vulnerable period. While it is inevitable, at some stage when you own an investment property you will have to experience a period of time without tenants. This can be costly if not managed properly, each week without a t…
A vacant property is every landlord’s and agency's, for that matter, most vulnerable period. While it is inevitable, at some stage when you own an investment property you will have to experience a period of time without tenants. This can be costly if not managed properly, each week without a tenant increases the financial pressure, especially if you have home loan obligations to meet.
The goal though is to not only find a tenant but find a quality tenant that is going to pay their rent on time and look after the property as if it was their own. This must be achieved in the shortest time frame possible, to avoid unnecessary financial strain and stress. On the same note, if an agency isn’t doing their job to secure you a quality tenant quickly, they are also losing out on valuable income and they are leaving themselves open to other agencies poaching their vacant properties. A good property manager will set the tone for renting a property quickly from the minute advice is given from or to the tenant. Communication is key and continuing the conversation daily or weekly is equally as important.
Three quick steps to rent your property quickly:
Professional photos are a must, but only select the images that show the property in its best light. Leave the others off the advertisement altogether. Just like you would with a sale property, choose the best-selling features of the property and display them in order of desirability to prospective tenants. For example, a gourmet kitchen or deck with sweeping views is a much better selling point to capture interest as opposed to a standard front of the house image. Also remember it is important to change the images around every week to freshen up the listing, people scroll through a lot of properties, and a new image may be more desirable to a tenant and entice them further to investigate the property. Make sure your property is presented on the major real estate portals like rea and domain, that is where the majority of tenants are searching these days. It is also important that you have a large ad, on the first page, even if you have to pay a little bit extra for advertising, it is worth it. Tenant statistics confirm, most tenants don’t scroll past page two.
Advertising with the correct price can mean the difference between weeks or months on the For Rent list. Your property manager should have an in-depth discussion with you prior to advertising a property for rent. This discussion should include a market update on what the local rental market is like (only a locally based agency will know this). There are also some great reporting tools available to agencies which offer updated statistics on what properties in the area have recently rented for (it is one thing to see what they are currently advertised at, but another to see what they actually rented for). Deciding on your strategy is the next vital step. It’s not just about picking a price and seeing how you go.
There are two main options you will need to consider:
- Do you start the price high and hope that you will achieve a higher rental return? The risk here is that you will likely be vacant for longer unless demand in your area is high and supply is limited. It would be a no brainer to engage this option if there is a real demand for the style of property you have, as there may even be competition for it and an even higher yield will be achievable.
- Do you advertise just under the market i.e. one of the less expensive properties in the area? There is no real risk here. If there are 10 similar properties in your area for rent, but you are $10 cheaper, it is more than likely you will rent your property before the others. If you take $10 less per week, it is better than missing out on the full rental asking price for several weeks.
You really need to trust your property managers advice here, but certainly ask as many questions as you can about the current market, do your own research on the major websites, and if your property manager doesn’t really understand the local market or isn’t demonstrating any urgency to get your property rented, then it might be time to look at another agency.
Get as many people through as often as possible. It is no point having the property for rent if you aren’t showing people through. An agency should have a set number of ‘open times’ or ‘viewing times’ per week for your property. If they aren’t opening it up, good chances are you will be vacant for a lot longer.
The other side to this is also not narrowing your tenant selection options too much. If you want your home rented quicker you may have to consider taking tenants with pets, most tenants do own a pet of some sort. You can have tenants sign a pet agreement which stipulates the rules and agreement for the pets, i.e. outside only, gardens and lawns to be fixed if damaged by pets, etc. By excluding or limiting certain people from renting your property you are potentially looking at longer vacancy periods.
Sometimes and in different market conditions, for example, if there is a new housing development being built and there are many properties available for rent all at the same time, properties just won’t rent. If that is the case then it is ultra-important that your property manager is proactive in coming up with solutions and strategies for renting the property. There is no point having it sit there vacant week after week.
Tips to finding a tenant:
- Incentives – sometimes you have to offer something different to all the other properties. This may be something like two week’s free rent, a $100 grocery card, paying for the internet or phone connection, or free mowing for 3 months, etc. Just something to stand out from the competition.
- Price reduction – as discussed above, your pricing strategy may need to be reconsidered. If you were one of the highest rental prices, you may need to come in just under the market. You could negotiate an increase in rent after an initial time frame, again there are other options you can discuss with your property manager to boost the rental return once you have secured a tenant.
- Upgrades on websites – for a small fee you can look at upgrading your listing to a more prominent ad or having it reloaded onto the front page of the major website. If you’ve slipped past page 2, this option should be considered.
- Photos and copy – if you haven’t invested in professional photos already then you will need to consider this. If your property isn’t presented properly most tenants won’t even bother to look at it. Your copy or advertisement should be edited, making sure the heading and the selling points or desirable aspects of the property are prominent or at the very least mentioned.
- Maintenance/improvements – listen to feedback from your property managers and tenants. If the air con has been a major stumbling block for tenants, then it might be time to look at adding one. In markets where the supply of rentals is high, and the demand is lower, tired, run-down properties tend to struggle and stay vacant longer. It may be time to speak with your accountant or financial adviser and look at putting some time and money into a few updates, this could be something as simple as painting the property or replacing the carpets, to bigger improvements like a new kitchen or bathroom. Your property manager should be able to assist by providing quotes and project managing for you.
Bad tenants can be a nightmare, for landlord’s and property managers, here are three top tenant screening steps:
- Affordability – can the tenant afford the property. This standard calculation for this is 30% of your total income. For example, rent shouldn’t be any more than 30% of your income so if you earn $1200 per week the weekly rental amount you could afford is $360. Employment details should be checked and a reference from the current employer to confirm income amount is correct. If there are previous employment details supplied, it is also handy to check with them as well.
- Rental history checks – agencies should check with at least the last two rental agencies or private landlords. These should be provided in writing, covering questions including, did they look after the property, was the bond returned, where they in rent arrears or receive any breaches, amongst others.
- Tenancy database checks – a lot of bad tenants but not all, will be added to Tenancy Default databases. The most popular is TICA. Tenants who have defaulted will remain on this list for up to 3 years.
A vacant property is stressful for a landlord and an agency should strive to rent out your property as quickly as possible for the best possible rental return. Communication should be constant, with weekly reviews of strategies and solutions to secure tenants.