You know what it is like, you buy your investment, you choose your property manager and now all you have to do is wait for the tenant applications to roll in. However they are not. It has been over 10 days and nothing….
A long vacancy period will kill your profitability on your investment. However it will be worse if you approve a tenant who you know is probably not the best and you have to take a chance. Your Landlord insurer will want to have a look at your application also so if your due diligence is not up to par they may not pay up if the tenants defaults. I cannot emphasis enough how much I do not want you to approve the wrong tenant so that your property is occupied – that is not the aim, the aim is to have it profitable.
Let’s look at the top 5 reasons your rental property is still vacant.
Is the rental amount comparable to other properties in the area?
You and I both know that not all properties are created equal. Just because your best friend has a 4 bedroom property in the same suburb that is renting out for $650 pw does not mean that your 4 bedroom rental is valued at the exact same rate.
If your property is not worth the asking price tenants will not apply. If you property has fewer amenities than others in the marketplace then you will need to consider lowering your asking price to find an appropriate tenant.
Instead of offering 1 weeks’ rent free – consider this “insider tip”. Let’s say that you have a property at $650 pw you want to offer 1 weeks free rent, but a property manager cannot advertise that on the various websites because they only have the ability to enter the rental price on the various rental websites. So tenants have to look for the more expensive price and then ready the header where most agents will write REDUCED PRICE, 1 WEEK RENT FREE etc, so why not calculate how much a discount is over 12 months and then advertise the property at that price instead i.e.
$650 x 52 = $33,800 per annum
$33800 – $650 = $33,150 per annum
$33,150/52 = $637.50 per week
Advertise it for that price or round it up or down but that way the property manager can entice more people to look at your property as the cheaper the property the more enquiries you will receive. You do not receive any less – you just market it differently.
Are you looking for the Hen’s teeth?
As you know many landlords can choose their own criteria (as long as they adhere to Legislation) for their ideal tenant.
Most of the time when screening tenants, landlords will make a decision based on rental history, income, general background and references. Some landlords believe that they can only rent to the top tier tenants – this usually happens after a Landlord has had a bad experience.
If you set your criteria or income too high, you might not be able to find a tenant. When I check applications I always work out what the affordability rate of the tenant is i.e. the rent not costing the tenants anything more than 30% of their total income. Anything more than 30% and it tends to be difficult for the tenant to meet all of their financial requirements.
In the past we have accepted a tenant with a fair to good rental history, especially if they have excellent references and verifiable income instead of waiting for that perfect tenants (which never exists).
I hate the property manager
Have you ever walked into an office to ask about a rental only to be given the cold shoulder and basically treated like scum by the Receptionist or the Property Manager? Would you like to work with a Property Manager like that for the next 12 months? It can be an instant turn off for tenants. However, it works the same way with Property Managers too. I have met demanding & rude tenants at inspections and I have thought to myself that there is no way that my client (or myself) will be able to maintain a relationship with them over the next 12 months. Sorry but if you are rude to the Property Manager at the first inspection, I can guarantee that you will not get the property.
If you are finding that your investment is constantly vacant, then I think that it is time that you (and your friends) did some “secret shopping”. Ask a friend to call the agency to organise an appointment to see your property. Does the Property Manager return the call? Do they turn up on time? Do they have keys? Are they professional and polite? How does the Property Manager treat your friend. I have known one to sit in his car smoking until someone turned up to view the property, then he would open up the door and the prospective tenants basically showed themselves through whilst he was on his phone outside.
Check out their online reviews, we all have tenants who hate us because of bond issues or owners who did not get the result that they wanted however look at the majority of the comments. What do they tell you?
A Property Manager may have one face for their clients and another for their tenants. I know one Property Manager who when faced with a tough email she just deletes it – she is the owner of the agency! I could not believe it when I saw her do that! Imagine what the rest of her staff are doing if they feel that this behaviour is sanctioned! Honestly I was flabbergasted.
Remember that your Property Manager is a direct reflection of you. If they give a negative first impression then there is a great chance that applicants will pass your property.
Putting a for rent sign out the front and and advertisement in the newspaper will no longer rent out your property.
You need to invest in marketing:
- Professional photos (including aerials now that we have drone photography)
- For rent sign out the front
- Placed on rental list
- Emailed out to relocation agents
- Emailed out to prospective tenants weekly
- Placed on various websites (the main one in Brisbane is realestate.com.au)
- Promoted to stay on top of the other listings. Due to logarithms we find that our landlords have to pay extra for a “promoted” listing instead of a “standard” listing in order to ensure that the property is kept at the top of the listings. You do not want it to fall to the bottom – no-one will see it. (Most tenants only look on the first 3 pages of a property website)
- Open home promoted each week
I have recently seen brand new apartments being advertised for rent, at 1/2 of the regular rental price for the first 2 months. This is an especially good alternative if the builder has provided a renal guarantee with the sale of the property.
You already know my feelings on pets. However for those of you who have not read my earlier blog I will summarise – by allowing pets at a rental property, you will have many more opportunities to find a tenant.
In my opinion more than 70% of tenants have a furbaby. The majority of tenants with furbabies (approx 60%) say that they really struggle to find pet friendly homes. If you allow pets at your property, your listing will be the first pet-owners respond to.
You must also note that when the demand is not there, the price will increase and the tenants tend to stay at homes longer. Do you know what that means? Less vacancy rate which means increased profitability.
I hope you have found this to be helpful – if you want to talk further please feel free to email me firstname.lastname@example.org