Vacant investment property? February is the month to get it tenanted
February is one of the busiest months for prospective tenants searching for rentals, according to REA Group. For investors, this may mean one of two things. Either you can easily snap up a new tenant for your vacant rental, or you may see your tenant looking to move elsewhere.
While the trend is increasingly to marry and have children later in life, realestate.com.au has surveyed and found that 55% of those they spoke to would be more than happy to move in with their partner within 12 months of dating.
Just one in 10 will wait until they are married to move in together, with two-thirds noting they’d rather set up an entirely new home with their significant other than try to move into the others’ space.
General manager of sales and operations, Arthur Charlaftis, said that a change in life stage is one of the biggest triggers for those looking to move rental properties.
“The decision to move in with a partner, or away from a housemate, often prompts people to re-enter the property market. The suburb profile pages on realestate.com.au help tenants and buyers to understand the demographic of the suburb they are considering, helping them to make a more informed decision,” Charlaftis said.
And with February being “the month” for tenants to be shopping around, it’s time to take advantage of the increased number of eyeballs looking at your listing.
If your property has been vacant for some time, then you need to identify what the problem is.
There are three factors that you need to look at:
Demand
Price
Presentation
Tips on tenanting your vacant rental on the next page. Please click below.
Getting that vacant rental tenanted
DEMAND
Firstly, check the demand in your suburb. A quick way to do this is to head onto SQM Research and look for the vacancy rate. The lower it is, the higher the demand for rentals, and the more likely this isn’t the problem.
However, in a suburb where dwelling types are mixed, it’s worth working out whether this blanket rate of demand applies to your property. Head onto a listings website and find out how many properties there are for that suburb – then check how many there are that are comparable to your property.
As you do this, make sure you’re keeping careful watch on how many are superior and how many are inferior to your property.
You then want to call a property manager – it might be worth calling one that isn’t your own if they can’t seem to provide any new information on why your property isn’t seeing much interest – and ask about the tenant demand on their books.
Five questions to ask:
1) How quickly are my type of property e.g. three bedroom, two bathroom units, being rented out?
2) What number of applications do you tend to get? (And what type of people are they – students, families etc?)
3) How much are tenants paying for them?
4) Are there any features they are looking for more than others?
5) How often do these properties come up for rent?
Ensure you’re comparing apples with apples – if your block is on a main road, or doesn’t have air conditioning when others do, you’d do well to mention this to the property manager. Your property type is also likely to dictate your tenant, according to Terri Scheer Insurance, so you need to know what type of person will be looking to rent this home.
For instance, if you have a ‘top dollar’ apartment, then your tenant is going to be expecting ‘top dollar’ amenities. Observer Cameron McEvoy explains what the 10 things are that they will be searching for.
Low demand means you’re going to need to be more competitive.
If demand is or isn’t favourable, then it’s still time to look at aspect number two.
PRICE
For many tenants, price is the top factor that they consider when renting a home. As an investor sitting with a vacant property that’s likely proving to be a drain on your bank account, you might find that a $5 or $10 drop in asking rent will stop the bleed in the short term.
You can head to RP Data for free and check what median asking rents are within a suburb, but by now, you will have looked at a number of comparable properties in the area, including some that are and are not being rented quickly. If your headlining figure is not in line with those doing well, or if you found that demand was soft in the example above, then it may be time to offer a rent discount or a “week’s free” incentive to get a tenant locked in.
Price is likely to be the aspect holding you back from your secure income.
PRESENTATION
Seeing how your property appears to a tenant who is looking at it for the first time can be difficult. It’s important to remember that presentation covers both how the property is advertised, as well as how it appears when the tenant attends an open home.
Have a look at your online listing (this should be on the major listings websites, and potentially on other sites such as Gumtree if you are comfortable with this strategy).
Check for the following:
An effectively written advertisement (does it sell the home’s best features and location benefits?)
As much information as possible about the home.
Good photographs – well lit, neat, clean, tidy and professional-looking photographs are absolutely crucial. It is worth getting these re-done if they are below standard.
Then have a look at the property itself (or the last inspection photographs if you are not close by). Some landlords even spend a night and a day in the home seeing if there’s anything that needs sorting out.
You need to ensure that:
Everything is in working order (no dripping taps, dodgy doors or similar).
Everything is clean – and by clean, it means really clean. Steam cleaning the carpets is important.
Your agent is prepared to maximise the home for its open (lights on, blinds open – just as you would when selling)
You’ve considered all of the senses – does something smell, look, feel or sound bad. Is the traffic noise too much? Is there anything you can do about it (such as timing your open homes carefully)?
The outside of the home has had as much attention as the inside – the yards should be tidy, and the front needs to be as presentable as possible. This is your first impression.
If you still have questions, see if you can find out why your last tenant left.
If your property is still looking a bit lacklustre, it might be worth considering some cosmetic renovations or getting the property professionally staged to provide it the ‘uplift’ it needs at an open home. A lick of paint, some new handles or taps and a bit of attention to the front of the property can really go a long way.
If you are still struggling after this point, it might be time to check how well your property manager is performing in terms of following tenant leads. If your property manager isn’t performing, it will become pretty clear when you have gone through the above steps.
This step-by-step guide to securing tenants will really help you get an understanding of the process a property manager should be going through.