Most investors who hold property long term, do so with the intention to benefit from capital growth in the value of the property. But lets not forget that its the rental income which makes the long term hold both possible and profitable.
The rental income usually goes most, if not all of the way, towards covering the holding costs or mortgage, rates and insurances etc. Sustaining that all-important rental income, maximising you returns and minimising the risk of extended vacancies, reduces the risk of having to fund those costs out of your own pocket for any extended period of time.
So how can you reduce risk? Easy, by attracting and keeping the best tenants for your rental property. When your tenants decide to vacate, the next most important thing is finding your next tenant quickly.
Here are my top tips on how to rent your property faster:
Before you even advertise a property for rent, you should get plenty of internal and external photos taken, preferable professional quality where possible, but only when it’s looking its very best, which can be achieved by:
. Cleaning out gutters
. Repainting the interior and/or exterior if required
. Pruning shrubs and trees
. Mowing the lawns
. Re-mulching garden beds
. Connect the power so the property doesn’t look dark upon inspections.
Sometimes we can be guilt of giving more regular attention to maintenance and repairs to our cars than we do to our investment properties. Yet your property is not only worth a lot more money, it’s also going up in value not down.
One way to attract and retain tenants is to ensure you attend to any repairs as soon as they’re reported. Maintaining your property will make it a more attractive home to current and prospective tenants. It will safeguard its long-term capital value and can be attended to as the need arises, rather than one larger outlay in repair costs.
A modern kitchen with stainless steel appliances, adequate storage and bench space will capture the attention of prospective tenants.
Dishwashers and air conditioners are now considered everyday essentials to most. Ample light and ventilation, and quality window furnishings also impact on the appeal of the property, and will keep your tenants happy.
You never get a second chance at a first impression. Many tenants will register to inspect a property, but will cancel after a drive-by if the kerb appeal is less than pleasing. Your tenants are responsible for the gardens while living in the property (unless written in their lease as an included service to the property), so make sure your property isn’t being advertised while looking untidy. It’s a good idea to keep an eye on how large or overgrown your garden may have become over time. An annual trim or tidy-up is a great idea before trees or shrubs become big, or potentially dangerous.
Small refurbishments and updates can be a profitable way to increase your rental yield and long-term tenant prospects. Its important to avoid over-capitalising, so concentrate on cosmetic improvements which will impact the overall appeal. These can include a fresh lick of paint, replacing tired carpets, cleaning and re-sealing kitchen and bathroom silicon and grout, updating fans, lights and tap ware.
Improving the visual appeal of a property increases demand which in turn translates into shorter vacancy periods.
Changes in local demand and supply can sometimes cause a shift across different rental markets. Stay up to date with whats happening in your market in order to meet rental price expectations. We watch this very closely for you at all times while your property is managed by Ray White Warrnambool.
While you don’t want to undervalue your rental property, you also want to avoid alienating potential tenants by asking too high a price either and having your property sit vacant for an extended period of time.
As an investor you want to minimise any potential damage to your investment. However, when you consider that around more than 68% (and increasing) of all Australian households own a pet of some kind, you can see how wanting to rule out our four legged friends could significantly reduce your potential tenant pool. There are of course pros and cons for allowing pets in your investment property.
Part of our role as a professional property managers, is to act as the middle person between yourself and your tenants. Experienced Property Managers are generally great judges of character and are quick to read the signs of an applicant who is either concealing a bad rental history or issues with the condition and presentation of their previous properties. Part of that process will include checks against national databases, affordability and employment checks along with personal references and searches. The best time saving strategy long term, is choosing the right tenants in the first place.
In excess of 90% of rental properties are generated via realestate portals in Australia, predominantly realestate.com.au and domain.com.au, and the vast majority of those are viewed on smart phones and tablets these days. For this reason, good quality photos are important as the quality marketing text.
A poor quality photo taken and an advertisement that reads like a shopping list will most likely miss the mark of that right tenant, and therefore not generate the volume of response which will allow your property manager to have a range of choices about, who to rent to, how soon they can move in and how long they wish to stay.
InspectRealEstate (IRE) is an online real estate booking system and phone app which Ray White Warrnambool has incorporated in our services which allows tenants to book to attend schedule property inspections, helps property managers to register who has attended, who will be applying and then report back to the owner in real time at the end of the inspections.
Up to date technology like this provides many time saving benefits, and communicates efficiently with all interested parties. It lets tenants and landlords know how an application is progressing as well as alerting potential tenants when a suitable property is about to become available. Often a pre-qualified tenant is just waiting for the right property to come up.
Keeping the objective of the minimum days vacant front of mind, there are two considerations here.
Once a tenant gets close to their moving out date, both the house and the stress levels can be at high levels, so it’s best to get the sourcing of a new tenant and viewing inspections out of the way early – before the mess of packing begins. The second consideration is that most tenants are needing to give at least 28 days notice (if on fixed term lease) or 14 days (if on month to month lease) of their current property. So start advertising a least a month before the property becomes vacant where you can. Getting organised early can mean the property is only vacant for a matter of hours or days, rather than weeks.
Giving your outgoing tenants a clean list of cleaning expectations all in a form of a checklist well ahead of their vacate date should allow ample time for them to handover the property in a very clean and tidy condition. The property manager will attend to do the exit condition report and arrange for any cleaning or maintenance issues to be addressed.
Many rental markets experience periods of higher and lower demand throughout the year, and Warrnambool is no different. Our town has a lower demand over the winter months and properties can remain vacant for longer. Conversely demand is highest over the summer months as many families and individuals prefer to relocate around the end of the year and settle before christmas or before school resumes in the new year.
If your property has become vacant in that quieter time it would be worth allowing your tenants an initial 6 months lease, then renewing during the busier time for 12 months. This would bring your lease renewals into line with the peak demand periods. In the event that your property does become vacant again at the end of that lease, a new tenant should be much easier to find quickly.
No landlord wants to see their property vacant for any extended period. It is however something we need to plan for and have enough of a financial buffer to avoid a short vacancy causing stress. Whilst we all want new tenants quickly – we more importantly; want the right tenant.
Be sure to call Shannon Callanan on 0413 050 606 if you would like to know more on any of the topics above.