The key to being a successful property investor is understanding why rental property vacancies occur and the devising a strategy to keep your property tenanted to the right residents at the right price. In this article the LITTLE REAL ESTATE team outline how rental property owners can be ahead of the pack with leasing their properties out.
Establishing a sustainable cash flow base for your portfolio is essential if you hope to build wealth through property investment.
As such, devising a strategy to keep your property tenanted to the right residents at the right price should be at the top of your priority list, alongside optimal asset acquisition and finance structures.
One of the best ways to minimise vacancies is to understand why they occur in the first place. Thereby reducing the inherent risks every property owner must address in order to shore up the necessary income for mortgage repayments, maintenance and holding expenses.
While you need to give yourself a little breathing space from the end of one lease agreement to the commencement of a new one, in order to:
- Have new leases drawn up and executed
- Write condition reports
- Clean carpets and attend to any small maintenance jobs
Anything beyond three to four weeks between tenant turnovers can become problematic for your cash flow.
A good way to avoid extended vacancy periods is to understand the four inherent risks that can increase your exposure to them.
Wrong Rental Price
This is generally the most common reason a rental property remains empty. With masses of market data available via online property portals, today’s tenant is more educated (and discerning) than ever.
If you fail to price your property according to market expectation, you’ll fail to attract the market. It’s that simple. Hence, the rent you set should be based on what the market is willing to pay, not just your financial needs as a property owner.
Ask yourself – is it better to budge a little in the short term, to have a more sustainable asset that generates consistent income rather than sporadic bursts of interrupted cash flow?
Selling your property to a prospective tenant should be approached in much the same way you’d sell to a prospective buyer. One is arguably just as important to the long-term viability of your portfolio, as the other.
The first step in making your marketing work to minimise vacancies is to know your tenant. Understand who you’re appealing to – what do they want? What are they prepared to pay for it? And how you should speak to them?
First impressions count, and that includes things like the images you post to accompany your online advertisement.
Today’s world of digital marketing is a highly visual medium, where prospective tenants generally make decisions on the basis of their immediate emotional response to your property, based on the photos you use.
Staging your property to translate its livability in pictures is important to make it stand out from ‘the crowd’.
Sometimes there’s no escaping the fact that the location of your asset is not suited to the majority of tenants — lacking the necessary amenities to attract and retain good long-term tenants.
Your residents require a diverse local industry base, within easy commuting distance for employment opportunities. Or how will they pay the rent?
Today’s tenants also prioritise lifestyle amenities and well-established social infrastructure, such as education and healthcare facilities. This all goes back to knowing who your tenant pool is and targeting their requirements accordingly.
Little Real Estate is Australia’s largest independently owned real estate company. If you are looking for a manager to look after your investment property speak to Angela Paradise on 0429 495 269. To get your Management Fees FREE for 6 months click here.
General Advice Warning: The advice has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice, in light of these objectives, financial situation or needs, before following the advice. We recommend that you speak to your accountant and financial adviser to help you determine whether direct property investment is right for you.