1. Investigate demand before buying
If an investor depends heavily on rental income, the strength of the rental market should be a critical factor in deciding where to buy.
“Investing is about current and potential supply and demand, and what you want to do is exploit the difference,” director of Right Property Group Steve Waters says. Buying in a location with high demand is the best way to secure a continuous flow of interested tenants, he says. In addition, the property’s size, type and character can impact on its rental appeal.
In a highly competitive market, he suggests adding extras to encourage tenants to pick your property out of the pack.
“Air conditioners don’t cost a lot in the gran scheme of things, and a tenant will always pick an apples-for-apples property with air-con rather than not” he says.
2. Put work into finding a quality tenant
An owner eager to fill a vacancy may be tempted to fill a vacancy may be tempted to bypass screening procedures for new tenants. However, selecting sub-standard tenant for the sake of expediency may end up costing the owner more in the long run, Mr Waters advises.
3. Keep the property in good condition
A property that is well maintained and nicely presented will have tenants lining up around the block.Overgrown yards and damaged fittings send the message that the owner does not care about the property, says property manager Terence Pethybridge. This may attract tenants with lower standards of cleanliness and maintenance.
4. Rapport with tenants
Property managers and owners can benefit from being on good terms with the tenant, according to Mr Pethybridge.
“You engage with the tenant, you find out how their work has been going, whether they are enjoying staying in the premises,” he says.
“If you’ve got a nice rapport with a tenant, they’re going to look after you a lot more than if you don’t” he suggests.
A tenant who has a good rapport with the property manager will give more notice of changes, be more amenable to walk-throughs and report fewer issues.
5. Consider offering a rental discount to exceptional tenants
Rental discounts can reward quality tenants. However, there are risks involved in being overly generous. Mr Waters is often willing to offer a slight discount once the tenant has a proven track record.
“A tenant who you never hear from, who always pays on time and keeps your asset in very good condition, I believe that is worth something. It might be $4 a week, it might be $10 a week,” he says.
Smart Property Investment, February 2014 issue
Lynne Wilton, The Formula – A mentor’s guide to confident property investing.