Despite contradictory media reports of vacancy rates in Victoria, in many Melbourne suburbs vacancy rates remain relatively high in comparison to this time last year. And with high vacancy rates comes some difficulty with leasing property, with lower than anticipated rental income and time periods for leasing both being affected.
There are numerous reasons for higher than usual vacancy rates in Melbourne.
An increase in new property developments that have settled over the past six to twelve months has stimulated the number of properties for lease on the market, as well as an increased number of first home buyers and first time investors (perhaps attracted by the remarkably low interest rates Australia is currently experiencing).
Whilst the lowering of rental yields is disappointing for landlords, the good news has been the declining interest rates; so whilst your weekly rental may not have improved (or sometimes even declined), the average loan commitments on an investment property have decreased by thousands of dollars per annum in some cases.
Ensuring your investment property leases within a short period of time, at a rental point appropriate for its specifications, is essential in ensuring the financial success of your investment. So what are the key points to remember when leasing your property? Here we detail our six top tips:
1. Maintain Your Investment Property
Ensuring your property is well maintained is essential for the longevity and value of your investment. Your Property Manager should arrange for regular inspections to safeguard against any potential damage or works that are required. Items like appliances, flooring and paintwork are subject to wear and tear and may require replacement every five to ten years. Although your Property Manager will keep abreast of these matters, it’s also important for you to inspect your property regularly and keep well informed of any matters that need addressing. And remember; a well kept property will lease much quicker than a property with maintenance issues.
2. Be Competitive & Realistic With Rental Pricing
Although a factor, the rental price of your investment property should not be dictated by increased rates, maintenance costs or body corporate fees. With a fluctuating property market comes varying rental pricing.
Your Property Manager should inform you of the most appropriate rental price for your property. They will set the monthly rental by comparing the rental price of comparable properties currently available for lease, or recently leased, in and around the suburb of your property.
With almost all properties listed on the internet now, potential applicants have access to view all available properties and pricing in the area and will be searching for the best deal. If you have an investment property similar to many others available at the same time, then it’s sometimes worthwhile to set the rental at a competitive price (perhaps $5 to $20 lower per week than average), which will draw the most enquiries.
Remember, if it is a choice between lowering your rental by $5 to $20 per week versus your property being vacant for a month, then you are almost always better off by marginally lowering your rental price, which will minimise loss in the long run.
3. Advertise Appropriately
Ensuring your online advertisement ‘sells’ the property in the best light to potential tenants is essential in generating enquiry, and therefore competition, for your property.
It’s important the wording used in your advertisement is enticing and realistic, noting all applicable features including any communal gardens, swimming pools, gyms and parking spaces.
Investing in professional photography whilst the property is vacant is also a good idea. Photographs can be kept and reused each time the property becomes vacant, which will enable the property to be advertised quickly once a tenant provides notice to vacate, showing your property in an immaculate condition in the event that you are conducting inspections whilst the property is tenanted.
4. Professional Cleaning; A Must!
Cleanliness goes a long way when advertising for, and maintaining, quality tenants. The better your property presents, the easier it will be to secure a tenant.
The Residential Tenancy Act states that a property must be kept ‘reasonably clean’, although thereis some ambiguity with this ruling as there is no specific definition of what ‘reasonably clean’ entails, therefore it’s always worthwhile giving your property a little extra attention to ensure optimal leasing conditions. It is worth spending a little extra money to ensure your investment property is thoroughly cleaned and looking new each time you go to rent it.
Detailed cleaning of kitchens, bathrooms and all of those hard to get at areas will really influence the look and feel of your property; remember, the cleaner your property is the more potential rent you are likely to receive.
5. Maintain Gardens, Courtyards and Balconies
If you have a garden, courtyard or balcony area, make sure it is kept neat and tidy.
It is a requirement of a tenant’s lease for the tenants to maintain all areas of the property in ‘good repair’ and return the property in the same condition it was provided to them, with the exception of fair wear and tear.
To ensure your gardens/grounds are maintained you may wish to offer professional services to tenants at a cost to yourself, or include it in the price of the rental. Once a garden gets out of control, it can be a lot of work (and cost) to get it back into good condition.
6. Furnished Property; Know Your Style
If you are renting your property fully furnished, (which can be a real plus for investors wanting to earn extra rental income) then you need to pick modern, simple and fashionable items that will appeal to the broader market. The objective is to create a minimalist style so any occupant can add their own belongings and flair.
Keep in mind that furnishing an apartment will limit your target market, and if you are unable to find a tenant wanting to move into a furnished property, then you may be faced with removing and storing the furniture in order to lease your property, which is both time consuming and costly.
Maintaining the quality of a rental property is in the best interest of both the landlord and the tenant. Having an experienced and efficient Property Manager for your investment property not only takes the hassle out of the ongoing maintenance of your asset, but they can also facilitate clear communication between tenant and landlord so that all parties are comfortable with the arrangements at hand.
Brodie Williams, Property Portfolio Manager – John Hopkins
Image by fantasista at FreeDigitalPhotos.net