18 Sep Why is my property vacant?
There is no denying that we seem to have moved into a tenant’s market in the rental economy. Statistically, this is said to occur when vacancy rates are higher than 2%. On the ground it means that properties are taking longer to rent, and in many cases rents are dropping. If you’ve observed other properties in your area renting faster than yours then it’s time to look at some factors that might be deterring potential applicants.
The rent might be too high
Times have changed in many suburbs across Australia and we are seeing rents fall. The rent your current tenants are paying may be higher than what the market is now prepared to offer. If the rental market in which you are listing has a vacancy rate greater than 2% you may need to factor in a rent reduction. Also, when setting the rent you must compare current rents in your area and consider the condition your property. If you are asking for significantly more rent than surrounding rentals your property must be in a better location, a better condition, or you are including additional services in the lease.
There are some design flaws or your facilities aren’t up to scratch
Tenants want clean, private, convenient, and secure properties so if your property isn’t fitting the bill for these you might not be getting a look in. Simple little things can bring up the feel of your rental like: a fresh coat of paint, new carpet, air-conditioning, or extra security measures. These are an investment, as they will decrease the time your property is left vacant.
Tenants don’t know your property is available
Successfully leasing a property is all about being visible. This means online. The days of securing a tenant through a classified ad are over. Don’t miss out on being seen by not being on property advertisement sites like: realestate.com.au, and domain.com.au. Don’t be afraid of popping a ‘For Rent’ sign out the front, if people are looking in your area they’re likely to be driving past your investment property.
The property isn’t marketed properly
If you’re not getting noticed it might be time to refresh the image of the property. By this I mean taking more (high quality) photos of your property. You need the place to look clean, well lit, secure, and well maintained. Always include a photo of the property’s exterior so perspective tenants can get an idea of how everything fits together and looks from the street.
It is also important to include the address in the listing. By not doing so you will automatically exclude many potential tenants who won’t bother to call or email to inquire. Why should they in this market where there are plenty of other properties available? Location is a key element when tenants make a choice. Hiding the address cuts out this very important criteria. You may have current tenants who ask you not to include the address as they ‘don’t want strangers pulling up outside’. Ignore this. Your priority is to find a new tenant. Excluding the address significantly hampers this.
How do I pinpoint the problem?
If you’re advertising the property and not receiving any enquiries you might be advertising through wrong channel (print not digital) or not properly marketing the property (poor presentation, no address), however the number one cause is usually because the rent is too high. Tenants know what other properties are renting for and price is the primary and most direct factor by which they compare.
If you are getting very few enquiries off the advertisement, and no one attends the open home, then it means the rent is too high. If you are getting enquiries, and people are inspecting, but no applications are being lodged, this means the market does not see good value for money in the property once they’ve seen it for themselves. Are is the property untidy or poorly maintained? The best way to find the answer is to ask tenants for feedback once they’ve inspected.
If you’re getting enquiries and inspections but no one is applying then you need to take a look at your property’s value for money. Try to get some feedback from the inspections and see what elements need an upgrade. Or reduce the rent to match the standard of the property.
Where do I go from here?
Now you know the problem it’s time to make some changes. Reducing the rent is an obvious solution and usually has good outcomes. This is better than holding out for your desired rent. Be realistic, in some markets it may be necessary to make a significant reduction. This is a better financial option than a vacant property.
You could consider a rent incentive where maybe the first week’s rent is free, or give the tenants a retail gift card equivalent to the week’s rent. This is also a great way to make your advertisement stand out. The worst thing you could do is not take action. If the market is not responding to your rent price then you’re being sent a clear message that the product is too expensive. Every week that goes by is a hit to your bottom line.