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It's a simple word that sends chills down the spines of property investors.
Perhaps that's a bit dramatic... After all, some vacancy is inevitable (e.g. downtime for maintenance). And at other times, tolerating vacancy until you find the right tenant can be a good long-term move.
However, if you're constantly facing vacancy, then chances are, you've got a problem.
Many investors find it hard to believe that parts of South East Queensland are experiencing their lowest vacancy rates in a decade.
It's understandably frustrating.
Investors who see their property remain vacant for any extended period of time are failing to realise the income potential of their investment. Empty properties also tend to reduce in comparative value, as they fall in state of repair.
Recently, Rental Express Managing Director, Chris Rolls, was quizzed about an investor who had seen their property remain empty for months on end, and then only achieve sporadic rentals.
In answering, he pointed to the four principles all property investors should adhere in order to benefit from the maximum possible return – by way of maximum rental and minimum vacancy rate.
Talk your would-be tenant's language
First, location is a prime factor of where people want to live. Businessmen will want to be near the city, those working on the coast will need coastal property, and families will require schools, parks, and amenities nearby.
There’s a host of possible tenants, all with different locational requirements: understanding the benefits that your property offers and who your target market is will ensure profitable marketing.
First impressions count
Second, how your property is presented will affect its ‘rentability’. Think about the home you would want to live in and the kind of tenants you want to attract. A well maintained garden and a clean and tidy interior will help you rent out your property more quickly. A maintenance plan will help it stay rented.
Know where to set your rent
Third, your property should be priced appropriately for market, and comparably to other similar properties in its location. If it’s not renting, then it may be too expensive. That can be problematic because over-priced properties can attract desperate tenants looking for a short-term solutions. Conversely, if your property is too cheap, then it could seem 'too good to be true'. As a results, high quality tenants may overlook your property completely.
Create a pool of tenants to choose from
Finally, a property can only be optimally rented with optimal marketing. A skilled property manager will have a wide network of potential tenants to market to, as well as access to other forms of advertising. It stands to reason, that if only a fraction of potential tenants know about your property, then only a fraction can apply for it.
What you can do if your property suffers high vacancy rates
If your property isn’t renting, then it will be because of one of the four must-dos above. Take a look at your location, and make sure your agent is marketing to the right sector of renters.
Make sure you ask for feedback from viewings, and act on criticism of presentation. If potential renters don’t like your colour scheme, then it’s time to go neutral.
Finally, speak to your agent about pricing. It could be that you have unreasonable expectations about achievable rents, and your agent should be able to guide you on this – reducing rental expectation by $50 or $60 a week is better than having a property remain empty for six months at a time (or even a few weeks for that matter!).
We’ve put together way to receive a free and independent evaluation of a property’s rental potential here.
By Simon Waide, Rental Express