While borders may be opening and many organisations returning to business as usual, it is still a challenging environment in some parts of the rental market.
Vacancy rates in inner city areas are higher than normal and according to Jo Natoli of The Rental Specialists, that means landlords and property managers have to work together to achieve good outcomes.
Natoli, who manages properties throughout the Sydney metropolitan area, says there are three fundamental things investors and their property managers need to do to ensure they find tenants in a timely manner, particularly during times of high vacancy.
They are – promotion, presentation and pricing.
“You need to get those three things in the right order to maximise attracting a tenant to your property and minimise your vacancy,” Natoli says.
“They’re all interrelated, you can’t have one without the other.”
Natoli says promotion is the most important step of the three.
“That’s where you’re initially attracting the interest of prospective tenants and it’s really, really important to promote your property properly,” she says.
She encourages investors to buy the best possible advertising on larger portals and ensure they use good quality photographs.
“The biggest complaint from tenants is that the photos are manipulated in such a way that it’s no longer a true and accurate reflection of the property, or they’ve been taken so many years ago that they’re no longer real or applicable,” she says.
Natoli is using videos and virtual tours to advertise rental properties as well, which she says is proving quite successful during COVID.
After ensuring you promote your property correctly, Natoli says it is essential that it is presented properly for prospective tenants to look at.
She prefers a property without furniture in it as she says that allows her to showcase the whole of the property.
“I would much rather have it vacant,” she says. “And I would much rather spend a few dollars and do some virtual staging if it is one of those odd layouts that lends itself to some furniture to stimulate a tenant’s imagination.”
Aside from that, Natoli says it’s essential the property is clean and tidy.
Once promotion and presentation are sorted, it’s time to work out the pricing.
Natoli says a lot of investors think about price first and not the other things – and, while it is always a factor, pricing doesn’t mean anything if you’re not attracting people to the property in the first place.
Too many landlords become fixated on achieving a certain rental and don’t listen to what their property manager and the market are saying.
It is false economy to have a property vacant for months while chasing a few extra dollars a week.
“I always say to my clients, ‘I would rather you have, especially in these really difficult markets, 100% of something than 100% percent of nothing’, because that just does not make financial sense whatsoever.”
Costs, such as council rates, water rates, and strata levies, keep adding up even if you don’t have a tenant in paying rent.
“You need to generate an income of some sort in this difficult market because when you become a landlord, you become a small business owner and you need to start thinking like a small business owner.
“Ultimately the market will tell you what the rent is going to be. And if you don’t listen, you will suffer vacancy. And remember, every week vacant is a 2% reduction of your revenue.
“If you have a vacancy you are losing money.”
Natoli says owners need to ensure their investment properties are kept to a high standard of maintenance, which will both keep the tenant happy and in place and also help maintain the value of the asset.
It also important to be selective about what tenant is allowed to move in.
“Make them submit applications and do your checks and balances. And make sure that you’ve got all of your paperwork in order.
“Do your entry condition report properly, it will save you some headaches when the tenant moves out. And then once you’ve got that make sure you’re doing your inspections regularly.”