A common fallacy found amongst small property investors is that both rent and property prices continue to rise.
Rents fall when more properties are available. The property investor should be prepared to meet the market price.
As a long term investor in real estate who manages her own properties, I have found that if you have not rented your property within two weeks, the chances are that your rent is too high. It is amazing how just a $5 drop in a $300 a week rental property will increase the number of enquiries. Before setting the rent for your property, do some research. If you are using a real estate agent, listen carefully to the advice they are giving you. They will know what the property is likely to rent for in the current market as they deal with the public every day. If you lose two weeks rent at $300 a week, that’s a lot of money to catch up.
Once your rent has been set for your particular property, if it’s still not getting enquiries after a couple of weeks, implement a planned reduction in rent until you start to get enquiries. Once the enquiries start, chances are that you will find a tenant within the week. Don’t forget to take into consideration times, say over Christmas, when there are likely to be fewer people looking to move.
You need to be competitive in other areas as well as price. You need to present your property so that people want to live there. You can undertake some fairly inexpensive renovations to make the property more appealing.
These are my five top tips to rent your property:
1. Ensure your property is spotlessly clean: This only costs you some cleaning products and a little elbow grease. Alternatively, there are plenty of bond cleaning agency you can employ. It is amazing how old paintwork can be rejuvenated when all the marks are removed with a bit of ‘White Magic’.
2. Ensure you have good security: Money spent on good locks and security grills is money well invested for the long term. Tenants want to know their possessions are safe. Particularly in the case of females living alone, personal safety is also a high priority.
3. Advertise early: As soon as the tenant gives notices, upload your advertisement and try to find a new tenant before the previous one has left. This will give you time to assess if the rental price is too high. As part of my lease agreement, I advise all tenants, that once they give notice, I will be showing the property between the hours of 10 am to 4 pm, weekdays only. Although you will still need to give the required ‘Notice of Entry Forms’, I find tenants are usually at work and have no problem with this arrangement. I never interfere with their personal weekend time, and this is appreciated.
4. Professional Photos: Make sure your photos looks professional. Do not take photos when other tenant’s furniture is still in the property. You will get your money’s worth out of a professional photographer, especially if you have just renovated the property.
5. Ask yourself if the rent is value for money: Put yourself in the eyes of the tenant, taking into account their income given the rental affordability. Look carefully and see what you can change at a low cost to make it more appealing such as new curtains or blinds.
You should ensure that you have a timetable for normal renovations. Sometimes it is easiest to simply do a complete make-over with new paint, curtains and floor coverings. When the vacancy factor is high, this may be an opportune time to do all those ‘little jobs’ you put off at the end of each tenancy.
Glenis Phillips, F Fin
Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.