Finding new tenants for your investment property during COVID-19
What a whirl wind it has been and I am not sure about you but I am tired of hearing the words pandemic, we are in this together and difficult times now!
So welcome to living with COVID-19. If you didn’t like change, I am sure by now it is growing on you! In our bubble of real estate we are an agent that has always thrived on change. I believe if we do not keep changing in our business we will not keep up with the times in so many ways which I believe to be very important.
Our Property Management Department covers around 12 km radius of the Melbourne CBD, and mostly the inner East, South and North with a few in the West. So this is the market that my article today is referring to.
The rental market is currently in an oversupply with properties due to COVID-19 and it certainly is a renters market for a lot of the properties at the moment. Our company usually runs at .01% vacancy rate, but now we are running at approx 1% vacancy rate – this might not sound like much but it is a lot more for us even though it is much better than the general market.
Currently we have more properties on the rent list that we have seen in our 20 years of business and it is certainly all hands on deck. We have fabulous systems and processes to find tenants quickly and lock them in – but they need to be looking first. Ben Maros our Leasing Consultant extraordinaire is doing a great job of booking inspections and with the full teams assistance keeping on top of the amount that is needed.
WHY IS THERE AN OVERSUPPLY OF RENTAL PROPERTIES?
There are a number of reasons we are seeing an oversupply in the Melbourne rental market right now.
Airbnb market has taken a big dive with no one traveling to Melbourne for holidays or short stays. This is not only due to restrictions but also the governments directive to “stay at home” to stop the spread. Many of these properties have now been unfurnished (or in some cases left furnished) and have come onto the general leasing market.
No migration from interstate and overseas has been happening
There are now no overseas students coming to Melbourne and many Aussie students have moved back with parents as they have no income to support living without their hospitality casual and part time positions
Companies with leases for serviced accommodation have given up their leases so owners have now had to put their properties on the general market
People who have needed to live close to the city before for work reasons have now discovered they do not need to, with working from home making it easier to live further away. We have seen many move from their own home (and placing it on the market) or giving notice to leave the home they are renting.
People with a second home base in the inner city who have in the past used it for ease when they visit, may not be able to now visit for an unknown time so have released their property onto the general market.
With the oversupply it is natural that we are now seeing rents drop on properties in order to find a new tenant. Unfortunately it is a bit of a race to the bottom, particularly for city apartments. We are seeing the market drop up to 20% in these areas.
Properties that are tired or need some work are also seeing the same difficulties in finding new tenants quickly without reducing the rental amount from what the owner has been receiving pre COVID.
SO WHAT DO WE DO TO FIND GREAT NEW TENANTS QUICKLY?
To get your property leased quickly, and to a great tenant, and without your rental declining, there are a number of options for you.
If your property is in good condition with no maintenance needed make sure your property marketing is standing out from the crowd. To do this you need to;
Make sure you are using professional pictures
Virtual furniture in empty properties makes your property look a lot more inviting that others that are not showing how furniture would look to make it a home
Virtual or video tours are a must especially in the COVID market. Many are preferring not to brave the inspections and we have leased properties to people in quarantine or lockdown with our tours too. Travelling to see properties from another state is also a lot more difficult than it has been in the past too.
Floor plans are a great way to show your lay out. You would use them for sale to attract the right buyer so why not for your rental property too
Good descriptions are so important. Do not have abbreviations (not everyone knows what a BIR or WC is!) and make sure all of the features are listed
It is important to provide lots of available times for inspections for potential tenants – also keeping in mind any current restrictions for viewings and if you need to have one on one appointments or you can do a group viewing.
If your property is missing items that will help attract a tenant add then in now. Many tenants will pass over properties that do not have cooling and a dishwasher for example. The updates to the Tenancy Act (VIC) also require all properties to have heating so if you do not have it – add it in now. We are seeing now more than ever that properties without outdoor areas or car parking off the street are being passed over for those that do. If you are looking for a new investment, look for these attributes.
We would recommend updating your property now if you need to. It is a good time in the market to have your property not rented to undergo renovations. With rents lower, a property sitting empty to do upgrades costs you less than in better times when the rent and demand is higher. Simple upgrades like new door handles, light fittings etc can be done right through to upgrading kitchens and bathrooms. Consider how old your flooring and blinds are – generally for an investment property they will last for 5-7 years. Is it time to upgrade? How long has it been since you repainted?
Outdoor areas can be easily updated to be clean and tidy and attractive. If you have a larger garden that requires maintenance, have you considered supplying a gardener included in the rent. A tenant who loves a garden may not love the maintenance and not only will this give you extra eyes on your investment every month but a tenant will love to move in to your maintained property over one that is not.
Don’t rule out a new kitchen or bathroom too – these items are the big ticket ones that help you to achieve a higher rental return. Consider what the cost will be and what the cost of not doing it will be in a % basis on return. Not on what you pay to what rental you receive in $ terms. This is not how investing works.
Consider proactive rental drops. If your property is not leased in the first week and you have followed the advice above finding a new tenant will be about the market overall and your pricing. Watch what other properties are advertised for that are comparable but REMEMBER these properties are not leased either….you need to be under them to get the new tenant first!
Obviously cash flow for you is important too so if you need more information on what you can do to make your property more appealing don’t hesitate to call us.
Domain & Co. are Melbourne’s Rental Experts. If you would like more information on how investing in property can be easy for you call Melanie today on +61 416 218 003 or email at firstname.lastname@example.org.