Being a landlord is challenging and, in a slow market where stock outnumbers prospective tenants, it is especially important to have a thorough understanding of the current environment.
Landlords need to take a hard, objective look at their properties, says Lorraine-Marie Dellbridge, rental manager in the Southern Suburbs for Lew Geffen Sotheby’s International Realty.
“In 2015, we saw a considerable increase in rental prices and, as the cycle goes, those prices have started coming down, along with a declining economy which has seen little growth during in recent years.
“In these tough economic times, a landlord has to look at the bigger picture and appreciate that tenants are looking to be positioned right, with all the space that they need and the lowest possible impact on their bank accounts.”
Dellbridge says there are generally two types of tenants and it’s important for landlords to establish which type they want to attract - and who their property is most like to attract.
There are the lifestyle tenants who want to be seen living at the “right” address and then there are those who want to be close to their favourite activities.
A surfer wants to be close to the beach, while the up-and-coming investment broker wants to be on the top floor of the newest, trendiest building in the CBD.
The common denominator these days, she says, is that almost all tenants are looking to cut back on the financial impact of renting.
“We have found that tenants will even move within the building where they live, simply because another two-bedroomed apartment in the block is going for less.”
Bearing in mind that the largest cost for owners is vacancy loss - when you’re not earning rental income - it becomes apparent that now more than ever, it’s critical landlords enter the market at a realistic and competitive price point.
Furthermore, there are a number of other key factors that contribute to determining the success of an investment property in the rental market, Dellbridge says.
“It should go without saying that landlords must ensure that the property is neat and spotlessly clean and that any appliances are in working order. But this is not always the case.
“First impressions are very important, especially when prospective tenants are spoiled for choice.”
That said, while a fresh coat of paint will make a world of difference, landlords should be wary of over-capitalising in the hope of attracting a higher-paying tenant.
“If a tenant can find a similar, but cheaper property, in their preferred area, they will apply for the cheaper option. Lifestyle tenants are more likely to be impressed by, and pay for, added bells and whistles but those are few and far between.”
Security is another determining factor. “Lack of security and secure parking will put many tenants off, especially single women, and it’s worth spending a little on securing your property.”
In the current market, Dellbridge notes that it is especially important for landlords to appoint an experienced agent who not only understands the market in their area, but also has a thorough grasp of the law, especially the impending upgrade of the Rental Housing Act.
“You’ll also have peace of mind knowing that your property is being maintained in a professional manner that includes timely payment of the rent each month.”
She says it’s important to note that unless your property is in the “student central” area or is a pristine, furnished property in an estate, furnished properties tend to stay on the market for considerably longer.
“More often than not tenants ask about the possibility of the furniture being removed, so before you furnish a property, ask an agent about the feasibility thereof.”
Dellbridge concludes: “The long and the short of it is that landlords need to arm themselves with knowledge about where the market is right now, preferably aligning themselves with professionals who can guide them.
“And remember that, at the end of the day, keeping the current tenant is always easier than finding a new tenant.”