Is Now a Good Time to Rent out Your Property?
The media, REIWA, industry experts have all been talking about the high vacancy rate in Perth, in fact its at its highest since December 2009 at 5.2% and medium rents dropping to $420 per week. The initial reaction to my question is to say no its not a good time to be an investor, but is that really the case?
Yes rents have decreased and the vacancy rate is high, property is still leasing and the yield is still good at around 4%. Property has always been a long term investment; one in which you may need to ride the highs and lows, if you stay in it long enough youll come out ahead.
So is now a good time to rent out your property?
You could apply this question to any big step in life, and if you follow some basic principles and tips, which Im about to share with you, then yes it is a good time to invest in property, especially with interest rates the lowest theyve been in years.
There are two factors which are paramount in assisting to lease your property quickly: Price and Presentation. This is applicable to all properties both new to the market and current properties becoming vacant.
Price: Rents are changing on a daily basis to compete with similar properties. When first advertising your property, it is important to price the rent according to the market in real time and gain first impact interest. Depending on your situation, there could be days or weeks between when your property was first appraised and when it is advertised. The price given initially may no longer be relevant. Your expectations may no longer be met. It is important you accept advice from the Agent when discussing the rental amount at this time. If any reduction is suggested, it is given because we understand the market and the tenants needs. A loss of say $40 per week but obtaining a tenant sooner is less of a loss than holding out for a higher figure, but having no tenant for weeks on end. The longer the property is advertised the initial interest is lost and the property will progress further down the advertising queue. You may then have to accept an even lower rent than what may have been offered previously and spend more money in trying to bring more attention to your property.
Presentation: Newer or renovated properties will be more appealing over those that are looking a bit tired and rundown. A fresh coat of paint, new carpet, low maintenance and mulched gardens will all be attractive features. If the property has a dishwasher recess, people will expect a dishwasher, especially if they have come from another property that had one. Tenants are just like us, they want the mod-cons and comforts too. It is almost a given these days that tenants want air conditioning. With busy lifestyles, people want low maintenance gardens they dont have to fuss over so maybe the garden needs a makeover and automated reticulation. Remember these enhancements arent just for tenant enjoyment, they are adding value to your property, so speak to your Property Manager about what improvements may be required.
If the property was owner-occupied and you have immaculate gardens, then consider a garden maintenance service in the rent, similarly if the property has a swimming pool. Its a small price to pay for owner peace of mind and a relief for tenants. The property needs to be as drop dead gorgeous from day one of advertising as possible, or it may deter applicants. For new builds, this includes ensuring the landscaping is complete, paving sand swept neatly away and building spares and extras removed from the property so people can get a proper idea of space and what benefits they can enjoy when living there.
Beware of exclusions: Sometimes they are a necessity, but locking up your belongings in a shed instead of a storage facility could be a deterrent. Tenants may want storage space. Many also worry about owners requiring access to the shed at any time, or are concerned about liability for loss or damage to the area
Benefits: Let us know of any additional information that we can include to promote your property, eg schools, popular locations, being flexible with pets. This could be the difference in receiving an application or not.
The average days on market is sitting at 35 days before being leased. Tenants are taking their time to select a property, most are window shopping until they find the perfect home for their needs and applying for several properties at once, often still looking and finding cheaper properties and pulling out at the last minute, despite being accepted. Some havent even given notice to their previous agent yet, so even upon acceptance, tenure could be 21-30 days away. But properties are leasing; for example at Rentwest Solutions we have broken our leasing record for August.
Your mortgage repayments: If you havent done a health check on your investment loan, now is definitely the time to review the situation and take advantage of great rates. Lower repayments can make up the rent differential and see you through the tough times.
Custom Financial Solutions are our team of finance brokers who have access to a large range of lenders and they can assist with obtaining the best rate for you. Contact your Property Manager today to arrange a Custom call and reduce your repayments.
Just like fashion and the sales market, the rental market is cyclical and there will be a turnaround in the future. Be a savvy investor: ensure your property is priced and presented well to gain and retain good tenants; communicate with your Property Manager and accept their professional advice.
Is now a good time to rent out your property? Yes, its as good a time as any. Working together, we will steer your investment successfully through the hard times and into the future.
Below are a couple of links to media articles in the last quarter worth considering: