For owners of an investment property, one of the most frustrating times can be when your house is sitting vacant. Every week that goes by when you don’t have a tenant can take a considerable bite out of your projected yield.
Fortunately, there are a number of steps you can take to protect yourself from a long vacancy period:
Understand the market value of your property
One of the first things you need to do is understand the market value of your property.It is important that when the time comes to advertise the property that you so at market value. Although it may be tempting to advertise at a higher rate, if your property is overpriced you are likely to generate less interest. Your agent should complete a current market appraisal for you. This will compare similar properties of the same size and in the proximity of your investment property that have been recently rented. This will give you an estimate of what your property's current rate should be.
Appoint a property manager that you can trust
Finding a property manager that you can trust and follow their advice regarding price reductions is also vital as they are dealing with vacant properties every day and will be aware of the current market conditions.
Advertise at the right time
One of the key steps you can take is is to make sure your property is advertised at the right time. Generally speaking, 3-4 weeks before the property is available is usually appropriate. If your property is advertised too early then your campaign may lose momentum.
On the other hand, if you wait until just before the property is available then you are unlikely to find a tenant for the first available occupy date. Most tenants will need to give notice at their current property and this may be 21 or 30 days depending on the type of tenancy they are in.
Monitor the campaign and adapt if necessary
When the listing is up, monitor it closely. If you are not getting any interest during the first couple of weeks this can be a sign that your property is priced too high and should be adjusted. As your advertising campaign continues, if you find you are generating interest, but you are not receiving any applications then this is also a sign that there is an issue. This could be price or something else.
Pay attention to presentation
Aside from pricing, presenting your property well for viewings is also vital. Make sure your property is clean and that all appliances are in good working order. Re-paint periodically and choose a hard-wearing floor that is easy to keep in good condition. Keep the gardens neat. A run-down property puts prospective tenants off or could attract tenants who care less for their surroundings. In my experience, a property that looks like it has been cared for is more likely to attract tenants that will care for it.
Offer an incentive
Offering an incentive is another way you can help make your property more appealing to prospective tenants. For example, offering one week's free rent can really help a tenant financially when they are moving. Often tenants have an overlap on their tenancies for a week or so to allow time to move and clean the old property before returning it to the previous agency. A week's free rent can really appeal to tenants and help reduce the financial burden.
Consider additional inclusions
Depending on the type of property you may attract more interest if some appliances are included in the lease. A washing machine, dryer, dishwasher or fridge freezer are all good examples. Be aware however that if any of these items need repair or replacement during a tenancy this is an owner responsibility.
Organise your leases around peak periods
If possible, organise your leases around peak periods. For example; coastal properties or properties with a pool may rent faster during the summer months.
Hold onto great tenants where possible
If you have a current tenant who pays rent regularly and is maintaining the property well it is highly advisable to try to keep them. If they have handed in their notice to vacate contact them immediately to see if re-negotiating the terms of their lease could keep them at the property.
Keep onto of maintenance
While your property is tenanted make sure maintenance is completed in a timely manner and purchase upgrades when required.
Be realistic when increasing the rent
Try to keep rental increases to a minimum and let them know that if you have increased the rent that you have kept it below market value because you value them as a tenant.
Renegotiate lease extensions early
If your tenant's lease is coming to an end renegotiate a lease extension early before the tenant has started looking for alternative properties. If the tenant has any issues address them at this point.
A vacancy period can be stressful and add to your out-of-pocket expenses, but with good planning and know-how, you can certainly minimise the period between tenants.