While low vacancy rates and strong rent yields are currently proving favourable for property investors across most major cities, market conditions can (and do) change as cycles move in and out of peaks and troughs.
Income derived from weekly rental payments is what sustains your portfolio. It helps you cover costs like the mortgage, insurances, rates and maintenance, among other things.
Essentially, it’s your bread and butter as an investor, and your most consistent form of cashflow. Or at least, it should be!
The key is to sustain that all important rental income, maximising your returns whilst minimising the risk of extended vacancies and therefore, periods of cashflow drought.
How do you do this? Well, you can start by using the following 11 tips to attract and retain good tenants for as long as possible.
1. Repairs and maintenance.
One way to keep worthy tenants is to ensure you attend to any genuine repairs as soon as they’re reported.
Not only will maintaining your property make it a more attractive home to current and prospective residents, it will also safeguard its long-term capital value.
2. Don’t forget the outside!
Some outside jobs should be done to maintain the curb appeal of your property if you need to relist it at the end of a lease term. Others represent a potential safety hazard and deserve your attention to ensure no one is injured on your premises.
Although your tenants are ultimately responsible for the gardens whilst living in your house, when it comes to the law and things like overhanging tree branches, it’s a good idea to address any small problems before they become big ones.
3. Put your best foot forward
When marketing your property, take plenty of internal and external shots, but only once it’s neat and tidy and you’ve enhanced its visual allure by:
- cleaning out gutters
- repainting the interior and /or exterior as required
- pruning shrubs and trees
- mowing the lawns
- re-mulching garden beds
Include a well-written description on your listing that gives prospective tenants a sense of what it might be like to live in your property on a daily basis. Providing information about local transport links, shopping and cafes/restaurants is another great marketing tactic.
4. Presentation perfect
This naturally follows on from the above and really just confirms the importance of impeccable presentation. Now, more than ever, tenants are becoming increasingly discerning as they’re forced to pay higher rents.
In return for their money they expect a certain level of comfort and amenity, so if you want top rental dollar (and consistency of income), ensure all fittings and fixtures are in good repair and replaced as required.
5. Consider the inclusions
Does your property have a modernized kitchen with shiny stainless steel appliances? Or is it more a time capsule with furnishings dating back to the seventies?
Once considered luxury items, things like dishwashers and air conditioners are now perceived as everyday essentials.
Installing quality light fittings and window furnishings, as well as the extra comforts we look for in a home, will keep your tenants smiling and your rental income flowing.
6. Add value
Minor refurbishments can be an excellent way to boost your rental yield, and long-term tenant prospects. The key here is to avoid over-capitalising and focus on aesthetic improvements that will also increase the capital value of your asset.
7. Know the law
Ending up before the residential tenancy tribunal is never ideal. It can cost you a lot of time and money if you fail to comply with the requirements outlined in your state’s residential tenancy legislation.
Failing to adhere to safety laws around things like smoke detectors, electrical appliances and pool fences not only attracts hefty fines, it could also mean your property sits vacant while you take the necessary steps to address any breaches.
8. Know your competition
When something causes an imbalance in the supply/demand matrix across different rental markets, you’ll often see vacancy rates creep up into the 3 to 4 per cent plus range, or tighten considerably, depending which way the scales tip.
Know what’s happening in the area in order to meet market expectations. While you don’t want to undersell your rental property, you don’t want to alienate potential tenants by asking an excessive price either.
9. Be reasonable about the rent
This isn’t just about pricing according to market expectation when relisting your property, it’s also about carefully considering any potential rent reviews.
Investors have the legal right to reasonably increase the weekly rent on your asset in line with inflation and other factors, but sometimes you need to weigh up whether an extra $5 or so is worth possibly losing good tenants over.
10. Consider pets
As a property investor you want to minimise any potential damage to your investment, so it’s understandable that many landlords stipulate a ‘No pets’ policy when marketing their asset.
However when you consider that around 63 per cent of all Australian households own a pet of some kind, you can see how discriminating against our four legged friends could significantly reduce your potential tenant pool.
11. Communicate effectively
Engaging a professional property manager as the conduit between yourself and your tenants can greatly improve communication between all parties.
Effective communication is essential to ensure any concerns are addressed before they escalate into a potential tribunal appearance, or a tenant decides to move on to greener pastures and you’re left with an empty investment.