Vacancy Rates and Your Investment Property

Vacancy rates are an important factor to take into account when buying an investment property but what is a good vacancy rate in Australia?

When looking at purchasing a property, obviously vacancy rates are going to be a very important factor. You want that property to always be rented and every week left empty is lost income.

So when a region or area is over that 3-5% mark or higher, then that should immediately be a red flag for you. It doesn’t necessarily mean that it’s not a vibrant area or that it’s not a growing area. It just means you need to do more research before you can be confident that there is a high enough rental demand for your property now and in the future.

An investment property’s strength is fundamentally determined by its ability to make an income. So, finding and keeping good tenants is the key to maintaining strong income for property investors.

It’s not surprising then that the #1 reason clients of Vault Property Management left their previous managing agent was dissatisfaction over the amount of time their property was vacant. This could happen for a number of reasons, not enough advertising on the right websites, not processing tenancy applications quick enough and it could be that they are not holding enough open for inspections to generate local interest.

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Questions you should be asking your Managing Agent

Q: Is there something wrong with my property?
One of the most common reasons for vacancy is infrequent or neglected repairs. Invest the time and the money that is necessary to keep your rental property operating in top condition.

Image is also important in attracting and keeping good tenants. A coat of paint, an outdoors clean-up or adding a few extras such as a security screen or some new plants can work wonders.

Q: Are there more avenues for marketing my property?
The days of print classified advertising for rental properties is just about over – it’s all online. Ensure that your property is advertised on the right real estate websites for your property, the managing agents website and on social media.
Some examples of what you are looking for;

  • Online listings on websites such as realestate.com.au and domain.com.au
  • A professional ‘For Lease’ sign at the front of your property
  • Email blast to past and current rental database

Q: Is the rent for my property set at the right price?
Communication with your managing agent after an inspection is important. Has there been any enquiry? How many people turned up? If a lot of people showed up and no applications received, is it the right price? Don’t expect your property to increase automatically every year, rental markets fluctuate so be sure to know your market.

Choosing the right property manager can be a daunting task, especially if you’ve never rented a property before. In order to find the right property manager, you need to ask the right questions.

  • What is your process on inspections and showing perspective tenants?
  • How can you demonstrate your knowledge of the current rental market in my area?

Before buying an investment property please make sure you carry out research on the rental market and that you are purchasing a property that suits the local demographic. Buying in an area dominated by home owners ensures there is no oversupply of rental stock and you’re not competing with too many other investors. In our experience of working with a local investment firm we have seen a high trend of investors heading to Brisbane to buy properties off plan. This will in turn over supply the market in general, including the rental market, resulting in downward pressure on rental returns and increasing vacancy.

If you have a property that is at risk of over supply or want to know how to get your tenant onto a long term lease, click below to receive your complimentary market review and health check.

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