How to Compete for Tenants When Vacancy Rates are High
By Sharon Fox-Slater on 27 Feb 2014
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Photo: Pedro Reyna, Creative Commons
Fuelled by low interest rates, home lending to property investors is at a record high – leading to the prospect of increased competition between landlords hoping to attract tenants.
When rental vacancy rates are low, finding a tenant is relatively easy. Tenants will flock to open house inspections, apply for multiple properties and sometimes offer to pay above the asking rent.
If necessary, they also compromise on the quality and location of their desired property.
However, if vacancy rates rise, prospective tenants can afford to be more choosey and landlords are forced to compete for their attention.
There are a number of things landlords and their property managers can do to increase their chances of successfully securing a tenant for a vacant property – beyond the obvious tactic of reducing the rent.
Here are 10 tips for landlords in a high-vacancy-rate scenario:
1. Add Sought-After Extras
If your property lacks a dishwasher, heating, cooling, an outdoor entertaining area or adequate storage, adding these popular items could get it rented out faster. A fresh coat of paint can also work wonders.
2. Put Together a Professional Advertisement
Many advertisements for rental properties aren’t flash – with poor photos, no floorplan and a cursory description that fails to appeal to the tenant’s emotion as well as their wallet.
“If vacancy rates rise, prospective tenants can afford to be more choosey and landlords are forced to compete for their attention.”
If you commission a floorplan and professional photos, which can have virtual ‘furniture’ added for scale, you can use them every time your property is vacant.
Make sure the text in the advertisement sells tenants on the experience of living in the property, not just the number of bedrooms.
3. Try Video
Some agents are starting to experiment with video in advertisements, which could also be worth a try.
4. Allow Pets
Australians are a nation of pet lovers. If you allow tenants with pets into your properties, you’ve got a far wider pool of prospective occupants – and much less competition – as many landlords won’t allow pets.
5. Make Sure Your Open for Inspections are Convenient
When properties are in plentiful supply, prospective tenants can only afford to attend open house inspections that are at a convenient time for them.
Make sure your property is open for inspection at least twice a week, including on the weekend.
6. Seek Feedback
Get feedback from prospective tenants at the opens. Are they interested? If not, why? Is it something you can address?
7. Be Flexible on the Lease
Be flexible in the length of the lease – some tenants want the certainty of a two-year lease, while others may only need six months.
8. Be Vigilant about Rent Rises
If you do drop the rent to get a tenant, don’t forget to be extra vigilant when it comes to subsequent regular rent rises – moving is a hassle and most tenants are prepared to pay extra to avoid it.
9. Don’t Lower Your Standards Too Far
It’s better to have no tenant than a tenant who is always late with the rent or leaves your property trashed.
10. Understand Your Insurance Coverage
If your property is vacant for an extended period of time, it is important to notify your landlord insurance provider to discuss the implications and make sure you remain covered.
