What To Do When A Property Won’t Lease?
The rental market is ever-changing and is often wrongly aligned with the sales market. The expectation is that if interest rates are low, the property market is booming and therefore the rental market must be booming. This is a very common misconception amongst property investors.
Our primary job in leasing is to coach Landlords through changing market conditions to help them make the right decisions.
Think of the rental market like the stock market – prices rise and fall. If you had shares worth $85 a share and called your broker to demand they sell them at $100 per share, what do you think they would tell you? So why, as PM’s, are we so afraid to give firm advice on rent based on evidence that we collect?
Property Managers can take an active role in educating investors on what the market is doing and why. When we pass on this knowledge we will see a shift from reactive pricing to proactive pricing. Gone are the days where we merely provide a rent collection service. At Real Estate Dynamics, we see evidence that the majority of lost managements walk out the door due to poor leasing strategies and little or no communication with Landlords.
Presenting your investors with relevant content about their investment property is not only an effective way to educate them, it is also a great way to market your existing sales properties as potential investments to your database of known property investors.
Too often media articles report ‘vacancy rates – the lowest they have been in years’; ‘rents soaring’ and ‘rental home shortages’. These can be very misleading and contradict the fact that Agencies have rental properties on their books that are screaming out for Tenants.
As industry professionals we know that leasing a property comes down to supply and demand and two very simple facts: Price and Presentation.
If a property isn’t leasing it’s usually due to one of these factors.
When a property is vacant for any length of time, owners become nervous about not receiving rental income and Property Managers expend time and energy on letting a property without any financial return for their hard work.
Remember that when speaking with Investors, confidence in how you communicate and facts on what you communicate, play an important part in building credibility and trust. An investor is paying you for your professional opinion. You are the expert – don’t forget that.
So – What do we need to consider, and what can we do when we are having problems renting a property?
Some tips to consider:
- Put a new price on it based on your research and market knowledge
- Remember to get lawns mowed and spot cleaning done if the property is empty for a period of time
- Don’t discard good rental applications – put them into another property where possible
- Build a network system with your local agencies, refer great prospective Tenants personally and encourage them to do the same
- Offer a rent-free period or a gift voucher to attract Tenants – carefully consider if a new rent price would be more effective
- Use professional photos that showcase your properties in the best possible way
- Regularly change the advertisement and photos around
- Be creative about where you advertise. Consider advertising through your local universities and schools – perhaps you could align with your local school to feature in their regular newsletter?
- Talk to businesses in your area that might be a source of Tenants and provide them with regular, updated stocks of brochures or rental lists – e.g. Migration Agents; Recruitment Companies, Storage Companies and Home Removalists
- Maintain a prospective tenant database
- Offer your Investors clear comparisons on how marketing can make a huge difference
- Provide Landlords details of properties that you have leased –this will help them see why another property may have leased before theirs
- Offer to cover the cost of upgrading to a premium listing – again, be careful that the property is priced correctly otherwise this may not be effective
- Be proactive, often we have a number of weeks’ notice before a property becomes available – use this time wisely!
- Discuss possible improvements to the property that will add to its appeal eg. Air conditioning
- Talk numbers, if the property sits vacant for 1 week you lose $X, if we drop the price and lease next week you lose $X.
- Talk about selling! Knowing what you know now, would you have purchased this property again? Perhaps it’s time to invest your money elsewhere?
- Get strategic about when to hold an open home, after regular work hours or during lunch breaks is a great idea and may improve interest
- Think outside the box! Consider using videos and/or floor plans. Do something that other agents are not.
- Promote the fact that you have excellent Landlords, show that you provide an excellent service to your Tenants
- Encourage your Landlords to consider pets
- Make it easy to apply for property – ensure your application form is on your website
- Ask for feedback at your open homes and pass it on to the Landlord
- Use your social media page to attract prospective Tenants not just to market your sales property
It is vital to get the very first open for inspection right, this is where you are capturing people who have sifted through all the old listings and disregarded them – they are hot prospects.
If the property is tenanted, encourage your Tenant to present the property well and consider sending them a small token of appreciation for their cooperation and assistance.