You just had some bad news. Your property manager informed you that your tenant has submitted their notice and they are vacating in a few weeks. What can you as the landlord do to fast-track the process of finding your next tenant and minimise your vacancy period?
With many developments and about 75,000 units due for completion in both Sydney and Melbourne in the next 2 years (source Corelogic), the prospect of prolonged periods of vacancy on rental properties is real and something that all investors – especially in areas of over-development- need not only be prepared for financially but more importantly, mentally.
In times like these, your property manager’s worth will really be tested and those that have systems, processes, experience, great salesmanship but also capacity to look after your individual needs – versus the many other vacancies they have at the same time – will survive. For others, prolonged periods of vacancy are almost a certainty, which will cost YOU thousands of dollars.
So what should you the landlord do to make sure your property is vacant for the least possible time? Here are my top 8 tips for landlords that are sure to fast-track the process of finding your next tenant.
1. Show your property manager up front that you are interested and will be actively engaged.
Oftentimes, property managers will let you know that the tenant has put in their notice, and then… nothing…. You go on about your daily life, forgetting that the clock is ticking towards your next mortgage repayment. My biggest mistake as a landlord myself early in my investing career, was to just trust “the process” assuming that wheels were in motion immediately and sadly, often they weren’t.
Every day that goes by with nothing happening, is a day lost. The process should start from the very first communication. If your property manager is proactive, on the first communication – in which they alert you of the vacancy – they need to be able to discuss with you the state of the market, their marketing strategy, the rent they have in mind, the repairs that may be needed on your property, and next steps. If they don’t, my advice to you is to get on the phone to them and discuss these questions as soon as possible. Don’t assume that the wheels are in motion or that your property manager has you as their number one priority, as a lot of them are simply too busy.
Nothing motivates and encourages property managers more to work hard than knowing that the landlord is interested in the process.
2. Ask your property manager for regular updates.
Your property manager should be providing you with regular updates. If they don’t, you need to ask for them. By having regular updates, you achieve three things. Firstly it continues your “being actively engaged” mantra which keeps property managers motivated, secondly it keeps your property manager on their toes, and thirdly and most importantly, it helps you be on top of progress. Little outward communication during a vacancy and usually not a good sign, and one that could end up costing landlords big dollars.
This doesn’t need to be a formal report. At NextGen for example we have a policy of sending a simple email with number of enquiries on the previous week, some commentary on attendees at inspections, the number of applications received, online ad traffic stats, and our thoughts about the next steps on the campaign and the rationale.
3. Be informed – Do you own research.
These days, it’s pretty easy to keep an eye on what the market is doing during your campaign. It doesn’t take a lot to get on realestate.com.au for example, where you can easily see how many other properties are up for rent in the immediate vicinity or close proximity to yours, how they compare to yours, and their advertised rents. By doing so regularly, you will be able to see for example if other properties are being rented (whilst yours isn’t) and what others agencies are doing with their rents.
If other agencies are dropping their rents, maybe you should also. If other properties are holding their advertised rents maybe you should hold yours also OR perhaps you may want to be a first mover. There is no right or wrong decision as what you do, depends on your circumstances but it enables you to be informed, and prepared for your discussions with your property manager. It also helps you confirm that the property manager is also actively monitoring the market.
4. Push your property manager to complete any improvements quickly.
Vacancy periods are the perfect opportunity to fix all those little things that may have gone unattended previously – but they need to be done quickly. Whilst this may be repairs of general nature to address wear and tear which you may have had to do anyway, they could also help with the rentability of your property. It’s not too expensive to do a lick of paint, to put in some new Ikea kitchen cupboard doors, or to change an old carpet, all of which could make all the difference in the world to a prospective tenant – who may have just visited a similar property that’s hadn’t had any improvements.
In fairness, if your property manager is doing their job, they should be letting you know about any such improvements coming up as part of their regular inspections. Your job here is to make sure the property manager jumps onto these so that they are completed quickly. Push them to organise tradespeople early so that on the day the previous tenant moves out, they are on hand to commence. The sooner the repairs are completed, the sooner the photographer will be able to get in and the sooner the ad will go out. This is another reason why time is of the absolute essence when the notice has been received.
5. Be readily available and easily accessible.
Acting quickly is of absolute essence during this time. That is essential for the property manager but also true for the landlord. When your property manager receives an application from a great tenant, they will need to discuss with you and finalise immediately. Every hour that passes with the tenant waiting, is an hour that another agent may be calling them to congratulate them on being successful on their application on another property. This is because it is very common for tenant to view a number of properties on the same day and apply for more than one.
A lot of times, good tenants are lost to other properties, because the property manager was unable to get hold of the owner to discuss. Good tenants don’t hang around forever in a tenant’s market where so many people are willing to offer all sorts of incentives.
If it is not possible for you to be easily accessible – you may want to consider authorising a friend or family member to make the decision on your behalf.
6. Prepare to be open minded and encourage your property manager to be creative.
Times like these, require landlords to be more open minded than ever. If for example you previously resisted having pets in your property, but a great otherwise tenant submits an application with a small, house-trained pet, it may be time to reconsider. Pet owners make great tenants and a house-trained pet would rarely cause any problem.
If a great prospective tenant indicates that fly screens or NBN connectivity is important to them, you may want to consider having them done as part of getting them approved.
If your perspective tenant wants a non traditional term period (ie 7 months), would you knock them back?
And the list goes on. Being flexible, open minded, and creative may be the difference between getting a great tenant or missing out.
7. Have realistic and fair rent expectations and listen to what the market is telling you.
We all love our properties and think they are special, but the reality is that to a tenant your property is quite similar to others they have seen. Having realistic and fair expectations on what the rent should be, should be the ultimate objective. And realistic and fair is not what our property is currently rented for or what similar properties on the same street rented for previously. Realistic and fair is what the market is doing today, next week, and every day the property remains vacant.
I have seen landlords not listen to the advice of their property manager, instead chasing $5 or $10 dollars extra a week and in doing so, had their property left vacant for weeks losing hundreds, often thousands of dollars along the way. To be fair, I’ve also seen property managers making the wrong decision just the same on rent or not acting quickly, with the same outcome. So let’s be clear: $5 a week is $260 a year, and $10 a week is $520 OR roughly the equivalent of one week’s rent (give or take). Putting at risk 2 or 3 weeks to gain ONE, just doesn’t make good financial sense.
The reality, whether we like it or not, is that the market will set the rent for your property – always has and always will – regardless of where it is in it’s cycle. It is not the property manager or the landlord. The market tells you what the advertised rent could be, and it is the market again that will tell you if you should be adjusting it.
“How will the market tell me” I hear you ask? Lots of online views but no enquiries? The market is telling you that your advertised rent is unrealistic. No online views? The market is telling you that the way the ad is pitched is wrong. You adjust the marketing copy and/or rent and you start getting some enquiries? The market is telling you that you are getting closer to where it wants you to be. Increased interest and people showing up at the opening or submitting applications? The market is telling you that it likes what you are doing… Set, monitor, listen to the market, be ready to adjust quickly and repeat….
8. Be strong, resilient and patient. Take control of the situation if you have to.
The last and most important set of tips relate to the way YOU carry yourself in this process.
Faced with a prospect of a prolonged vacancy is not pleasant for all parties involved (property manager and landlord). In fact, the longer the vacancy remains, the more daunting the experience becomes. Landlords that have cash flow issues will feel it the most. If your property is in an “oversupplied” area, it could remain vacant for longer. It is not uncommon for properties in newly constructed buildings or in recently developed suburbs where a number of properties – sometimes newer than yours – to remain vacant for weeks – regardless of how hard you or the property manager works. When that happens, the most important thing to remember as the landlord, is to be prepared, both financially but more importantly mentally.
Be patient and do not panic – YOUR PROPERTY WILL BE RENTED. Staying in control whilst remaining calm will give you a clear state of mind which will enable you to provide the necessary input, guidance, decision making, active listening, empathy, but also support for your property manager. Assuming the role of the educated leader is critical and will take you a long way towards having your property rented quickly.
Your constant communication and healthy relationship with your property manager is therefore critical and it starts with you. Have an active role and don’t underestimate the way you carry yourself throughout this process. I am not for a minute suggesting that it is easy, especially for landlords that are new to investing and may not have been through rough periods and prolonged vacancies before. Perhaps a good way to deal with it is to continually remind yourself that having a vacancy is part of the game of investing, and that finding a tenant is a process of setting a strategy, working hard, monitoring results and adjusting until the right tenant is found.
It is also important to remember that vacancies are often through no fault of anyone – even though sometimes bad service, lack of support for their requests, or non empathetic or sympathetic property managers and landlords, will force tenants to look at alternatives. Lesson here for all involved, especially during times likes this, is to not take your tenant from granted. Attracting and keeping good tenants, is now more important than ever before and the role of the property manager is critical. I have no doubt that property managers will have to work harder to fill vacancies and, I am sure most will. There are some though that will not be able to move quickly for a number of reasons.
The tips I outlined above, will show you pretty quickly if your property manager is doing the best they can for you. Your role as an active party requires you to be supportive, but you also need to be prepared to make the hard decisions if you need to and make them quickly.
Don’t be scared to push hard your property manager if they are not looking after your interests, neither should you be afraid to take your business elsewhere if you feel that, despite your best efforts, the process drags on and you are not getting results.
After all, it is your money that is at stake here and you are the one that have that dreaded mortgage repayment coming up.
Who we are:
NextGen Property Mgmt (www.nextgenpm.com.au) is a boutique Real Estate licensed agency that specialises in property management. NextGen Property Mgmt does NOT has a sales team unlike most other agencies that specialise in Sales and have Property Management as a side business.
Our area of focus is residential property and we operate in Inner and South West Sydney, as well as St George.
NextGen was created from its infancy to cater for investors as it was founded by investors who quickly realised that in a highly regulated industry like Real Estate – competence, expertise, care and service by property managers varies greatly.
As an investor, you need to have trust for and feel valued by your property manager. You need to know that your property is being looked after with minimal disruption and you are getting maximum return for your investment. At NextGen we understand that because we are investors living busy lives ourselves, so our promise to you is that you will no longer have to worry about your most valued asset because we will make sure to take care of it as if it is our own.
If you want to learn more about us just click here to organise a time for a chat. Or call us on 0414 494 840. We would love to hear from you and to share our story.