4 reasons your investment property can fail to attract tenants
17 June 2019
Understand why vacancies occur and devise a strategy to keep your property tenanted to the right residents at the right price.
Establishing a sustainable cash flow base for your portfolio is essential if you hope to build wealth through property investment.
As such, devising a strategy to keep your property tenanted to the right residents at the right price can be at the top of the best investors priority list, alongside optimal asset acquisition and finance structures.
One of the best ways to minimise vacancies is to understand why they occur in the first place.
When you gain this understanding of one of the main inherent risks that come with owning an investment property you can begin to address it. This can lead to the shoring up the necessary income for mortgage repayments, maintenance and holding expenses.
While you can give yourself a little breathing space from the end of one lease agreement to the beginning of a new one, in order to…
Have new leases drawn up and executed
Write condition reports
Clean carpets and attend to any small maintenance jobs, etc.
Anything beyond three to four weeks between tenant turnovers can become problematic for your cashflow.
A good way to avoid extended vacancy periods is to understand four of the inherent risks that can increase your exposure to them…
1. Wrong rental price
This is generally the most common reason a rental property remains empty. With masses of market data available via online property portals, today’s tenant is more educated about their options than ever.
If your property is priced higher than market expectation, even if it's only marginal, you can fail to attract prospective tenants. It’s that simple. Hence, the rent your property is set at should be based on what the market is willing to pay, not just your financial needs as a property owner.
Owning an investment property can be a great balancing act. Is it better to budge a little in the short term, to have a more sustainable asset that generates consistent income rather than sporadic bursts of interrupted cashflow?
2. Ineffective marketing
Attracting the right prospective tenant should be approached in much the same way you’d sell your property to a prospective buyer.
The first step in making your marketing work to minimise vacancies is to know your tenant audience. Understand who you’re appealing to – what do they want? What are they prepared to pay for it?
How do you speak to them?
There are a number of different marketing strategies that can be taken to ensure that your property achieves the right price on the rental market. The key is employing the correct ones at the right time.
3. Poor presentation
First impressions count! This includes the images that are used to accompany your online listing.
Today’s world of digital marketing is a highly visual medium, where prospective tenants can make decisions on the basis of their immediate emotional response to your property. In most instances, this comes from the photos of your property.
Staging your property to translate its livability is important to make it stand out from ‘the crowd’.
This also means that your property needs to be tidy and neat when there is an open inspection.
4. Non-prime location
Sometimes there’s no escaping the fact that the location of your asset is not suited to the majority of tenants. It may be lacking the necessary amenities to attract and retain good long-term tenants.
Your residents require a diverse local industry base, within easy commuting distance for employment opportunities. How else will they pay the rent?
One of the biggest driving factors in tenants selecting a home to rent is commute time, either by public transport or their personal vehicle. Higher commuting times can be off-putting for prospective tenants.
Today’s tenants also prioritise lifestyle amenities and well-established social infrastructure, such as education and healthcare facilities.
If you’d like more information regarding property management strategies that can help to minimise vacancy periods, while maximising your investment portfolio cash flow, why not connect with the experienced team at Little Real Estate?
Let one of our professionals conduct a rental appraisal on your investment property for accurate and personal insight into how your property can perform on the rental market.