We keep on reading about how low residential
vacancies rates are across much of the country. Also on how much rents
have risen; and the expectation that they will continue rising, and at the same
pace, well into the future.
But several sub-measures of the rental market suggest that
rental growth is already slowing down.
Also, more renters are sharing accommodation in order to
afford to live in preferred locations.
Renters are also leaving sub-par, even average properties,
and relocating to better properties. Renters are staying longer in
quality & well maintained homes & occupying lesser quality properties
for increasingly shorter leases.
Target your lease periods around maximum
take-up periods.
You should never have to be trying to find new tenants
around Christmas or other times where people are more interested in going on
holidays – i.e. school holidays.
Other times to watch out for can vary according to local drivers – i.e.
universities, hospitals, new construction projects etc.
Never have a lease end
in December or January as a rule
Regardless of the stage in the property cycle – is that
competition is fierce in rental markets. Prospective tenants always
compare your property to whatever else is on offer. They just don’t
blindly accept the asking rent without doing their homework.
A poor property doesn’t rent well, regardless of the lack
(or otherwise) of supply.
Don’t expect rents to rise automatically every
year.
There are many things an investor can do to maximise rents,
but again, my experience suggests that rents don’t rise every time a lease is
up & keeping a good tenant, even for a bit less rent, is far better than
getting more money & having tenant problems.
A property investor’s aim always should be to sign the best
tenant for the highest possible rent in the lowest possible vacancy time.
Never let your property sit – advertised for rent – vacant
for too long. Properties should be rented out in weeks, not months.
Waiting too long stuffs up your cash flow & often gets
you less rent in the end. If you want to take longer, do not list it for
the full time. It will look stale.
Buy an investment property that can be shared.
One-bedroom stock in an inner city location is fine, just
make sure the apartment design/proportions can accommodate a couple if
needed. Also when it comes to two-bedroom product – having separate bedrooms,
with their own ensuite, allows two unrelated couples or singles to share.
In fact, the one ensuite per bedroom ratio is proving to be
a good one, especially in regional markets, where resource workers often share
accommodation once friendships are established. Four middle-aged men in a
four-bedroom/four-bathroom house might not smell too crash hot, but I bet it
would show a great rental return.
Some statistics For You
There are some 1,600 postcodes across Australia.
Last year, 40% of these experienced a decline in their
rental vacancy rate, whilst just over half (52%) saw an increase in the number
of dwellings available to rent. Eight per cent saw no change in rental
supply.
When it comes to rental demographics, more people are
sharing. A consistent theme across Queensland rental agencies is the
increase in the number of people per dwelling. Many have told us that
there are around 30% more people living in each rental property when compared
to a few years ago.
The Census doesn’t supply us with the number of people
renting, but some quick maths suggests that 2.5 people live, on average, in the
nation’s 2.3 million rental dwellings. Ten years ago, the average size of
the rental occupancy across Australia, was closer to 2.
Jason Gwerder
Friday, 11 December 2015
