Holding on to your property long-term is a function of finding the right property, in the right location. Whilst there are many factors that come into play when it comes to maximising the cash flows of your investment, these are the primary factors that will help put you in front of a good pool of tenants who will help you run the engine of your property and benefit from years of growth.
For any astute investor this is an obvious concept, but for many landlords some of the most thought-provoking fears that act as a road block to their success are; not being able to secure a tenant, not getting the cash flow to cover outgoings or not being able to secure a quality tenant that will look after their investment.
So, if you’re a landlord or pending property investor in Perth, we’re sharing some of our insider tips on how we help our clients get their property’s rented, keep them rented and maximise their cash flows.
If you’re a sophisticated property investor you know how important it is to attract a tenant for more weeks of the year rather than someone willing to pay you the most rent.
Many property investors become so focused on attracting someone who will pay them above the market demand and lose sight of the bigger picture which is, having tenant who will be willing to stay in your property long-term and pay you for more weeks of the year.
Rental market conditions can change from one year to the next, so it’s important to stay one step ahead of the market so that you’re always meeting the demands.
Assuming all things equal, let’s highlight an example of why a sophisticated investor wouldn’t ask for an extra $30 a week above market demand and the impacts this could potentially have on their cash flow if they did.
The scenario: Asking for $450 per week in an area where median rent returns are $420.
A smart landlord: Meets the market demand at $420 per week, which means their rental property only sits vacant for two weeks. Their property is rented for 50 weeks of the year resulting in $21,000 annual rent return.
Now let’s look at a landlord who would prefer to wait for a tenant willing to pay more rent. They ask above the market demand at $450 which results in their rental property sitting on the market longer for six weeks. Their property is rented for 46 weeks of the year resulting in $20,700 annual rent return.
Whilst the second landlord got the weekly rental return they’re were looking for, this example demonstrates the importance of not letting your property sit idle and vacant for more weeks out of the year.
In the know with market conditions and cycles
As mentioned, your rental yield is a function of the right property, in the right location so it’s important that you enlist the help of a property manager that has good market insight, right down to the suburb and its growth potential.
We conduct thorough research and profile every suburb in Perth so that we know what’s happening in the area that will attract prospecting tenants and what (if any) factors will contribute to a sudden surge in growth over the next 3-5 years.
We use this information to help keep our clients in the loop with the Perth property market, and more importantly understanding what your property is worth and what the market is prepared to pay to live in your suburb and property type.
This knowledge is particularly valuable for our Eastern State clients who don’t always have their nose to the ground and helps to support their long-term investment strategy.
Dress your property in its best outfit
If you’ve been hooked by all the latest and greatest renovation shows, you’ll know for yourself that staging the home is one of the best ways to appeal to our emotional attachment to a home.
Compared to an empty and sterile box, a staged home can showcase to prospective tenants the possibilities of what can be done with the space. Not only can this open a pool of tenants but when a home is styled well, it can increase the perceived value of your property.
Property management experts have said that staged homes will sell or lease within one to two weeks of being put on the market which is 87% faster than non-staged homes.
Not only does a displayed home look and feel more inviting in person, they make for beautiful photos that make your marketing more appealing and can increase your listing click-throughs.
Knowing what your ideal tenant wants in a home
Knowing how to package up your marketing is a crucial part of getting your listing in front of prospective tenants. As highlighted above, beautiful pictures carry a lot of weight but if you want to stand out from the crowd, it’s important to know what your ideal tenant wants in a home.
Every home has its own unique qualities, but if you don’t know how to highlight those qualities in a way that’s meaningful to your perfect tenant then you’re more likely to be beaten by your neighbouring competition.
A large part of this comes back to, understanding the property market in your area, what features are people willing to pay for, and what type of tenant are you trying to attract.
For example, a young couple who work in the city, love to eat out at restaurants every week and frequently travel won’t necessarily be looking for a home that requires a lot of maintenance but rather a lock and leave option, close to public transport and hospitality amenities.
A good property manager will be able to help you understand the type of demographic in your area, looking for your property type so that you’re attracting an ideal tenant that will help you maximise your property’s cash flow potential.
All in all, there are many factors that play a vital role in helping your property shine and attract quality tenants, but we’ve found the greatest success for our clients when we get these components right!
Remember, that property investment is a long-term strategy and it’s about having tenants who will help you ride the wave through time in the market. It simply does not work without a tenant, so it really pays dividends to choose a good property manager to help you tick the above boxes.