One of the biggest challenges an investor has to overcome is selecting the right tenant for their property. This is particularly the case in areas of Australia, such as Darwin and Perth, where rental vacancy rates are currently very high because of an oversupply of rental properties, leading to a downward pressure on rents.
Property investors should take a commonsense approach to selecting a tenant by considering the following eight points:
1. Property manager: Always appoint a professional property manager because this is one of your biggest assets. They will be able to undertake the necessary background checks on prospective tenants and undertake regular property inspections to ensure the property is kept in a top condition.
2. Rental price: Rental property can remain vacant for prolonged periods of time because the landlord is charging above the market rate for the property. Even if the rental property is $10 above the average weekly rent for the area, the landlord may find it hard to find a tenant in an area where there is an oversupply of rental properties. It is therefore critical that the rental costs are competitive and landlords should check rental prices in the local area for similar properties before determining your rent.
3. Young people: Don’t discriminate against young people because they are your largest pool of potential tenants. Surveys indicated that more than half of all young (under 35 years) lone-person households rent privately.
4. Marketing: Make sure that the property is exposed to the maximum number of tenants through newspaper and internet advertising. The property should regularly adverted because the pool of tenants is constantly changing.
5. Availability: Tenants are constantly looking for rental properties seven days a week. You therefore have to make some time available every day for property inspections if you are trying to find a tenant for the property.
6. Presentation: When leasing your rental property, take the same approach as if you were selling the property. The overall presentation of the property will make the property more attractive to prospective tenants. Many people looking for rental accommodation do not even inspect the property because it looks poorly presented from the outside. You can increase the street appeal of the rental property by keeping the front gardens in a good condition. You don’t want prospective tenants to dismiss the property before getting to the front door.
7. Air-conditioning: Ensure that your rental property has lifestyle facilities. For example, a dishwasher and air-conditioning are key facilities which tenants seek in a rental property. These facilities can also enable the landlord to charge a higher rent. If your rental property does not have these facilities then a tenant is likely to rent an alternative property.
8. Landlord protection insurance: Always take out landlord protection insurance. Should a tenant do a runner, this can cover you for any damaged caused plus can cover you for lost rent.