Landlords need to work harder to retain tenants
There is an old saying in real estate that the ‘tenant is king’ and this is very much a truism in the current Perth property market.
Blogger: Rory O'Rourke, O’Rourke Realty Investments
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The latest REIWA figures for Perth show that the rental vacancy rate in Perth has increased to 4% and weekly rents have fallen on average by $10 to $450.
While vacancy rates vary from area to area, the reality is that landlords are now operating in a very different rental market compared to 18 months ago when the rental vacancy rate in many areas of Perth were below 2%.
In the current property market, it is critical that landlords reduce vacancy rates by ensuring they offer the highest level of service to their existing tenants.
If a tenant leaves property because they are unhappy, the outcome for the landlord may be lost rents over several weeks as they try to find a new tenant and at the end of the day they might have to accept a lower rent than the existing tenant is paying.
One of the most common reasons tenants leave a rental property is that the landlord does not address simple maintenance issues like fixing a broken air conditioner or faulty shower.
This problem is particularly common with landlords who manage their own properties as they are often too busy with other matters, or simply not in contact, to look after problems raised by landlords.
For example, fly in fly out worker who try to manage their own rental problems may be in remote areas where there is no telephone coverage when a distraught tenant calls them about an urgent maintenance issue.
During times of very low vacancy rates when tenants were struggling to find accommodation, landlords who provided a lower level of service could get away with this behaviour because tenants have very few choices.
With nearly 6,000 rental properties available for lease in Perth at the moment, dissatisfied tenants can now easily move to a better property if the landlord provides a sub-standard service.
If you are too busy to manage your property, then it makes sense to hire a professional property management company to look after your property.
This will ensure that the property is regularly inspected and keep in a good condition. It also means that the tenant has someone who they can easily contact to address a problem at the property, whether it is after hours or at weekends.
Other benefits of using a professional property management company include:
* Market Appraisal: A property manager will be able to give an independent assessment of the correct rent for a rental property. Many first time investors tend to over estimate the weekly rent they should charge resulting in lost income through a high vacancy rate.
* Tenant Selection: Landlords need to make careful background checks on tenants to ensure that they will take a responsible approach to their tenancy. Selecting the right tenant is critical for a landlord because a good tenant will pay their rent on time and look after the property. A property management company will have access to information on people with a history of being bad tenants and also undertake a through background check on all applications.
* Marketing: A property manager will also have a list of tenants who may like to rent the property. Many prospective tenants contact local property managers directly for information about properties for lease. In addition, a property manager will also have access to Internet marketing which is becoming more important in the rental market.
* Viewing the property: Showing prospective tenants the property takes time because people wanting to lease a home generally want to view the property during after work hours such as the evenings or weekends. Private land lords are more restricted in their time and therefore may not be able to find the best tenant for the property in the fastest time.
* Legal Issues: Because of the growing trend towards litigation, people who privately lease their properties can open themselves to litigation if they fail to discharge their legal responsibilities in relation to the investment property i.e. fixing items in the investment property that could cause personal injury. A property manager is fully briefed on these legal responsibilities and this offers additional peace of mind for the investor.
* A professional relationship: Finally, the relationship between the tenant and the owner should be on a professional basis. Investors who manage their investment properties tend to develop friendships with their tenants which means that problems can arise when the tenant fails to pay their rent or maintain the property. By using the services of a property manager, the relationship is kept on a business footing which will be financially beneficial for the investor.
About Rory O'Rourke
Rory O’Rourke is the principal and licensee of O’Rourke Realty Investments in Perth and has been in the property industry for over 40 years.
Rory is a former Vice President of the International Real Estate Federation (FIABCI) Australian Chapter and was inducted into the International Who’s Who of Professionals for 2009/2010.
He has authored three bestselling books ‘Born Free Taxed to Death’, ‘I sold 22 homes in one day’ and ‘It’s Time… the Republic of Australia’.
These books can be accessed at http://www.orourke.com.au/books.html
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