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With rent prices rising across the nation, landlords are struggling to strike a balance between maintaining a good business and holding on to good tenants.
Rents across between meeting market conditions and retaining good tenants, property experts are advising landlords to consider whether the benefits of keeping them can outweigh any increased rental income. have climbed following the end of the rental moratorium in March, with the median price reaching as much as $420 at the end of May. But, with landlords struggling to strike the right balance
According to Momentum Wealth, here are three reasons why it can pay to keep good tenants.
Good tenants can be hard to find, and if you’ve managed to secure a happy tenant, it can pay to keep them in your property. Good tenants will care for your home as if it were their own, ensuring no damage is done and keeping the property neat and well maintained, which can help minimise the cost of any ongoing maintenance and repairs. If you have had the same tenant for an extended period, then it is likely that they will want to stay well into the future, and this can help minimise any vacancy periods moving forward.
The current rental market in WA is incredibly tight, and the vacancy rate has hovered below 1 per cent for a long time now. Because of this, you may think that getting a new tenant will happen overnight. However, this isn’t always the case, and often – even in such a tight rental market – there will be a period where no one is in your rental property and you will be losing money.
It is also important to consider what could happen down the track. While the rental market is tight now, it will likely correct itself in the medium term as more rental properties come on stream to help satisfy demand. If you’ve opted to re-lease the property at a higher price, this new tenant may choose to move on once their lease period is up. This could mean you will be facing a longer vacancy period in the not-too-distant future. It is important for landlords to consider both the immediate and also long-term impact that bringing in a new tenant may have.
In addition to considering the potential for lost income while your property sits vacant, you also need to consider the costs associated with re-leasing your property.
If your property is managed by a professional property manager, you will need to consider their letting fees, which are often equivalent to one to three weeks of rent. You will also need to cover the marketing costs required to help promote your property (including photography and online advertising). All of these processes will cost you money directly from your pocket, and while you will be benefitting from a higher rental income, it is important to understand how much these initial costs can eat into your extra returns.
While rents are increasing, our property managers are also beginning to witness a rise in tenant expectations. Because prospective tenants are being asked to pay higher prices, they are beginning to expect properties with more features, as well as ones that have been better maintained. If you do decide to re-lease your property, then it is important to understand what tenants are demanding. If your property doesn’t include features like air-conditioning and a dishwasher, or if there are maintenance issues that may need addressing, then you may not achieve the rental price you are looking for, or you might need to dip into your own pocket to have these features added or fixed.
“As we’ve outlined above, sometimes it can make sense to keep the current tenants that you have, but that doesn’t mean that you need to miss out on increased rent altogether,” Momentum Wealth said.
According to them, a good property manager will be able to work with a tenant to come up with solutions that suit both parties, and one practice could be to incorporate rental increase clauses into lease agreements.