How do you maximise the return on your investment property and ensure that your property is being managed effectively?
If you’ve been reading my blog for the past month, you’ll know that I’ve been raving on about engaging the best Property Manager that you can find.
Whilst it might seem like a ‘Self pitch’ for our Property Management team, you’d be surprised at the horror stories and things we see on a daily basis going about our business.
All too often, my sales team and I attend a sales appraisal where the property is managed through another agent and we’re pretty horrified by what we see.
When we mention some obvious issues to the owner, the vast majority of owners seem genuinely surprised and have been told by their Property Manager that everything is going well and that the home is well-maintained.
This leads me on to the next point in our series “The Biggest Mistakes Made By Landlords”…
- Ignoring Maintenance Requests – Often when we appraise a property, we have many tenants that tell us “I’ve reported this issue to the Property Manager numerous times but nothing has been done about it”. Either the Property Manager is too busy and hasn’t reported it to the landlord (which does happen quite often), or the landlord is trying to save some dollars and is neglecting to address items that do require some attention.
At times, tenants will request things to be done that are either their own responsibility to fix or they request things to be fixed that are quite picky and unnecessary. It is not the owners’ responsibility to perform a minor renovation to satisfy the tenants, but it is the landlords’ responsibility to ensure things are working effectively and that the tenant is living in a standard that is healthy, clean and safe.
Only a few months ago, I have a friend that was renting a property and there was a leak in the ceiling from a storm last Summer. The ceiling starting to produce mould and despite the tenant reporting it to the Property Manager numerous times, nothing was done about it. After a while, one of my friend’s children became sick and the doctor indicated that the cause might have been due to the large mouldy ceiling which was (by this time), starting to become a large issue. The doctor recommended that the family remove themselves from the home and the family found another rental property within 2 weeks and moved out. The tenants stopped paying rent at the affected property despite having several months to run on the lease. The Landlord took the tenants to QCAT (Queensland Civil and Administrative Tribunal) and when the tenants provided sufficient evidence of why they vacated, the landlord was ordered to pay the family’s medical bills, removal costs and rent at their new rental property until the original lease had expired. In the end, ignoring the issue cost the landlord plenty of money when a simple fix at the time the issue started could have saved them plenty of time and lots of money.
If an owner ignores maintenance requests, it also sends a message to the tenants that the owner doesn’t care about them or their own property and many times, a tenant will often lose interest in maintaining a property too. They usually say things like “If the owner doesn’t care about us or care about this property, why should we bother to do the same?”
- Over-pricing Your Rental Property – It’s amazing the number of times I’ve seen an owner have their heart set on a particular price that they want to achieve for a rental property, only to have it sit empty and with no income for lengthy periods of time, but they won’t reduce the price to attract a tenant quickly.
We’re all for marketing a property effectively, negotiating hard and implementing strategies designed to attract the highest rental and in the quickest period of time but every week where you have no tenant is a week where it stings your back pocket…no matter how wealthy you are.
When I was working for another real estate agency many years ago, I saw an example of a unit sit on the market vacant for almost 10 months. The owner was advertising it for $400 per week but the market value was clearly around $350-$360 per week. I say “clearly” because we saw other units that were virtually identical and in the same complex come on to the market for rent and find tenants almost immediately…whilst this one continued to sit vacant week after week.
The landlord knocked back an offer of $350 per week after being on the market for only one week, then turn down another offer of $355 per week after being vacant for 3 months. Finally, the owner accepted $345 per week after 10 months. If they’d taken the first offer, they would have saved almost $15,000 in lost revenue. In hindsight, the property was rented for only 8 weeks of the 52-week period with a total revenue of $2760…or averaging it out to just over $53 per week. At $350 per week, it only takes one week being vacant to cost you $10 per week for 35 weeks…so you can see how much it would cost you in the property was vacant for as much as 3-4 weeks if you look at it this way.
At times, it can be a far better decision to price the rental competitively and fill the property quickly rather than leave it sit empty and have it cost you thousands of dollars.
Next week, we’ll close out this topic and then move on to answer some great questions we’ve received recently from our readers.
Until then, Happy Renting, Happy Listing & Happy Selling.