How to avoid rental pressure in today’s investment property market
10 July 2019
For the first time in 12 years Sydney rents are falling and properties are taking longer to lease. Understandably, that can be stressful for landlords. On average, it takes 32 days to find a tenant in Sydney and in suburbs like Box Hill and Windsor it’s taking almost twice as long. Most landlords use their tenant’s rent to pay the mortgage and about 1/3 have less than one month’s buffer to cover mortgage repayments.
This is what makes even the most positively geared landlord willing to drop the rent to get a tenant in quickly, and why the average Sydney unit is earning $1,000 less in rent each year and in some areas, landlords are losing significantly more. When you’re without a tenant for over a month and eating into your own income, it can get in the way of your regular budget be a stressful experience.
Here are our top 3 tips to help you avoid rental pressure in today’s investment property market.
- Plan ahead: Talk to your agent to understand how long it’s taking to find new tenants in your area and what you might be able to do to your property to get the highest rent the next time you need to find a new tenant. By putting a plan in place and putting a little extra cash aside each week you’ll be prepared to do what it takes to get the best tenant and the highest rent.
- Freshen-up your property to show it in the best light: Properties are taking longer to rent and the building boom over the last few years has made the market more competitive. Depending on how neat and tidy your tenant is, it might make sense to use the opportunity when your tenant moves out, to freshen-up the place and ensure you show it in the best light. Your agent should be able to provide you with an assessment of the ‘easy wins’ that can maximise your return on investment, whether it’s a quick paint job, new carpet, or appliances. A little extra rent each week can mean thousands more in your pocket each year, which can quickly pay off the coat of paint that can give be the instant facelift you need to maximise your return.
- Find quality tenants, and keep them as long as possible: Taking your time to find the right tenant sounds all well and good but it takes time, and if you’re in between tenants, it is costs money. About 80% of investment properties have landlord insurance, primarily to cover the loss of rent, however this insurance doesn’t cover you when you tenant moves out at the end of the lease. This is where FutureRent can help. Futurerent’s Maximiser has been designed to address this very problem. You can get 4 weeks' rent paid upfront to help cover expenses so you can take the time to find a great tenant and get the most out of your investment property.
Who is FutureRent?
FutureRent exists to provide flexibility to landlords by giving them early access to their rental income. Find out more about FutureRent here.
Checkout Domain’s list of fastest and slowest areas to find a tenant in Sydney here.