Let them have pets: Why landlords shouldn't be so ruff on good tenants
An investment property without a tenant is virtually worthless. Even if your property is valued at $1 million or more, if it's generating no income it's a millstone around your neck.
Attracting and keeping good tenants is the key to being a successful property investor. And that's even more so now that COVID-19 has sparked an increase in vacancies, which is pushing rents down.
Sydney had the highest vacancy rate in the nation at 3.8% at June 30, falling 0.2% from May, followed by Melbourne with a vacancy rate of 3% and falling 0.1% in the month, according to SQM.
In the wake of this, Australia's median rental has dropped 0.5% in three months, reversing almost two years of straight growth, according to June quarter data from CoreLogic. This is the largest
quarterly drop since September 2018.
When separated by location, capital city rental prices were hit hardest, dropping by 0.7 % compared with just 0.2 % in regional centres. The Hobart market had the largest rental value falls in the June quarter, down 2.3 %, followed by Sydney (-1.3%), Melbourne (-1%) and Brisbane (-0.6%).
COVID-19 means there is not much upside for landlords, with closed international borders, job losses and reduced income all significantly reducing demand.
If you're a landlord in the happy position of having a good tenant who pays the rent on time, keeps your property in good order and doesn't break the rules - such as sub-letting a room without your approval - now is the time to nurture that tenant to ensure your cash flow into the future.
Make sure your property is well maintained and respond promptly to any repair requests from your tenant. It's really important to keep up maintenance so your property doesn't deteriorate over time and also provides a comfortable environment for your tenant. This might include things like maintaining gardens, repainting or replacing outdated appliances.
Keep in mind that while this is your property, it is the tenant's home. Show them respect and courtesy and allow them privacy. You or your managing agent should only visit the home for scheduled inspections and to address maintenance issues. Also be open to the tenant's requests and be willing to compromise. Don't completely rule out pets - just put some rules around them.
Remember you do have a bond to cover any extra cleaning entailed at the end of the tenancy. And why can't a tenant put up artwork as long as they are prepared to do it in such a way that it won't cause any permanent damage to the walls?
When it comes to the rental rate, don't be in a rush to increase it substantially if you have a good tenant.
One of my friends, who is a great landlord and virtually never has a vacancy for more than a week in her many units, says it's better to increase the rent by a small amount each year rather than a big amount every few years. But if a good tenant is going through a tough time it might be worth considering reducing the rent, at least until they sort themselves out.
Finally, if you're happy with your tenant, let them know! It's always nice to feel appreciated and this is no different for tenants who take care of your property and ultimately help you achieve your investment goals.
For landlords seeking good tenants, the competition is now fiercer. The key to finding and holding a good tenant is to have a decent property. Good-standard properties attract better quality tenants and a larger number of applicants, so you have greater choice. Before leasing out a property, make sure it is up to scratch, that all required repairs are completed and that it is a comfortable environment to live in.
To make your place more attractive, avoid doing anything too restrictive that might limit interest in the property, such as a lease term too short or long to commit to. Also consider pets upon application instead of having a blanket ban. With some rules in place to ensure pets won't do any harm, the owner of a well-behaved animal might be your perfect tenant.
Also make sure you or your managing agent check the references of suitable applicants and cross-reference the applicants on a tenancy database to make sure no past complaints have been made against them.
Get stories like this in our newsletters.