Buying an investment property is a great wealth accumulation strategy. To have the opportunity to earn a regular income stream through monthly rent is a great incentive. However, how do you attract a good tenant for your investment property?
Generating a regular rental income is quite important and should be a key criteria when buying an investment property. It can help service your investment loan, help reduce other debts, provide an income stream in retirement and help cover the property expenses such as insurance or rates. In many case if the cash flow is positive, you may be less inclined to sell the property at all!
To get the best value out of the income, attract a good tenant is crucial to a successful investment property. Here are three (3) ways to attracting a good tenant:-
Marketing/selling your investment property
You may have the most wonderful investment property. Be that an Apartment, Townhouse or House and Land, you need to market your property well if you want to attract a good tenant. Employing a good Property Manager will also ensure you promote your property to the right audience and on a timely basis. When marketing the property, you need to highlight the location and its lifestyle opportunities. This means you need to elaborate on the amenities available (such as cafes, supermarkets, restaurants etc), the sporting/recreational facilities (such as a gymnasium, swimming pool etc), park lands, schools and hospitals/medical clinics close by. These will play an important role to attract a good tenant. A good tenant won’t chose a cheaper property that is one hour away from work. They will look to occupy where they are close to work while have the opportunities to live a happy social life.
When it comes to marketing the property, your property manager needs to be clever about attracting the right tenants. Nearby amenities should be taken into account and the marketing campaign targeted appropriately. If the property is a family home near schools, then families will be the target market. If close to hospitals, market to hospital staff. It’s essential that you take the time to consider who will best suit the property and target the marketing campaign to that demographic. If you advertise too generically, you’re going to risk missing your target audience altogether.
Pricing asking rental amount
This has more merit than you may realise. Setting the right price to lease your property will create various attraction to your property. If you set the rent too high you may still get a great tenant, however the cost of living and the rent may actually create cash flow problems for your tenant. You may end up sitting on a vacant property. If you set the rent too low, some good tenants may feel the property has something wrong with it. Capturing the highest rental return is a key factor, but you need to know your market and the investment property’s location. Your Property Manager should help you make the right decision and help you set the right asking rental price.
If you’re struggling to attract a good tenant, try reducing the rent by just $5 – $10 per week to attract more people. Your aim should always be to put the best tenant into your property, not necessarily the first. A bad tenant can cost you far more during the tenancy than a small rent reduction.
Maintaining and presenting your property
Ensuring your property looks inviting will have a big influence in attracting a good tenant. If the property looks miserable and poorly maintained, the tenant may also further neglect the place, while a good tenant may feel unsafe thinking of living there.
When your tenants move out, it’s a good time to review the state of your investment property. Consider simple things that may provide the property with a warming experience. Opening the blinds so it shows the natural light, steam clean the carpets so that the property looks new & hygienic, weed the gardens and cut the laws.
If the property looks tired, then you may need to consider revitalising the property. This may include painting the home, replacing carpets, or even upgrading the kitchen. These decisions are costly, so a careful analysis should be considered. Talk to your Property Manager and ask what experiences they are seeing in the market.
In summary
Good tenants will acknowledge these changes. The more care you place on your investment property, the more likely the tenant will reciprocate. Don’t be afraid to communicate with your tenant. Learn if they are enjoying themselves. Remember, the better the property is marketed, priced and maintained, the more the property will also grow in value!
A final note – landlords need to be asking themselves “would they be happy living there?”
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
Apr 2018
