Smart property investors know the value of a good tenant.
The average weekly rent in Australia is $450; over a year that’s $23,400. But a good tenant goes beyond what they’re paying in rent. You also want someone that will take care of the property, respect the neighbours and rent long-term. Even though the national vacancy rate is a relatively tight 2.2% – good tenants can be hard to come by.
The trick is: how do you find them?
To attract quality tenants you need to offer a quality property. Here’s a guide to considerations you need to make before you purchase your property, after you buy and during the tenant search.
Purchasing a rental property
There are several considerations to make when purchasing a rental property, but if you’re looking to attract quality tenants then location will play an important factor.
First off: identify the type of renter you’re hoping to attract and put yourself in their shoes. If you’re hoping to attract students, look for property close to universities, colleges and transportation. If you’re after families, then proximity of schools will play an important role. And if your ideal tenant is a senior, look for property close to community centres, shopping and transportation.
Also look for a neighborhood that you’d want to live in. Is it a quiet road? Are the streets clean? Are the neighbours’ yards tidy? Are the parked cars in relatively good condition? A neighbourhood that is a mix of owner/occupier housing and renters is generally one that will be better kept than a neighbourhood that strictly caters to renters.
Once you’ve determined location, focus on the property itself. Again, think of your ideal renters’ concerns. Students looking for a share house will probably value big bedrooms, as they will spend more time there. Seniors will be looking for something that is one level. And families will be keen on something with a yard, preferably enclosed.
Making the property presentable
It goes without saying that the interior should be clean. Keep paint to muted colours – you might love a signature wall in the living room painted bright red, but it won’t be everyone’s cup of tea. Put new light bulbs in all the fixtures. Nothing gives a room an instant facelift like bright lighting.
In the kitchen, fix drawers so they slide easily and make sure handles on screwed on tight. Get rid of stains, crumbs and mould. Lining the cupboards can cover a few sins. Invest in quality appliances and if you can’t afford new appliances, see what you can do to make them more presentable. For instance, new wire racks in the oven will go a long way in approving its overall appearance.
In the bathroom, consider buying a cheap, but new vanity. Installing a new toilet seat would also be a good touch. And a bright mirror is a definite must.
Renting it out
If you choose to rent the property out yourself, then there are a couple of things you can do to increase your chances of picking a good tenant.
One is to be honest in the ad. If you oversell its attributes, good tenants might get turned off and overlook the genuinely positive aspects of the property.
And don’t be greedy. Gauge how much similar properties in the area are renting for and price accordingly. If you overprice, you might find yourself with a tenant that is desperate to find a place because no one else would rent to them based on their history. And avoid increasing the rent too much. You’ll just encourage turnover and you could end up out of pocket for a considerable amount of time.
Be presentable. If you’re showing the property, make sure you look like someone the tenant would want to deal with. Let them know you would respond to needs quickly, but you’re not going to be visiting the property all the time.
Have a formal application that includes rental history and make sure you check references that include their employer and previous landlords/property managers.
If you decide to use a property manager, make sure you investigate their services thoroughly. Consider how they market properties, how they deal with issues such as arrears, repairs and maintenance, and how frequently they will inspect the property.
Sometimes you can do everything right and still end up with a bad tenant. Landlord insurance can take some of the stress out of renting by covering damage or loss to your property, protection against unpaid rent, theft or malicious damage, and even the cost of replacing or repairing furnished properties.