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Good times are rolling for landlords amid tight market conditions, but this property management expert advised rental property owners to stay on their toes and take measures to “future-proof” their investments.
With vacancy rates around the country close to zero and rents on the upswing, Maria Milillo, Raine & Horne’s head of property management, stated it’s understandable for landlords to be more complacent and “enjoy the financial ride” following the challenges of the last few years.
Domain’s latest data showed that national vacancy rate skidded to its lowest point on record at 0.8 per cent in October, credited to rental listings also plunging to a new historic low during the period.
Darwin and Brisbane were the only cities to post a monthly gain; however, the Northern Territory capital and Queensland capital still had significantly low vacancy rates of 0.7 per cent and 0.8 per cent, respectively.
With all capital cities deemed to be landlord’s markets, Domain said that prospective tenants are facing a “highly competitive environment” characterised by high demand, low supply, and rising asking rents.
And while this sounds like good news for landlords, Ms Milillo argued that “now is the time” for landlords to take on improvements to their real estate assets that will help protect them from more challenging times in the future when occupancy rates are lower and tenants have a wide range of choices.
“Suppose there is a shift, and the market becomes more competitive. If your carpets are threadbare, the walls are crying out for paint, or there’s no dishwasher or air conditioning, the property might sit vacant for extended periods and reduce your investment return,” the expert explained.
But Ms Milillo acknowledged that making upgrades can depend on the current occupancy status of your rental property.
“If the current tenant is about to move on, then getting into the property and making some simple hacks is easy,” she said.
But what if your property is currently tenanted?
If the property is tenanted and you are planning to undertake upgrades, Ms Milillo underlined the importance of finding ways to make these improvements with minimal disruption to the occupants.
“For example, if you need to recarpet the property and paint it, you might need to pay for the tenant to stay in a hotel or motel for a couple of nights while the work is completed. It might cost a few extra dollars, but you’ll recoup the spending in the longer term. Better still, the current tenants will also benefit,” the expert said.
When deciding how to go about with the improvements, she also advised landlords to seek advice/feedback not just from their property manager but also from their tenants.
For starters, Ms Milillo advised landlords to inquire from their tenants what they deem to be the most important feature or aspect of their property that needs fixing or upgrading.
For example, if a tenant communicates that an apartment is too hot in summer or too cold in winter, she pointed out that issues can be addressed by adding an air conditioner.
Other issues that may be raised include the property requiring new flooring in a particular room, the light fittings are dated, or the kitchen cupboards need a facelift.
Whatever issues are raised by your tenant, Ms Milillo noted that your property manager could open these lines of communication for you with your renters.
“By collaborating with the tenant, they’ll be more likely to work with you when it’s time to start the required improvements,” she commented.
Additionally, if you are planning to implement a series of more minor fixes or enhancements, the expert recommended considering moving out your tenants over a period to minimise the day-to-day disruptions.
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