There are many factors which influence how long a rental property may remain on the market before a suitable tenant is found. Some of these relate to the property itself, others to the agent selected to list the property, and others to the rental market at the time of listing.
While the following list is not exhaustive, it provides a good starting point for understanding the reasons impacting how long a property may remain on the market, and what can be done to up the pace.
5 Reasons Your Property May Remain Vacant For Longer
1. Rental price
The first factor many investors turn to when a property is remaining vacant for a longer-than-desired period is the asking price. Of course, it stands to reason that if a property is too expensive it will remain on the market for a long time.
If an investor or their agent has aimed high with the rent when listing the property, this could be a cause of delay. It's important to consider that holding out for a higher per-week rental income may actually be financial worse than filling the property quickly at a lower asking rent.
For example, if you are asking $500 per week for a property and it is remaining vacant as a result, a vacancy of 4 weeks at $500 will cost you $2,000 in rental income. Dropping that property even as far as $450 and filling the property within a week may seem like a poor decision, however this $50 shortfall in weekly rental income would take 40 weeks to total the same loss as leaving the property vacant for 4 weeks at an asking rent of $500.
In short, dropping the rent can be a good idea to fill a property quickly, however it should never be the first action taken. There are plenty of other potential reasons for a delay in finding a tenant which do not require an adjustment of the asking rent.
2. Rental market demand in the area
Before adjusting asking rent it is crucial to consider the state of market demand in the area. Real estate agents with strong experience in your location will know the level of demand they experience when a property is listed for rent.
However even without this experience, sites such as realestate.com.au enable investors to view trends in the number of views per listing for properties in any given suburb. For example, you may find that there were 1,000 views of 3 bedroom rental properties in your suburb last month. If this was the case, there must be a reason other than market demand impacting the speed of finding a tenant for your property.
We have certainly seen instances where the asking rent is reasonable, demand in the area and for that type of property is high, yet the property is not moving. Why...?
3. Comparable properties and their asking rent
If asking rent seems reasonable and rental interest is strong, you may need to more closely consider the number of comparable properties you are competing against and their asking rent. Put yourself in the mind of a potential applicant. If searching in your suburb and in a particular price range, would your property seems like good value alongside other options?
Even if your property is the least expensive at the time, how does it compare against the inclusions of the more expensive properties? It could be that the additional inclusions or features of more expensive properties in the area are seen to be great value for the difference in asking rent.
For example, if there is a gap of only $10 between a basic property and a more superior offering which includes a number of desirable features (such as gas cooking, ducted air conditioning, more storage space, better views etc.), the rent of the less expensive property may need to be decreased further to reflect the significant difference in included value.
4. Marketing campaign and presentation of the home
It is surprisingly common to see properties listed for rent at premium asking rents with very poor photography and copywriting. We attempt to provide photography for our listings which highlights the key features of a home and in a natural way. We do not extensively recolour or stretch the proportions of images to make rooms seem larger and so on, as this can simply mislead and disappoint potential applicants who will of course wish to view the property in person.
We also pride ourselves on providing quality copy to succinctly describe the features and environment of a property. Sadly, so often rental listings are presented riddled with poor grammar, spelling mistakes, or other evidence of a lack of enthusiasm and attention to communicating the property in its best light.
If the property has been on the market for some time, consideration may also need to be given to how the property is physically presented to prospective tenants who may attend an inspection (or simply drive past prior to arranging an inspection). Interest will remain high if lawns and gardens remain trim, and the home is presented in an attractive and inviting way.
5. Availability for open inspections
Somewhat shielded from the view of many investors is the level of flexibility and availability an agent will offer to ensure a prospective tenant can view the property at an inspection.
If the asking rent seems reasonable, demand in the area is strong, your property is compelling amongst the competition, and there is a good marketing campaign to advertise the property - what's the final hurdle? Perhaps the agent is taking too long to respond to prospective tenants or is not making themselves available at a time suitable to a quality applicant.
Yes, but how long should it take to find a tenant after my rental property is listed?
The answer is of course - it varies. As a guide, we will typically list a property to market within 24-48 hours of taking photographs. Within 3 days of the listing first going live, we will have a read on the market response, as there is generally a much stronger response to a new rental listing in the first days after it is listed rather than any time later.
For a quality home in a popular location, it is not uncommon that we will have a number of good applicants forwarded to a landlord to discuss within the first week of a property being on the market.
The key of course is communication and transparency. If we are finding the response is slow, we will consider and discuss with the investor the potential reasons why and a plan of action to reduce any period of vacancy.
If you have experienced an extended period of vacancy in your rental property or have been less than satisfied with the communication, support and expertise of your property manager in Newcastle, contact us today. We'd love to help you once again enjoy your investment experience and maximise your return through finding a long term, quality tenant.
Carnelian Property Management Newcastle NSW
We are a family-owned and run Newcastle real estate agent offering expert property management across Newcastle and Lake Macquarie.