What is a Vacancy Rate and why is it important?
The term ‘Vacancy Rate’ is heard quite a lot in property talk – but surprisingly few people actually know what it is or how to calculate it. The vacancy rate of a suburb or area is the percentage of properties that are vacant, out of the total number of rental properties.
In general, the vacancy rate across many larger cities and towns would vary around 3%. This amount is regarded as a healthy market, or ‘equilibrium’. This means that there are enough vacant properties for tenants to move into, but not too many to create a glut of vacancies and bring the prices down.
If we now consider the vacancy rate for an individual real estate agency, the goal is always to beat the average – that is, to strive for a vacancy rate under the industry average. This shows that the agency’s processes, marketing, communication, and efficiency is ahead of the competition. Above all, it means rental money in their Landlords’ pockets.
Five tenant warning signs we look for as agents
Selecting the right tenant for your property can be tough, especially when you want to get someone in there and paying rent straight away – but make sure you look out for these warning signs. Many self-managing investors make the mistake of not paying attention to the quality of the tenant – as long as they have rented the property and are achieving a high rent, they’re happy. However, this is often cause for concern later down the track when they are forced to spend a large amount of money fixing the damages caused by out-of-control tenants and spending time searching for new tenants when they don’t work out.
Five warning signs that you should steer clear of in a prospective tenant:
If they’re quick to find faults
If you have someone attend an inspection where they point out every minor defect they can find despite the unit or house being near perfect but put in an application anyway – stay clear. You will be constantly sorting our repairs and spending money to keep them happy.
If they have something to hide
If an applicant applies to rent your property but does not provide any supporting documents or references, there is usually a reason why and you should proceed with caution. When you specifically request this information and they still cannot produce anything, I think it’s safer to simply select another applicant.
If they’re always in arrears
Rent should always be paid on time. An applicant who is constantly late with rent or still owing money to their previous landlord will always be this way, and I can guarantee they will be a financial burden to you. One of the most common excuses applicants make for being behind in payments is that their previous agent wasn’t organising repairs on time – even if this may be true, it’s a major red flag.
If they’re constantly on the move
If an applicant has moved properties every six months for the past three years and explain they did so for a lifestyle change, you can be fairly confident you will be looking for a new tenant six months down the track if you proceed. It is also likely that they weren’t looking for a lifestyle change but instead were asked to leave their other rental properties.
If they’re poorly presented
Just like a job interview, applicants should always make an effort to look well-presented when they inspect a property – this shows they’re taking their application seriously and is a good indication they will respect your property. If an applicant has unruly hair and is wearing slippers and a dirty shirt, you can be sure that their living habits will be just as chaotic.
If you have any questions, or need clarification on any of the above, please contact Anna Marten, our Head of Property Management, on 9651 1666 or email@example.com.
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