After explaining to our followers and our current clients for months that the rental market is flattening to the point of decline, the NZ Herald published an article titled “ Is the rental market finally good for renters?” on 3rd June 2022:
“….Rentals priced at around $600 a week are staying vacant, her property manager tells her, and landlords are having to decrease the rent by the same amount they would usually increase. The Auckland real estate company manages about 17,000 rentals; nearly 500 are available. …”
A few weeks later on 11th July, Newshub broke another bombshell of an article “ Property managers warning landlords after sudden change in rental market”, and to open this article, it says and we quote: “ Trade Me figures show a record high supply of properties nationwide, combined with a drop in demand for rentals….”
Shocking? Maybe to some, who have been brainwashed by news outlets on the housing crisis and there isn’t enough housing and rents have been skyrocketing. To people who work in the property management industry, we have been like…where did you get this idea from?
As always, news is not news. News may as well be called “Not News” once it hits the news. At least, they got it right this time, on a very rare occasion, mind you.
Enough teasing about how late the news people get onto the real news. Let’s talk about what a property investor or a landlord should do in this declining rental market.
1. KEEP YOUR GOOD TENANTS!
Keep them! Do what you need to do to keep your current tenant. Ride it out, this tough period.
(1) Vacancy at this stage is costly. As a landlord, you will be looking at a letting fee cost which is typically one week rent plus GST + loss of rent for vacancy period + credit check costs+premium Trademe marketing fee.
(2) Here is the kicker: If your current tenant started their tenancy before 1st July 2021, you have until 1st July 2024 to be compliant with the Healthy Homes Standards. If your great tenant moves out and a new tenant moves in, you have 90 days from the start of the new tenancy to be compliant. Yes it means, additional $$ now out of your pocket.
(3) I hate to break the news to you, you may not even get the rent your previous tenants have been paying. Rents are taking a downward hit at the moment, as temporarily as that might be. You may not get the rent you want, let alone the rent increase you feel so justified.
2. Make your property Stand out from the crowd
There are currently an “unprecedented” amount of listings available for rent. To stand out, here are some essential things you must do:
(1) Present it well
Ensure your property is in good condition and there are not broken items around and the grounds are tidy. Clean and Tidy would be the bare minimum requirement.
(2) Promote it well
- Pay for premium listing fees-this is not negotiable if you want it rented
- Pay to get videos, professional photos, 3D tour and floor plans-only really interested people will contact you
- Write detailed and accurate descriptions about the property
(3) Price it correctly
It might shock you that something that was rented at $1100, will only rent at $960 today. It happens. It happens a lot and more and more now. Do we believe the rental market will crash? No. Do we believe it is only temporary? Yes. Do we believe landlords must face the music and price it according to the market to get it rented? ABSOLUTELY.
When you have 38 listings in EPSOM that are 4 bedroom 2 bathrooms with prices starting as long as $850 per week and still not renting, you got to be realistic.
3. Hire a professional property management company
A good company will do all of the above and more for you. The first and most important job for a property management company is to secure a good tenant for your property within the shortest time possible. To make it happen, a good company would do:
- Weekend viewings;
- Private viewings on demand;
- At least set up 2 viewings per week;
- Arrange for access properly if tenanted;
- Respond to enquiry timely;
- Dedicated letting agent and letting support;
- Have a database of prospective tenants;
- Videos, good photos, put tags on photos, relist property when necessary;
- Process applications quickly and make lease offer asap;
- Have KPI around how fast Tenancy agreement must be signed to secure the tenancy; and lastly
- Social media channels to promote your properties including but not limited to:
* Facebook, post and live streaming
* Tik Tok
There is no reason to wait any longer. If you have a vacant property, Uno Property Management is here to help.