Over the past few months, the world as we know it has completely changed, and how COVID-19 has affected the real estate market is a hot topic. Some experts are reporting that property values are stable, others that there has been a decline while others are anticipating a 20% decrease in the coming year. So what about rentals? The Melbourne City Council has reported that the CBD and surrounding areas have the highest vacancy rate in a decade rising from 1.9% to 5.4% in April 2020 compared with the same time last year.
What can landlords do to protect their rental income now and in the near future?
Negotiate with your tenants. If your tenant is experiencing financial hardship find a solution that suits you both, it may not be ideal but it is necessary. A tenant paying reduced rent is better than a vacant property generating no rent.
Be flexible. Whether your property is vacant or tenanted the price you ask for rent may differ from what you were receiving 6 months ago. Consider what other properties in the area are asking for rent as this is what you are competing with. Rent values are generally determined using historic data – what has leased similar in recent months. Now is the time to look at how many similar properties are available, how long they have been available for, and which property is the best value for money.
Make it attractive. If possible, do the odd job, install the dishwasher or split system and get your property to a standard that is attractive for tenants to stay there or for tenants to want to move there.
Invest in advertising. Make your property stand out with professional photos, virtual tours, and floor plans to give as much information online as possible. This small investment to minimise your vacancy can save you thousands of dollars in the long run.
It’s not all doom and gloom. Properties are still leasing, we just need to change our approach and our expectations to match the market and with the easing of restrictions and as life returns to a new normal we can expect that the real estate market will adjust to a new normal too.