Landlords – insist on a fixed term lease!
It seems every agent is talking about reducing vacancy periods and maximising rents. Let’s face it, in this market, it’s easy to accomplish by doing very little. Tenants are screaming for rental properties and are willing to jump through hoops to secure one. If we were comparing the rental market to the sales market, this is certainly a Landlord’s market and has been so for some time now.
Despite it being a Landlord’s market, there still seems to be some properties that aren’t renting with ‘minimum fuss and at the maximum rent’ and I can enlighten you on the reason why – because the lettings clerk/Property Manager didn’t think to bring the lease into the best periods of the year – to GUARANTEE you achieve the best rent with the very shortest vacancy period. And, it’s because they are only open to, or think about, the traditional 6 and 12 months leases despite the period of year the re-let is occurring.
The simple facts are this: most people when choosing to change jobs, change schools, change any significant part of their life, usually do so at the start of a new year. This usually then leads them to change their living arrangements. This means that competition is at its highest during these January and February months. If the usual practice is for to take a 6 or 12 month lease, it follows then that June/July will also be quite a competitive time. The law of supply and demand shows that when demand is at its highest, prices rise. When at its lowest, prices fall.
Why then do we still see some leases falling due for renewal in March/April (over Easter – when every man and their dog is off to Straddie/Frazer/insert fun 4WD adventure), September/October (exceptionally quiet period – I know I’m too busy watching all the footy finals!), between December 15th and January 2nd – (Um, party hat and vino while looking at rental properties? I don’t think so!). And why do we still see some leases fall on Sundays, Public Holidays and during big local events?
It’s really very simple: ensure your lease is due for renewal during the best periods of the year. Firstly, your tenant won’t want to move because they can see that 30 other people are turning up to each inspection with applications ready, along with an I’ll do anything attitude, so they’ll accept that larger rent increase so you’ll even save on a let fee! Secondly, if your tenant does choose to move because they are changing jobs, schools etc, you will catch another eager tenant willing to jump through hoops to secure your property AT THE HIGHEST RENT, YESTERDAY.
So the next time your Property Manager says, “I have an application, the tenants would like a 6 or 12 month lease”, take note – is it March? Then why not ask for a 10 month lease? Don’t be scared of longer term leases either for eg. 13 months, your property manager can insert a rent increase sometime during the lease (for eg. after six months) as long as it’s negotiated at the start of the lease. Is it September? How about a 4 or 10 month lease? Remember, it’s a Landlord’s market, you can design your rental terms to ensure you are squeezing every cent from that investment property of yours!
If your property manager is not attending to these things without you needing to ask, are they looking after your best interests?