Long vacant period; Slow rental market?

I have one house sitting out there for 2 months now, still no luck... keep missing out by inches where prospective tenants change their mind at the last minute (3 have done so to me, such cruelty).

Is it just me, or Melbourne rental market has slowed? What should I do at this rate?

 

What area is your property in?

My pm said market has not slowed at all.
Chatting to her a few days ago (she often calls me to give a quick update on my property and market), she said it was still very busy for her leasing wise.

 

It really depends on the market in Melbourne. Some areas would be in higher demand then others. My IP in Melbourne still would have a reasonably slow rental market now (even though it has improved over the last year) but then on the other side of Melbourne, things are going like hotcakes. mmmm. Hotcakes.

 

Try dropping your rent price 20 bucks a week. Rent price is really sensitive to tenants and if they find an equal place for a few dollars cheaper, they'll take it. Or try some other innovative ideas to entice tenants to your place.

 

Comes down to price really. Each week vacant just digs your hole deeper. Don't follow the Melbourne market, but I believe majority of people don't like to move at this time of year, buyers and renters get cosy through winter.

I was told this many years ago and it has stuck with me. Say your property rents @520/w (to make things easy). Each week it goes vacant, has cost you around $10 a week for that year. So you can be better off to reduce your price 10,20,30/w to get a tenant.

Using your 2 months, say 9 weeks vacant with these numbers.
Full 52 weeks @520/w income $27,040
9 weeks vacant costs you $4,680
Rental income position at end of year $22,360

You would end up with the same rental income if you had dropped to $430/w for the full 52 weeks!!! That's a whole $90/w cheaper which is much more appealing to a tenant.

Not saying you'll have to drop that much but it puts things into perspective when you do the numbers so don't hold out for that extra 20 bucks a week, after a few weeks go by that $20 is gone anyway. Drop and get a tenant now.

 

Some good advise from the other posters.

Talk to your agent and see what can be done to your property or its rental to get someone across the line.

Monitor the areas other rentals and see what is on the market, what is being leased and how they compare with yours.

 

I did the above 4 weeks in. Dropped $10 (mine's on a lower range of $300 so $10 is equivalent to dropping $20 on a $500 rental).

Should I drop more now that another month has passed?

 

What feedback have you had from your sgent? Could you do something relatively cheap to freshen up the property? What's it's best & worst feature & how does it REALLY compare with similar properties? It's probably also stale so even if there's nothing wrong with it ppl will know it's been on the market for a month & assume there is

 

Talk your agent and at least another agent as sometimes it is not just the rent.

Can the place do with a freshen up, have a dishwasher installed, better security. There may be one or lots of reasons as to why your property is being passed over and you need to understand what that this.

 

As others have said it could be price. But is the agent crap? Are they doing opens? What's the ad and photos like?

If you want more considered opinions why not post up the ad?

 

I had to do the same for 1 of my properties... Dropped it down by $30 as it was vacant for 4 weeks...

 

I will post some photos, but not the ad. The agency are nice people and I don't want to defame them.

Property was just renovated with newly fenced sideyard, french door at living room, brand new cooktop that I just purchased upon received feedback that old cooktop might be the reason. I have since taken further steps myself last night by posting on Gumtree too.



I'm $7000 out-of-pocket now due to renovation and cooktop and it is quite a bit depressing really...now if I drop the rent more, it would be a price that is lower than before the renovation. I'm not financially vulnerable or anything, I can quite comfortably pay the mortgage, but seriously, an investment means it needs to pay me back...

 

Im finding its slow in a lot of area right across the country. It used to generally take around 2 weeks to fill a vacancy where as now it is taking around 4. A lot of investors in the market everywhere and other are exiting the rental market and buying there own homes. Never thought i would say it but i wouldnt mind a couple of rate rises to push things back to how it was before.

 

I know absolutely nothing about the Melbourne market but as others have commented what does the agent say? Have they leased other properties recently at a similar price? Its their job to know intimately what the local market is doing.
After that long you need a tenant, you have 2 options either drop the rent or the pm.
When the market turns against you all you can do is ride it out IMO.
Drop the rent 20 pw if necessary and ride it out, rents will continue to rise long term. I know what you mean about spending a lot of money and then looking at rental decreases. I recently spent about $8500 on a place only for the tenant not to renew their lease and I had to drop the rent $20 pw, thats the way it goes sometimes.

 

If you posted the ad we would do the defaming not you. lol. Are they doing opens? Perhaps call the agency (or get a friend to on speaker) and inquire about the joint - see what sort of service they give a perspective renter??

WHERES THE QUOTE BUTTON?

"Property was just renovated with newly fenced sideyard, french door at living room, brand new cooktop that I just purchased upon received feedback that old cooktop might be the reason. I have since taken further steps myself last night by posting on Gumtree too.

I'm $7000 out-of-pocket now due to renovation and cooktop and it is quite a bit depressing really...now if I drop the rent more, it would be a price that is lower than before the renovation. I'm not financially vulnerable or anything, I can quite comfortably pay the mortgage, but seriously, an investment means it needs to pay me back.."
Tenants don't give a **** about what you did to the property, how much you spent, or if the rent you receive is lower than what you last got. They just compare your place against what is available for rent.

 

Looks like a lovely house from initial look at your photos. Are there too many rentals in the area available? Anyway, better to bite the bullet and have some money coming in obviously, even if you have to drop lower, than no money coming in at all.

 

I agree... I would drop the price again to get someone in the door with the hopes of increasing the rent later. Also what is the max vacancy your insurance company allows?

 

Insurance? What about it?? Why?

 

Some insurance companies require you to advise them when your property has been vacant for 60 days or more.

 

Yes. Many insurance companies will not cover properties that have been extended for vacant periods because of the significantly higher risks of vandalism/arson ect.