Rents fall sharply as virus takes its toll

I vacated a property (2 bedroom apartment) I was renting within a postcode within Melbourne that typically is home to about 40% international students. Landlord slashed the previous rent by 20% - but a month later, property is still empty. I feel for the landlord, but there are so many empty apartments within the same building... the apartments aren't particularly spacious either (most newer apartments are shoeboxes these days), which seems to discourage potential tenants, despite being well built (good insulation, sound proofing).

Despite the plethora of cheap rentals available, I'm taking a break from renting and caring for elderly family members instead - not letting them anywhere near aged care while the risk of the virus is still an issue. A lot of friends my age are preferring to live back with family at the moment.

 

Another reason why 3 bedrooms is better is that the tenant can (not legally) rent out the 3rd bedroom to reduce cost.

When i was buying my IP using a BA 3 years, she told me to get a 2 bedder townhouse and I kept telling her I only want 3-bedder as I know that every one is building 2 bedders, but not 3. This crisis shows that is the case.

 

How is everyone holding up with their rents/ vacancies?

So far, its been OK for me (touch wood) No doubt jobseeker/ jobkeeper providing enormous level of support. Out of 17 properties, I've got one vacancy (worked out OK, as I have chosen to put in new flooring + paint which will deliver incremental +$40 per week), and I've had to drop the rent $40 on another property. On all of the others I've had no issues, actually been resigning a lot of 12 month leases at either the same or higher rent.

Now I've said that, I'll likely get 3 PM's call me this afternoon with issues

Hopefully all OK for you guys as well?

 

13 resi leases and 2 commercial (worth more than resi combined), are all good.
To be honest, during the whole period, maintenance issues have dropped significantly when previously there was always something which required fixing with the resi props.
Maybe the tenants are fixing stuff themselves because they have more time on their hands ‍♂️

 

Sunshine Coast rents have increased - 1.2% vacancy will do that.

 

When I built my own portfolio, I loaded up on 3 bedders (though I have a mix). My reason at the time was that I (a) just got back from London and put a premium on size, and (b) figured that if there was ever a recession, families/couples would co-locate so the extra bedroom would represent an extra income.

I never thought in a million years that there would be a pandemic scare and people would be working from home.

Lastly in fairness to your BA, there might have been price constraints on getting to that third bedroom. But your instincts were bang on.

 

No change with mine

 

In Brisbane rent falls have been mostly in the CBD. Here's the SQM Asking Rent Index for the last 3 years to track the falls in postcode 4000.

Compare that to many other postcodes in Brisbane and the story is very different. Here is an example of postcode 4051

There will always be markets within markets!

 

All that data tells me is that it is cheaper to rent in Melbourne than in Brissy!

 

Perhaps just the data I selected