I cannot find tenants! Help please

[Marina]

Hi Everyone,

I have 2 properties in an Estate called Sanctuary Lakes, which is largely
made up of owner occupiers, and caters more for the higher rental market.
We are surrounded by an 18 hole golf course, gym , spa , sauna , cafes and
24 hour security. It is only 20 minutes from the CBD.
It has been about 7 weeks and since then I have reduced the rent, and thrown in a cleaner and gardener once a month.

I am not stressing yet, but it has come to the point where I need to do something more, so here I am asking for some help.

Would anyone know any relocation agencies or property managers that would
be able to locate suitable tenants.

Any help would be appreciated.

Thankyou kindly
Marina.

 

[duncan_m]

Is it an obscure/not well known suburb name?

I have a property in a suburb in Adelaide called "Glenalta" but hardly anyone knows where it is so I advertise it as "Blackwood/Glenalta", everyone knows Blackwood. I used to get almost no interest when I advertised it just as "Glenalta"..

Perhaps if your suburb is new, you have the same problem?

 

[simonjulie]

Hi Marina
I did a quick search of rentals on Domain.com.au and found 42 Sanctuary lakes listings. It might just be possible that this estate is not as predominantly
Owner occupied as you were lead to believe.
I have found that there are usually two reasons why any property won't rent/sell and they are "price and exposure to the market"
You have got quite a lot of competition down there. I suggest you isolate the direct competition with your products and then respond with a strategy that will make your properties more marketable.
Kind regards
Simon

 

[Kristine..]

Hi Marina

Sanctuary Lakes is just lovely!

I find that despite the internet and all the bells and whistles, most properties still let from the board.

So if you haven't got boards, get them up pronto. It is worth the effort. When working on the houses it is not uncommon to see people pull up then get on the phone while they are sitting in their cars looking at the house.

Otherwise, make sure you have an agent with a bit of rental exposure - some are mainly Sales agents and are not really interested in rentals. There are some 'exec' relocation companies but most of the trade still comes from people already living in the area.

Hope you get tenants soon

Cheers

Kristine

 

[Andrew]

Sanctuary Lakes is actually Werribee from what I can tell. Things that I can think of immediately:

* find out what the other 42 properties don't have that you do and emphasise that.
* allow pets (for the right tenants who'll keep their Rottweiler outside.)
* rent it furnished (find a tenant who wants furnishing first though.) The new tenants
might even like to help choose furnishings.
* approach nearby multinationals who need furnished executive rentals.
* lower your price.
* give rent free period at the end of the lease (provided the property is still in acceptable condition.)

andy

 

[Sim]

Further to what Simon said above ... for two substantially similar properties, the cheaper one will always be the one that is rented first.

You either need to A) make sure your property is more attractive to prospective tenants (and I don't just mean prettier - give them a reason to want to live there), and/or B) drop the price so that you are the cheapest.

Do the sums - how much is 12 months at a reduced rent going to cost you versus another X weeks of vacancy ?

In fact, here's a formula to help you do exactly that...

D = amount (dollars per week) we think we would have to discount rent by to get a tenant (compare your asking rent to those of similar properties nearby ... D should be the difference in price between your asking and the lowest price elsewhere)

W = number of weeks vacant (either how long it has already been vacant, or the total length of time you think you will need to keep advertising for before you get a tenant at your current asking rent)

R = your current asking rent (dollars per week)

The formula is:

(52*D/R) - W < 0

... or in other words ... when the formula on the left evaluates to a number less than zero, then you would have been (or will be) better off dropping your rent by $D per week.

For example, with a property renting for $300 per week, a discount of $20 per week or face 3 weeks of vacancy, formula evaluates to (52*20/300)-3 = 0.46 which is greater than zero, so better off waiting for three weeks to get our $300 per week ! Simply put... 3 weeks @ $300 loss through vacancy = $900 lost ... 52 weeks @ $20 per week discount = $1040 ... costs more to drop the rent.

But look at what happens if you have to wait for a fourth week! Formula evaluates to: (52*20/300)-4 = -0.53 ... meaning that we would have been better off dropping our rent by the $20 than waiting for 4 weeks for our higher rent.

Of course, there are many more variables than this - but I think it serves to illustrate how the concept works ... there is a point at which enduring extended vacancy costs far more than accepting a decrease in rent.

Another example: let's take a nice round figure of $260 a week.

$5 a week discount versus 1 week vacancy - no difference
$10 a week discount = equivalent to 2 weeks vacancy
$15 a week = 3 weeks vacancy
$20 a week = 4 weeks ... etc etc etc

So, while trying to maximise your rents is a great idea - don't get caught up with waiting for that someone willing to pay a higher rent ... sometimes vacancies can cost a lot more than discounted rents !!

(Yes I've made a lot of assumptions with these calculations - but it's the principle that's important here, not the detail)

 

[Mrs Bird]

Sanctuary Lakes is actually Werribee from what I can tell.

Sanctuary Lakes is next to Point Cook. Werribee and Hoopers crossing are on the other side of the freeway but in the next 10 years all the above suburbs will probably be joined due to development.

Sanctuary is a fantastic, beautiful development with many of the lake front homes commanding 800K plus. The problem is at the moment it is a young suburb, still isolated in a new estate area. Lack of transport, local shops and other facilities could be a real problem particular for renters who rely on public transport. It will eventually build up in the next few years but these outer estates take time.

I can highly recommend Sweeneys in Altona. Give them a ring even though they are based in Altona, they also handle rentals in Sanctuary lakes.

Best of luck...we have also gone through difficult times but you will find someone to rent given time.

Mrs Bird

 

[Peter Parker]

My own experience when facing this problem last year:

March 04. Contract signed. A rent of $200pw would represent a satisfactory yield (9.15% approx) and better than anything else then available. Rental market buoyant (vacancy rate 2%).

16/4/05 Property Settled

PM suggests $200 - 220, or possibly even higher.

Checked rents of similar places advertised and enquired about their status

A. $240pw (still vacant)
B. $210pw (application lodged)
C. $240pw (tenanted)
D. $230pw (still vacant)

I set my rent at $220pw, but advised PM that I'd take $210pw for a long lease.

3/5 Still not rented. Request PM to drop rent to $210pw.

18/5. PM advises vacancy rate approaching 10% (this is in a location where there is traditionally a easter/winter lull).

26/5 Vacant for over a month!

Looked at rents for similar properties again. Found that they had fallen slightly, as follows:

A. $180pw
B. $200pw
C. $200pw
D. $230pw

Decided to lower rent to $195pw, so cheaper than most; this would catch those searching the web for $100 - 200 rents.

14/6: After a false start with a deposit paid (and kept), finally success! Excellent tenants signed up for 6mths @ $195pw.

8/12/04: New blinds for tenants (which needed replacing anyway). Started planning work for new lease.

Rental market had strengthened and rents were:

A. $210pw
B. $220pw
C. $220pw
D. $230pw

Renewed lease at $205pw, which tenants gladly accepted. Had it been a new tenant, I would have tried for $215pw.

Lessons:

* I should have dropped the rent earlier rather than later (2wks, not 4).
* The time of year leases are signed is important.
* My initial judgement of the rent was very accurate.
* The approach of being cheaper than 75% of similar properties is good (especially when the difference is only $20pw and occupancy is key).

Rgds, Peter

 

[Marina]

Hi to all,
I was actually stunned when SimonJulie mentioned there were 42 vacancies.
So I went through each and every listing and lo and behold there were
18 homes that were either listed twice and some were even listed 3 times.!

So the real number of homes that are for lease are 25 homes. Phew! Gosh! that is a whole lot better!
There are 6 townhomes, 6 signature homes(these all look the same and are small) 3 small houses, 4 high priced homes.

So basically I am in direct competition with 4 or 5 homes.

I have decided that it will be better to drop the rent a futher $50 per week,
have a cleaner once a month ( I will do the cleaning) have a gardner once a month ( hubby will be the gardner) and maybe put in 4 weeks rent free at the
end of the lease ( not sure about this one).

I will keep you all posted as to the progress.


If it was easy everyone would be doing it
Marina.

 

[simonjulie]

Hi Marina
Good work
Now you have a better understanding of the market place.
Keep us posted as to your progress.
Kind regards
Simon
PS. It might be a good idea not to reveal upfront who the cleaner and gardener really are. It might seem intrusive to some tenants.

 

[pennyk]

Hi Marina,

That seems a lot of work to do! Are you that far above market rates that you need to drop $50, plus have the cleaning and gardening...

I would be looking at changing agents before I went to those extremes. We have had places vacant for long periods of time, and I always found a change of agent had the desired effect and it was let within a week.

Pen

 

[tubs]

We recently had trouble renting a property, so I called all the agents in the area to ask if they had anyone on a waiting list on their books. A couple of agents were really helpful and (unknown to the agent who we were listing with) sent a few potential tenants around to have a look. It would be a shame for a tenant to be on a waiting list with one agent, while you have a suitable property sitting on the books with another agent.

When you talk to other agents, make it clear that you are not asking them to manage your property, but if they do have anyone on their books, then they can manage the property. Hey, it saves them advertising and they rent it out straight away. You should also be able to get a reduced letting fee, since you brought the property to them. But make sure you have a general tenancy agreement with your current agent, not an exclusive authority, or you might have trouble.

Tubs

 

[quoll]

G'day Marina

Have you been to look at the competition?

Compare them to yours, what do you have that they don't, big yard, security, better airflow, nicer kitchen, easier to maintain, bigger aircon, etc.

What do there ads push, which features, how does your ad compare, have they got signs?

What has rented recently?

How many agents deal with the area? Have you spoken with all of them?

The pets idea works well, you get them in and lock them in, once they have a dog in the yard it makes it harder for the tenant to leave.

Cheers
quoll

 

[quoll]

Hi Marina,

That seems a lot of work to do! Are you that far above market rates that you need to drop $50, plus have the cleaning and gardening...

I would be looking at changing agents before I went to those extremes. We have had places vacant for long periods of time, and I always found a change of agent had the desired effect and it was let within a week.

Pen

dido pennyk

the last two tenants we got have been from changing agents. Had one property where tenants were leaving and old agent had 6 weeks to find tenants, changed agents and got new tenant that day at 20% increase in rent.

quoll

 

[Rixter]

Hi Everyone,

I have 2 properties in an Estate called Sanctuary Lakes, which is largely
made up of owner occupiers, and caters more for the higher rental market.
We are surrounded by an 18 hole golf course, gym , spa , sauna , cafes and
24 hour security. It is only 20 minutes from the CBD.
It has been about 7 weeks and since then I have reduced the rent, and thrown in a cleaner and gardener once a month.

I am not stressing yet, but it has come to the point where I need to do something more, so here I am asking for some help.

Would anyone know any relocation agencies or property managers that would
be able to locate suitable tenants.

Any help would be appreciated.

Thankyou kindly
Marina.

Hi Marina,

Sounds maybe the property is catering to the TOP end of the market with fewer ppl or prospects that circle within it. Not knowing the area , could you tell me a bit more about it?

I have found the biggest market with the most ppl circling witin it being the MIDDLE market - so I have always targeted areas that cater to this marketplace in relation to minimising my risks & vacancies factors.

LOWER end market I prefer to leave alone due to minimising risks factors.

 

[Aceyducey]

Marina,

I think the answers above have basically covered your issue, but I'd just like to say that IMHO the only reasons a property will EVER be vacant is that the rental is too high or you're not reaching the right target audience.

A good PM should help you address both of these.

Cheers,

Aceyducey

 

[stirling]

I have decided that it will be better to drop the rent a futher $50 per week,
have a cleaner once a month ( I will do the cleaning) have a gardner once a month ( hubby will be the gardner) and maybe put in 4 weeks rent free at the
end of the lease ( not sure about this one).

The cleaning could be a bad idea. Could be 8 hours work per month. The gardening could create water consumption disputes, (unless landlord has agreed to pay for all water). Both would be intimidating to tenant.

I do know of one landlord who uses a managing agent but becomes "Anonomous Joe the handyman" for repairs. Less intimidating for tenants. I don't know if he changes into his overalls in a phone box.

Stirling

 

[crest133]

Hi Marina
If there are 4 or 5 similar properties, then the agents decide which place to push when confronted with a tenant enquiry. You might like to try increasing the lump sum payment to the PM for the next lease by $200 or more. Better to keep the weekly rent up if at all possible and get the PM motivated to promote your property over others. They're only in it for the money after all.
good luck
cheers
crest133

 

[Kristine..]

Pardon me, Crest

But what do you do for the money?

I'm sorry, but I find your final comment quite offensive and fail to see how such a statement could be of any possible benefit to Marina or anyone else.

A property will sell or rent when the purchaser or tenant who wants to live there decides it is the best property for them. Agents have an equal professional duty to all their vendors or landlords no matter what rate of payment has been negotiated with the listing.

Marina must find the point of difference for her property and promote that difference.

It has nothing to do with bribing the agent.

Kristine

 

[crest133]

Pardon me, Crest

But what do you do for the money?

I'm sorry, but I find your final comment quite offensive and fail to see how such a statement could be of any possible benefit to Marina or anyone else.

A property will sell or rent when the purchaser or tenant who wants to live there decides it is the best property for them. Agents have an equal professional duty to all their vendors or landlords no matter what rate of payment has been negotiated with the listing.

Marina must find the point of difference for her property and promote that difference.

It has nothing to do with bribing the agent.

Kristine

Hi Kristine
Please try to stay professional, stay on topic, and not be personal.

None of my remarks or suggestions were offensive otherwise you would have explained why, and please remember - it is offensive to say someone is offensive without explaining why you think they are offensive otherwise they become defensive and go on the offensive, n'est pas ??

Your failing to see a benefit for Marina is probably a request for information rather than a lack of vision. I definately see a benefit for Marina, which is the topic of this posting - Can't Find Tenants. The benefit is that she will find a tenant - not too complicated really. You see, the Real Estate Agent works for profit, and expects the employee (PM) to generate as much profit as possible. The extra money I suggested is a bonus, reward, financial incentive, extra commission, monetary motivation, better deal, one upmanship, to ensure that Marina's property gets the best attention from the PM.
The commercial reality is that salesmanship or the art of persuasion is applied everyday in many occupations, including Property Management, so prospective tenants can be persuaded, sold, convinced, manipulated, co-erced, motivated, even dazzled and charmed.
Having been a PM, I speak from my own experience.
A property manager has an obligation to maximise profit for the licencee of the Real Estate Agency. Naturally, when a PM has the job situation of showing 4 or 5 similar properties to a prospective tenant except that one of those properties will return an extra $200 commission to the REA, heelloooo. Guess what happens ? Commercial reality m'dear.
Just like Mortgage Brokers favouring finance packages which pay higher commissions. Don't tell me they favour the ones which pay the least, oooohh perrrlease. So there's answer to your question, that's what they do for the money, apply their skill for a fast result.
cheers
crest133