Weathering the Rental Market Storm

27 Jul 2017

Tips and tricks to riding out the property cycle

The Brisbane Rental market is currently weathering a storm, and some investors are not ready for it.

If you own an investment property in the Brisbane market that has become vacant in the last 12 months, you might have noticed a change in the rental market. This change might be slightly longer vacancy? or perhaps little to no rental increase, or in some cases a slight drop in rental return. 

Now, before you go into melt down and think the market is sinking take a moment to read this post!

All property markets go through cycles, and right now in the Brisbane market we are seeing multiple influences effecting our market place. The most significant at this point in time I believe, is the boom of new Apartments and Townhouses which are being purchased by investors. This increased supply of rentals to the market is creating competition among investors which in turn is resulting in increased vacancy, and wavering rental yields.

In addition, during low interest rate environments tenants often jump into home ownership, which again has a ripple effect across the investment market. This creates a perfect storm of increased supply and reduced demand.

So how do you prepare your portfolio for the storm?

There are several things the team at Hot Property Management do to assist during this type of investment environment, such as;

  • Strategic lease lengths, most landlords just sign up 6 or 12 month leases, however you want to be strategic with the lease end date and take into consideration season changes in the market, for example in Brisbane we see peak rental periods during January/ February, and June/July, around these times you can often achieve a slight premium or reduced down time.
  • Keep up Maintenance, well presented, well maintained properties are the first to rent in any market. If your property doesn’t look presentable then tenants will look elsewhere.
  • Have the essentials, the essentials are things I believe every investment property should have in order to achieve premium performance, 1) Dishwasher, 2) Robes in bedrooms 3) Ceiling fans throughout 4) at least one air conditioning unit (either in living or master bedroom) 5) Be pet friendly   
  • Be Reasonable, keep in mind that a small drop in rent or keeping the rent stagnant is a short term proposition, as the market recovers and rentals can increase you will make up the difference in the long run.

Also keep in mind that often during periods of lower rental yields we see stronger capital growth, a drop in rental of $50 per week might seem like a big deal in the moment, but when you consider that same property might be experiencing capital growth of $500 Per week, fluctuations in the rental market are part and parcel of owning property. 

 

 


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