Private property issue #24 - no tenants

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How do you find a tenant when your property’s been empty for 3 months?

At last week’s webinar, one investor asked:

“What tactics can we use to find a tenant in this challenging market? It’s a studio unit, so no real scope for renos. The bathroom/kitchen are only 6-7yrs old and in good nick but it’s been on the market for 3mths…”

Let’s look at this investor’s property to see what she could do.

What’s the property?

The investor owns a small studio apartment in Mt Eden, located on the 4^th floor of the building.

It was advertised on TradeMe (with stunning photos) for $470 a week – and the investor was using a property manager.

The property is in good nick, and there’s no opportunity to renovate. So what else can she do to get it rented?

Step #1 – add appliances

This apartment is up 4 flights of stairs – and was advertised without appliances for the kitchen and laundry.

Rookie mistake. Tenants don’t want to lug a washer-dryer or a fridge-freezer up staircase after staircase.

And most tenants expect these appliances to be included when renting an apartment.

So step #1 is to buy (or rent) whiteware for the property. Or, tell the tenants that it will be included, and get it once you secure a tenant.

Step #2 – don’t make the property look too good

You need to look at your listing from a tenant's perspective.

Usually, I’d recommend getting really nice photography or doing a mini-staging.

But, in this listing, the top-quality photographs have worked against the investor.

Tenants are visual. They need to see what they're getting.

Because the property was so beautifully decorated, there is a risk of anti-climax when the tenant walks into an empty room.

So step #2 is to take photos of the empty property.

Step #3 – make it clear what the tenants are getting

One of the issues renting this property is that some tenants don’t realise that it is a studio apartment (rather than a 1-bedroom).

In the first photo, the mirror makes it look like there is a separate bedroom where there isn’t.

The investor said, "yeah, that got me too when I went to buy it.”

So, here are a few options.

It would be better to open the wardrobe so people can see:

1. a) there's not an extra bedroom
2. b) there’s shelving and storage behind (tenants care about storage).

I also found a floor plan online from when the property was last sold. This could be included so tenants can visualise what they’ll be renting

Step #4 – drop the rent

If you can’t find a tenant, you’ve priced the property too high for the market.

You need to drop the price.

This studio was priced at the higher end.

Although no rental data is available for studios in Mt Eden, the median 1-bed apartment rents for $450 /week.

So a tenant could rent the average 1-bed apartment for $450 /week …

Or they could rent this studio for $470 a week.

Given a choice, most tenants would go for the 1-bedroom apartment.

In the end, this investor dropped the price from $470 to $430 and has now found a tenant.

The $40 drop worked.

Sure, over a year, the investor will get ~$2,100 less than she initially thought ($40 a week x 52).

But, she lost ~$7,300 by having her property empty for 3 months.

It would have been better to drop the rent earlier to secure a tenant and the rental cashflow more quickly.

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