Recent Buying Selling Lifestyle Leasing Commercial Market View Tax Investment
Recent Buying Selling Lifestyle Leasing Commercial Market View Tax Investment
Leasing

Dealing with reducing rent on an investment property

29-May-2020
Written by Elishah Lusi
In light of the COVID19 pandemic and the restrictions with travel, we have a seen a flood of short-term rentals hit the long term rental market all at once. Tenants who would normally be searching for a new home including internationals and students are not able to travel to Melbourne so the number of people leasing in the CBD has also reduced significantly.

This means that tenants have an abundance of properties to choose from and some are even trying to negotiate rents that are already heavily discounted.

Let’s not forget an important fact of property investing, market demand determines what the rent should be, it always has and always will be a case of supply and demand.

Some clients are reluctant to reduce the rent because they were previously getting more per week, but it’s not just the supply and demand that impact the rental market it’s also the time of year. You may get a higher rental during a summer market, then when you are trying to lease it during winter. The reality is not many people feel like viewing properties on a cold, rainy day or moving to a new house when there is a good chance their belongings might get wet in the process. If you lease a property out in peak season during summer months for a six-month term, then try and lease the same property out during winter it is a very different market. This coupled with the current restrictions in place make for a slower than usual leasing environment.

We need to keep in mind that sometimes a slightly lower rent now is better than a slightly higher rent later, this is sometimes hard to remember when looking at weekly rental amounts. However let’s say you’re asking $500 a week rent, and the market is determining $480 per week, if you have your property vacant for three weeks waiting for someone at that price point you are already worse off on a per annum basis. Not to mention you might have to wait a week or two for a new Tenant to move in after they are approved.

Leasing properties quickly and minimising vacancy periods are achievable when you price the property right to begin with, to often we hear people say ‘let’s try for X amount per week and wait and see’ that waiting usually results in the price being reduced and losing a week or two weeks rental in the process. Following this process the property drops back with the online listing portals and the property is more likely to be lost on pages 3 or beyond.

Finally what comes around goes around, if you have had your property for a while you will know that sometimes you get a few years of great return and a few years of not so great return, this is all part of investing in property investing it’s a long term game. Our team at Direct Property are still leasing properties and in some cases after one inspection when priced accurately for the current market.

If you have any questions or would like to discuss leasing your property please feel free to contact us.

Keep Reading

Residential rental rules during the COVID 19 moratorium

Since March 2020 we have been receiving enquiries from tenants suffering hardship and have been processing requests to assist with their rental payments. Here we look at the steps we take when we are dealing with a rent reduction request. Read More

What’s Covid-19 really doing to the rental market in Melbourne?

With the recent data showing a significant increase in views, it looks to be a positive market ahead and we are looking forward to Spring and what that will hold for property. Read More