A touchy topic for some but I am not talking about Occupy Wall Street here, I am talking about the now 1% (well, 0.9%) vacancy rate being reported among property managers in Cairns, the conditions for investing in property (for rental return) have rarely (if ever) been better.
We’ve talked before about the fact that a “balanced” market normally sits at the circa 3-3.5% vacancy rate, with anything below 2.5% generally considered “tight”, so to see 1% or less (i.e. for every 100 rental properties managed there are just 1 available to new tenants) it goes from “tight” to “downright stressful” if you are a prospective tenant looking for a home here in Cairns.
With less choice, that hopeful tenant is going to need to apply quicker and for more properties to increase their chance of success, but with other tenants in the same boat they are going to see more competition for each property.
From a landlord’s perspective, things look decidedly rosier, with time between tenants down and more competition pushing rents upward – reducing risk and increasing returns on their properties. Combined with the lower cost of financing and a slightly more relaxed lending environment, there are more opportunities to positively gear properties, putting actual dollars in owners’ pockets throughout the year, not just at tax time.
Amidst all this blue sky for landlords though, what if YOUR property is one of the 1% and doesn’t have a tenant? If you are struggling to secure a tenant in this market, there are probably a few practical areas to check which apply regardless of general market conditions. 1 – is your property fit for purpose? Is it clean and tidy and SAFE? A well-presented property is always going to see more activity than it will otherwise, bringing more tenants to your door. 2 - Have you priced the property correctly? As tight as things are there is still a limit to what the market can pay, and $500/week for a 2 bedroom unit in Manoora is going to be a stiff ask in any market. (I almost said Mooroobool but House on the Hill does present an intriguing offering). 3 – do tenants know your property is available? Gumtree and Facebook Marketplace have their uses but if you aren’t targeting tenants where they look, you are going to keep waiting. As always, talk to your property management professional to get the right advice and the right result!