Professionals Real Estate 
With the overall vacancy rates in Perth now at 4.1%, there is a growing danger that over-anxious landlords who are struggling to secure a tenant may decide to take a more casual approach to tenant selection.
Property owners should never underestimate the value in a thorough tenant selection process, as a wrong decision at the start of tenancy could prove very costly with loss of rent and possible damages.
In the current Perth property market, the weekly rental price is the key issue that landlords need to focus on.
For several years, Perth landlords have been conditioned to rising rents – now they have to re-evaluate and accept that rents are falling due to an oversupply of rental properties.
This oversupply is just part of the normal property cycle and will self-correct over time. In the meantime, landlords need to set their rents to meet changing market conditions and ensure their property is competitively priced with competing properties. In some cases that might involve cutting the weekly rent by more than 10% in the short term to attract a suitable long-term tenant.
In contrast, if landlords continue to hold out for above market rents, they may attract a poor quality tenant and this could end in financial disaster – it is like playing Russian roulette with your investment property.
Tenant selection is also a key issue that people who are entering the property investment market should also focus on.
One of the key issues that many people overlook when buying a rental property for the first time is the needs of the tenant – the person who will actually live in the investment property.
Many first time investors buy an investment property which is similar to their own family home without taking into account the particular needs of the rental market.
For example, if the demographic of tenants in your area are generally young families or single people, they may prefer to live near social infrastructure such as schools, shops or public transport.
The tenant is ‘King’ when you are considering buying an investment property because a good tenant will pay their rent on time and help maintain the property.
It is important to remember that many people who rent cannot afford to buy a home so the weekly rent has to be very competitively priced.
Setting the correct rent which will appeal to the largest number of prospective tenants is a therefore an important consideration when you are marketing your investment property. If tenants are finding better value property elsewhere then your property may sit vacant for longer.
The fact is that many first time investors over-price their rental property and as a result lose significant amounts of money in the process.
Accepting a lower rent to attract a great tenant is in most occasions, the financially smart decision to make in these market conditions.
Tips for renting
* Do your research. How much are similar properties being actually rented for in your area? This might be very different from the advertised rental price.
* Unless your property has some special features, don’t pitch your rent at the highest rate. The best tenant is a long term tenant who pays regularly and looks after your property. The best deal is generally a “win win situation” for both property owner and the tenant.
* Don’t set the rent at the rate you need to cover your costs. Always focus on the tenants rather then your own financial needs. You can only sell your product at a price someone else is prepared to pay. If you need more rent for your costs, then seek financial advice on whether the investment is still appropriate for your personal financial situation.
