WITH VACANCY RATES creeping up across the country, property managers have been seeking help – not just to find tenants for their owners – but to learn to thrive in what feels like a tough market. If you are sensing a change in your area, there are plenty of things you can do to turn it around. Story by Hermi0ne Gardiner.
SUPPLY AND DEMAND; a property is only worth what someone is willing to pay for it.
The challenge is that, for years in the most part, rents have continued to rise gradually. Owners expect the same or higher rent each time and, when a vacate notice comes across our desks, we often simply list at the same price or higher, because that’s what we’ve always done – often without detailed thought on the current market, such as:
- What is available and comparable?
- Current vacancy rates and days on market?
- What have properties leased at, not just what is advertised?
- What newer developments have affected the price of this property?
- What sort of tenant demand is there in this area for this kind of property?
- Has the sales market had an impact on people choosing to buy instead of rent?
Whatever the reasons, if we want to get these properties leased faster and minimise the risk of the landlord taking their business elsewhere, I believe we need to start making it our job as the owner’s property manager to be far more across all of this knowledge. To support them in making smart investment decisions in pricing from the start of the leasing process, well before the property becomes vacant.
We also need to learn how to share this knowledge with them as the industry experts and work alongside them, not just tell them what they should do without educating them and then wonder why they don’t listen.
Ideally, we should be educating them on the true property value; not just at the vacate phase, but regularly throughout the tenancy so there are no rude shocks or surprises, making our job easier when the time comes.
How we do this depends on the data and statistics we track from both within and from outside our own office. Weekly, monthly and annually we should be tracking market data for our core area, such as averages across days vacant, days on market, active tenants searching, average rents, increase or decrease on past rents and properties available.
If we track this data, even when it is a great market and things are leasing well, it will form an important comparison point for those tougher times. It could even provide a point of difference for our property management service.
Here are some things we need to remember to make our lives easier when trying to avoid high vacancy.
SHIFT YOUR MINDSET
- We are interpreters of the market; we don’t dictate the market. When speaking with owners we must remove the fear they are going to blame us, get upset or leave us. It is not our fault if the market has changed.
- Shift our language to become their partner in property management. Change your language and dialogue to ‘we’ and ‘us’, not ‘you’ and ‘yours’. Shift the dialogue from ‘rent reduction’ to ‘rent adjustment’.
BE THE EXPERT
- Track statistics internally – work out what needs to be tracked daily, weekly, monthly, and annually.
- Share with the team – determine how we share and distribute this data with the team, not just the leasing consultant. Property managers, new business and even sales may need to know too.
- Educate externally – teach our owners about the market with newsletters, comparables and leasing reports.
OVERCOME BARRIERS TO LEASING
- Condition of the property: can’t get the owner to update the property? Help your owners to arrange a payment plan with contractors, suggest re-finance, and remind them we can deduct from rent. Next time, plan ahead and help the owner budget in advance for upcoming renovation works.
- Ensure marketing has professional photos, good copy and stays at the top of the search results. Tenants rarely search past page one, and often won’t enquire if they can’t find the information they need.
PRICING
- True pricing strategy from vacate notice – if the property is not worth what it was last time, give owners the truth about the market and don’t sugar-coat it. Help them make the best decision to ensure minimal vacancy.
- Offer pricing options – for example, $550 to get it leased fast with minimal vacancy, $600 for an intermediate result and $650 to be waiting longer for the right tenant with a risk of higher vacancy.
- Pre-frame price adjustments – if you are pricing above the market, agree what the next price adjustment will be and by when. Do this in advance, and it will take less time convincing them later.
- Pre-advise of market shift – when you see a dip in enquiry levels, share the prediction instead of waiting for the Saturday open and having no one show up.
PROACTIVE LEASING
- Old school marketing – this can still work to capture passive renters in the market, those who aren’t looking online but could be interested in the property in the local area. For this reason letterbox drops and signboards still work.
- Treat tenants like buyers – keep a tenant database and work it. If you use an online booking system, use the data captured from this and get on the phones; don’t just wait for the tenants to book.
- Offer flexible viewing times outside of the set open for inspection on Saturdays.
- Consider how you are promoting through e-marketing and social media – Facebook offers great targeted marketing to the desired target market.
ONGOING UPDATES
- Send a weekly report to educate the owner. For each listed property, consider providing statistics on days vacant, days on market, page views, enquiries, inspections, applications, price adjustments and lost rent while vacant.
- Don’t rely on email. Get on the phone at least twice a week. If the property has been vacant over two weeks, increase that to four times a week. If over four weeks vacant consider being on the phone daily.
BRING THE OWNER INTO THE JOURNEY
- Where possible, take the owner online, ask them to pretend they are a tenant searching in that price bracket and location and get them to tell you what they see.
- Invite the owner to the open for inspection; it can be quite powerful to stand in a quiet apartment for 20 minutes with no one coming through to show what the market is really like out there.
BREAK IT DOWN
- Provide the owner with a cost analysis of rent adjustment vs staying the same over a 12-month period and what that difference means in annual income.
- Share a case study of another positive result in shifting the price, or a negative result in not adjusting the price. Social proof can work wonders.
LAST RESORTS
- Where possible, get face to face for a meeting; if they are not in your area, request a Skype meeting.
- Director call. Get the manager or director to call and let them know that as an agency we are concerned that their property is not leasing. Sometimes the senior perspective can help get them around, and show the seriousness of situation.
- Ask the owner ‘What more do you think we could be doing to lease the property?’
The last one is my favourite, but of course only to be asked if you are sure you have done everything you can do to get the property leased. Now, after reading this, you can ask yourself: Have you really done everything?
