I saw an agent advertise the other day that they had 20,000 tenants on their database.
Now I appreciate that number sounds very impressive, but let's look a little closer at the reality and what that means for you as an investor.
Firstly, I highly doubt that there are 20,000, qualified, quality tenants looking for a home right now. I know there is a housing crisis, but this number just seems way off.
I suspect this is not a clean database, and has built up over time, and tenants haven't bothered to unsubscribe to emails.
You know how it is...when you are looking for a rental property, you cast the net far and wide in the hopes of securing the right home. And then you find one, and you keep getting these emails from real estate agents, but it doesn't bother you enough to actually click the unsubscribe button. Besides, who doesn't like keeping an eye on the real estate market?
But does it mean they are actively looking for a home? Probably not.
Timing is everything
Secondly, let's look at the cycle of searching for a rental home.
I would suggest this is approximately FOUR to SIX weeks at most. Traditionally this has been more than sufficient in the rental market, and although we know now, it might take tenants longer to find a home, the advertising cycle has not changed. It still operates on a 30 day maximum, and any home that stays online past that period goes stale, goes to the bottom of the page, and has tenants wondering what is wrong with it.
The rental market is a fast moving beast.
However the home buying cycle is typically 6 - 12 MONTHS, so it makes a lot of sense to. build up a quality buyer database, and work with buyers over the long term to try and determine what they are looking for and help them with their most significant purchase. It also is more appealing to sellers to have an agent try and capture people on a database.
It doesn't make sense to me that this would be an asset for investors, because even if there was that one perfect tenant on the database, what are the odds that your home is what they are looking for? Within a month? Even the biggest agency would struggle to meet a tenants needs perfectly.
I may be wrong, but this tactic of promoting a tenant database, seems to be driven by a sales agent, who has no idea what the rental market is actually about.
Quality over quantity
I know there are some tenants who are super organised and will reach out to agents to go on a database months before they are looking to move.
But I can tell you that all good tenants get snapped up very quickly. Those that are left...go on the database.
It has been a recurring theme for the last year or so, that we can get multiple applications on a rental property, but there may only be 1 or 2 good applicants out of 25 for example. Unfortunately there are a lot of tenants who have done the wrong thing, didn't pay rent on time, didn't look after the property, that are struggling to find a rental with a real estate agency because we still have enough choice to wait around for the right tenant.
Good tenants just know they need to have their applications ready, they need to sign up to alerts on the real estate online portals, they just know this is as serious as hunting for a new job and requires preparation.
They are actively looking for the right home for them, they are not relying on a property manager to find it for them.
Low cost - massive return
I remember the time when we used to have to call in our rental listings to the newspaper, and use all their weird abbreviations, and get a cost per line item, so we would always try to maximise the words with abbreviations to get the most value for landlords. BR, close all fac, unfurn, kitch, u.f, w.w and so on. It was an entirely different language!
It then appeared ONCE. If we didn't get a tenant that week, we would have to advertise during the week, and again each weekend, costing the landlord money every time we ran a new ad. This could go on for weeks!
Now, for a very low cost, we can advertise to over 10 million viewers each month via www.realestate.com.au, and the payment occurs once, and lasts for as long as it needs to (30 days or less if marketed correctly!)
We can now include photos, floorpans and virtual tours, all included within the same fee.
Wow baby we have come a long way!
I know there are some agents who might promote the use of a database, "save money on advertising", but I want to ensure my clients property gets seen by the most amount of eyeballs, in order to get the most amount of people at my open, in order to create a competitive environment so the good tenants apply immediately, so we have a choice of good quality tenants, and so we can achieve a result in the fastest possible time.
The small cost could end up costing you a lot more in the long run. What if there was a better tenant out there? What if you are missing out on the maximum rent you could achieve because it was not marketed to its best advantage?
It seems logical at first glance
I do get asked this by most investors, and I get it, I truly do. Why would you market a property if you didn't have to?
But I am saying why wouldn't you? Just because it's a rental, doesn't mean it should have less marketing than selling your home.
The premise is exactly the same, cast the net far and wide, and hopefully not all the fish are ones you need to throw back in (on the database!)
I have been marketing homes both in rentals and sales for a really long time, and there are many more tips I can go into, to ensure the maximum result for your home. I would love to chat to you further on 0426 241 676 or hello@tayloredproperty.com.au
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