Expectation versus actual market has been the challenge for many in the last twelve to eighteen months. It has been hard to comprehend at times with the decreases in rent returns in the last couple of years and I think we have seen the worst of it during 2018.
We are always looking for a way as investors to improve our return, or at least maintain it best we can, and the past market has certainly tested us. The flip of this I guess is for potential tenants as they are looking for the best return for their buck and in recent times wanted to haggle but this may be changing.
2019 has started with increased inquiry for rentals which is encouraging, this is usually a good sign, but we won’t get too excited too early. I think between now and the end of June will give us the clearest signs and hopefully the potential of lower vacancy rates and the chance for small adjustments upwards in rents for landlords. Why the end of June you ask? We do have a Federal election potentially in May and there has been much talk about negative gearing and what may happen.
This decision will have some impact on the market in a variety of ways for some current landlords as well as future investors, I think particularly for the east coast which has already started to cool. They are probably in terms of change in their market where we were four years ago. Those who have been highly geared with loans during our last three to four years have certainly felt pain with lower rents and decrease in equity as well as the adjustment in the banks’ approaches to lending particularly interest only loans.
The recent market has also alerted landlords that in a competitive market your property needs to be fully functional and presented well. Most know this however those who have ignored this have paid the price. Regular maintenance for a landlord is simply part of life as it is with their own personal home and if it is maintained it saves time and money in the long term.
First by attracting better tenants and usually achieving better rents with tenants staying longer as they enjoy the property they lease more. No property stays perfect by itself but we do know that a great tenant helps maintain it longer and better and as well makes it affordable for a landlord to maintain their investment.
This year looks as if it will soon present a more even playing field for landlords which for many will be a great return to some sanity for a while. It can be quite a journey at times being a landlord especially in tougher times.
Thank you for your support and we look forward to working closely with you again throughout the year and hope 2019 is a great year for you and your family.
Written by Milton Rendell, CEO – Real Estate Plus