The biggest issues in property management today
Buying investment real estate in Surfers Paradise is only half the journey. Once you own real estate here, the next step is the management of your purchase. This is everything from making sure power and water are hooked up, to checking for wear and tear, to selecting the right tenants to move in. It is ongoing work, and being aware of the challenges facing the property management industry can help you stay one step ahead of the market.
Ahead of our landlord symposium on June 6, we thought it would be prudent to take a look at some of the biggest issues that property managers are facing in the current market.
Getting a good yield
Rising real estate prices are fantastic for capital gains, but they can make it difficult to procure significant rental yields from your property. According to SQM Research data, gross implied yields for both houses and units in Surfers Paradise currently sit around the 6 per cent mark – a healthy result for any residential investor.
However, as prices rise, it becomes necessary to temper rental increases – they can't always rise perfectly in line with property value increases. For example, CoreLogic RP Data monthly indices show that in the 12 months to the end of April, house values rose by 15.52 per cent in Sydney. However, SQM data indicate that asking rents on houses in the NSW capital only went up by 3.6 per cent in the year to May 12.
Rent can't rise as quickly a prices can, due to tenancy laws and the fact that it would likely price many tenants out of the market. While that example was over in Sydney, it is a lesson that should apply here too. As Surfers Paradise property prices rise, it will be a challenge for landlords to keep getting excellent yields out of their new property without raising rent by too much. This is where tax breaks through asset depreciation can come in handy for your bottom line.
Keeping tenants in the off season
Traditionally, April to July is the period in which vacancy rates spike in Surfers Paradise. The colder months may see people seek other pastures, leaving you with more of a struggle to fill your rental property. This is relative, however – currently, SQM has the local vacancy rate marked at 2.4 per cent, which is still a good performance.
However, those landlords who are finding their home more difficult to fill over these months can try new marketing methods. Using agents and property management services are great ways of securing tenants, as is advertising on a variety of real estate websites.
You can also negotiate tenancies for longer periods, or work out subletting options. Tackling dry periods for investment property is the sort of challenge that can be addressed in full at the landlord symposium.
Don't go it alone
We often hear from investment property owners who have struggled to fill their Main Beach real estate, or are having trouble dealing with poor tenants they selected. There are many problems that can arise with owning rental properties, but careful planning and the right knowledge can lead you down the path to profit.
Seeking advice from your local council or property management company is a great way to find out exactly what you need. But for the best one on one communication for now, make sure to come on down to our landlord symposium next weekend. You will find landlords from all across the Gold Coast, be able to trade ideas and tips, as well as simply have an enjoyable time.
It is brought to you by us at Ray White Surfers Paradise, and you can RSVP at our website. While you're there, you can also check out the latest news and listing from across the Gold Coast.