Maintaining a profitable rental portfolio is a priority for most property managers in Perth, and from time-to-time, careful evaluation of the amount of rent you’re receiving from your investment is something that should be considered. In some cases, this may involve a rent reduction. In this article, we look at factors that may influence you to reduce the rent, and why.
When should you consider a rent reduction as a property manager in Perth?
Many property managers in Perth prefer not to do or even think about, however outlined below are several reasons why you may want to consider a rent reduction:
• Your rental property has been vacant for several weeks.
• The level of interest is extremely low.
• Few or no applications are being received.
• Other properties listed for rent in your area for the same price offer better facilities and amenities.
Keeping pace with current market conditions!
Property management in Perth is no easy feat. When faced with a decrease in demand for your property or an excess of available rental properties in the same area, it may be worth reducing the rent to stay competitive and attract tenant applications. Whether you’re considering a lease renewal for your existing tenants or aiming to attract new ones, it’s crucial that current vacancy rates in your area are evaluated, and thorough market research is undertaken.
Keeping great tenants
If you have great tenants who you want to keep, a slight rent reduction may be seen as a gesture of goodwill that will reduce the risk of a vacancy period and turnover costs.
Property Maintenance and Improvements
If major capital works are required while the tenant is living at the property, reducing the rent may be a good way of acknowledging any inconvenience caused to them. It’s also worth remembering that costs associated with improvements to a tenanted property are tax deductible so this could make a rent reduction more viable.
If you’re having difficulty finding a tenant
Reducing the rent may be an unattractive option for most property managers in Perth, however several weeks of vacancy can have a bigger impact on your rental income. Even a drop of $10-$30 a week can bolster interest in your property which may lead to more tenant enquiries and a quicker turnaround in finding a suitable tenant.
Knowing when to reduce the rent is an important element to the success and profitability of your rental portfolio. Current market conditions, vacancy rates, repairs and maintenance required at the property and the level of competition in your area should be considered when making an informed decision as to whether to reduce the rent.
Across Australia interest rates have been steadily rising which has been a cause for concern to many Perth property managers. This, along with the other factors mentioned, are all influences that should also be considered when thinking about any change to your rental income but please remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.
