The question that all landlords must think about is how best to attract tenants. New Zealand is predominantly a renting nation and competition is strong between landlords to secure the best possible tenants. Those landlords that use the appropriate mediums to market their properties and reach the widest audience are generally those that see higher rents, fewer vacancies, stable tenants and long term tenancies.
On any given day in any major city, there are hundreds of “For Let” advertisements chasing the elusive best tenant. In the main, the bulk of the ads are placed by private landlords (although this is changing), followed by licensed real estate property managers, and then non-licensed property managers. The amount of money spent on advertisements in the New Zealand Herald each month could be enough to feed a small third world country.
It seems that the first reaction of most private landlords and property managers when faced with a vacancy is to reach for the phone and place an advertisement in the paper. However there are alternative options to attract tenants which are more effective.
There are 8 broad “sources of tenants” that we find useful to monitor.
- Renewals−Existing tenants renewing fixed terms or moving into other properties we manage.
- NZ Herald−Largest metropolitan newspaper in Auckland market.
- Web Page−Allen Realty web page plus various other sites we use
- Local papers−Suburban and other print media.
- Corporate referrals−Organisations that refer tenants to us.
- Signs−For Rent signs on vacant property.
- Other referrals−Referrals from sources other than corporate.
- Other−All other sources
The following table summarizes three recent months of letting data, and from those we can make some interesting assumptions and conclusions. These show the % of properties rented for the month via each source.
What this table shows is that over a three month period an average of almost 40% of Allen Realty’s’ new tenants come from internal sources. Internal sources include our web page, www.allenrealty.co.nz, existing tenant movements/referrals, office listings, for rent signs and our prospective tenant database.
Other external New Zealand property websites are also useful sources at about 50% of all new tenancies. But most interesting to note is that the New Zealand Herald and local newspapers are NOT a significant source of attracting new tenants (this is probably one reason media companies are purchasing many websites). In this day and age where tenants have greater resources than the past, the majority of prospective tenants are not using the Herald and other papers to source property. Websites (whether an agents or external) provide prospective tenants with a platform to view properties, including many photos, and to also make comparisons between properties. From their home or office they use the web to investigate the area, its amenities and infrastructure. It is also interesting to note approximately a quarter of tenants secured actually use the web to apply to rent the property. So not only is it beneficial to advertise on-line but also to have a platform whereby tenants can apply on-line. It is not only about reaching your audience, but making it easy for them.
Clearly internet advertising must be a priority and it is essential to list properties on multiple sites. Although the cost of one advertisement on line is increasing (trademe is currently very high at $99 per listing), many property managers cover the cost of this charge in the management fees which average $22.50 per week plus GST. However, check the fine print as some property managers (usually unlicensed) on-charge this cost. Realestate.co.nz is also a good site, and like trademe, all Allen’s’ properties are listed on this site automatically.
Another interesting point is that our tenant vacancy rate stays reasonably stable year in and year out. Regardless of seasonality, tenant friendly rental markets, landlord friendly rental markets, the number of properties available in the market, government policy, or any other external factors, our vacancy percentage rate remains stable. This is only because we source a high proportion of new tenants from mediums other than the “open market” where most landlords are competing. If we were only advertising using standard mediums we would expect a higher vacancy rate as the market experiences its seasonal lows. However, like other professional property managers Allen Realty has an advantage in attracting new tenants, as not only do we cover many bases but enquiries come to us.
All landlords, large or small should be recording the source of the new tenant, so they can decide where to allocate their resources based on facts. If a private landlord or small rental agency relies solely on newspaper advertising, the result could be little success in attracting tenants, and long vacancy periods. Think outside the square and maximise your exposure! Those landlords using multiple mediums to advertise for tenants will generally be the investors that get more bang for their buck!