(Just like how the Fortune cat, or Maneki Neko brings fortune to its owners, this article will demonstrate how effective marketing can help you to earn more from your rental property investment)
You may be of the belief that a given property always has a set rental price and expected vacancy rate, however, this is far from the truth, in fact the amount of variance in these factors can be swung wide open depending on how the property is marketed. In this article we will give an overview of some of the main factors causing this when it comes to the broader range of residential properties. There are lots of upgrades and excellent ways a property owner can enhance their return on investment, along with unique niche strategies dependant upon the property at hand (stay tuned for future posts), this article focuses purely rental marketing aspects.
The starting point is in the presentation of the property, in the age where most property searches begin and end online, it is arguably more important for online presentation than the physical presentation itself. Why spend thousands on refurbishments only to have a high rate of searchers scroll past your hard work. Professional photography is a must, photos must be of the highest quality, using wide-angle lenses to showcase spaciousness, and taken with optimal lighting conditions combined with professional editing to maximise natural light and shadows, great photos will come to act as a great complimentary asset to your property, and can potentially be used in the future to re let your house given the condition remains similar. These photos must then be ordered in a manner with the feature rooms serving as the thumbnail image that will grab the prospective tenant’s eye, proceeding in a logical order to hold interest and encourage the viewer to stay and read the description.
Floorplans, Videos, and 3D Walkthroughs
There is often a fine line between giving the prospective tenant enough information to make a descision to view, and information overload, even leading them to make their own assumptions about the property before even viewing it. A lot of the time to degree in which to include video walkthroughs/ interactive floorplans will come down to the individual features of the property. Floorplans must be accurate, and walkthroughs/ videos must be professionally produced, a poorly produced video walkthrough can often do more harm than good, the viewer may draw conclusions about the space due to features or benefits that have not been translated through the video, which may have been seen in person.
We always prefer to opt for getting a viewing booked first as the viewer can experience the area, and fully experience what it will be like to live in the property, with live video walkthroughs it is much harder for them to picture themselves living there. The benefits of video and virtual tours of the viewer not needing to attend, having all of their questions answered, and quickly seeing more information need to be weighed up to make sure what is optimal for the property.
The listing description should be concise as possible, in order to serve 3 main functions. The first is what comes up in the listing thumbnail and the first line of text to catch attention. The second is to convey all of the selling features that the property has that will make the property stand out, masking use of specific words and descriptions to appeal to the target market. The third is to encourage the tenant to reach out and contact the agent in order to arrange a viewing. After clicking the listing, tenants usually click through photos first, then skim through the listing afterward. When a listing listing is well written, it grabs attention, flows well, conveys the main selling features and necessary information, finally calling the reader to make contact and take the next step of booking a viewing.
Booking Viewings / First Contact
Once the prospective tenant reaches out, it is likely they will also reach out to another 3-5 properties at the same time, it is important that they are responded to ASAP in order to book a viewing whilst their interest is still high, respond late or not at all as can be common and the prospective viewer will likely be lost forever never to make another attempt. It is also important to have an organised calendar with availability to show the tenant preferably as soon as they require, ideally their first requested timeslot. The ever common issue of the no-show happens largely due to the fact viewings are commonly forced over to the next week or specific timeslots that work only for the agent and not the viewer first.
In-Person/ Live-Video Viewing
Now it is the day of the viewing, In the best-case scenario the tenant will demonstrate interest and ask to apply to the property, It is likely that they may have further questions either upon viewing or based on the new information as they look round. It is extremely important that all of their questions can be answered or it will prevent them from making a decision, our goal is to make the decision to rent as easy and seamless as possible. If the tenant does not wish to apply on viewing or shortly after, it is usually because the property is not what they expected it to be, most of the time when a tenant books a viewing, there is an idea of the property that they have in their mind, and the reality didn’t match up. If the agent showing your property just acts as a ‘door opener’, usually heard regurgitating “all the info is in the listing” or “call the office after”, you can be sure that you are losing out here.
So how does all of this translate to higher rental rates? Prospective tenants throughout each stage will drop off in a funnel-like manner from clicking the listing to submitting a successful application, we will explore what this means for your ability to set rental rates and finding more suitable tenants below.
It’s All One Big Funnel
Prospective tenants are usually going to drop off from first click to the final successful applicants as there are bound to be reasons out of our control. However as we have discussed, there are a lot of ways a prospective tenants can and do fall off due to the way the property is marketed and in which the enquiry process is managed. With all of the factors we have explored on point, you should now have a large amount of applicants who are all suitable tenants and wanting to rent your property, with abundance over scarcity. This takes us to the next concept we will explore below on the zones of possible agreement
Playing The Zone Of Possible Agreement
Moving onto the negotiation and deal making side of things, as we can see above, each party has their range of an acceptable offer. The ‘Zone of possible agreement’ or ZOPA in the image above is the potential range in which both parties can agree and in which price your property will rent. When a landlord is in a desperate situation, or has a lack of choices, they will be pushed down towards the worst case end of their acceptable spectrum, being the tenant’s base case, in a worst case with poor marketing, the tenant’s highest willing price may fall below landlord’s lowest acceptable price, leaving the property sitting vacant, as no tenant can be found to rent at the price desired.
The outcome of an effectively marketed property is that we have the flip side of this scenario creating strong demand, resulting in a large number of potential applicants. This has an equal and opposite effect as we now have more willing applicants, and so the property will end up renting at the highest acceptable range that tenants are willing to go. As the landlord does not now have a desperate need to choose a tenant, they have enough time to pick the most suitable tenants, and the ones that can propose the most attractive applications and rental rates.
This is also where negotiation comes into the mix, as we can see there is usually a wide range of what tenants will rent for in a best case vs what they will accept, and also in the range of what a landlord would drop their rent to vs their best case, as an agent marketing on behalf of a landlord, it is our goal to create the advantage on behalf of the landlord, within reason ethically, to create rents as close to the best case scenario in which a tenant will also be happy.
In reality most of the time the rental pricing requires foresight, it is not in reality very easy to push prices up if it has been listed at a lower rate as it is to drop the rate, having a keen ability to decide upon the price that can be attained given what an agent has to work with is invaluable, along with having the right strategy and flexibility of being able to adapt if the market environment does not act as favourable as predicted. The longer your property has been on the market for to no success, the more prospective tenants will naturally start to wonder that maybe something is wrong with it, or to assume it is overpriced, deserving only of lower offers, which is also usually the case, with the exception of poor agent performance. A common pitfall for landlords is that that can be persuaded in their their choice of agent based on who comes round and gives them the highest number, in reality the landlord should also be observing how well most of the aspects in this article are covered, as these are what underlies the agent’s ability to let at a higher price versus other agents.
We hope this has shed some light onto some of the key areas which determine the success of your rental beyond the property itself. We can clearly contrast how if all these areas mentioned are carried out poorly how easy it is for tenants to drop off along the process before they ever get to the application stage, versus using an optimised marketing strategy. It is clear to see how then how the number of resulting applicants dictates our success in achieving higher rental rates to happier tenants. This article demonstrates how the way in which a property is marketed can create transformative results no matter the property. If you have a property that isn’t achieving competitive rents or is experiencing high levels of vacancy, it is worth going back to basics and making sure these concepts are fully utilised before taking more costly measures such as disposing of the property or carrying out major works. We are of the understanding that the majority of the areas explored also can be apply across to Residential Sales.