Monday, 29 September 2014
Popular, commonly believed ideas that are wrong are called "wives tales". It's not that people are stupid or like to believe things that aren't true, it's more often the case that few know the truth or freely share it. I was speaking with a property owner on Saturday about leasing her unit; I was asked a question I hear pretty often. "Do you think the tenants will look after my property?" In some way there was no question. It is usually said by people as a fact, a belief deep down that tenants wouldn't look after other people's homes.
It got me thinking what do people assume about a tenant, about leasing and what are the real numbers? How often does it happen that a tenant trashes a property, how long does a property sit vacant? I know the answers but you may not so here they are.
We manage 1200 properties and last year we had 254 properties where tenants vacated and new tenants moved in. That meant 254 outgoing inspections checking for cleaning, damage, rent paid up, you name it, we checked it.
This is what happened:
- Less than 22% of our properties vacated last year. Most financial advisers suggest that you allow 2 weeks vacancy each year. We have been tracking the numbers for years and if your property is in good condition and well maintained, you'll have a vacancy every 4.7 years.
- In over 65% of cases when tenants vacated our properties, the properties were left completely clean, with no damage and rent fully paid up Most people are responsible and clean and tidy. There are people who aren't but many of those can be weeded out during the application process. We knock back more than 3 out of 4 applications.
- In less than 35% of the cases that tenants moved out did we have to make a deduction from the tenant's bond. Our bond process also includes inviting owners to inspect the property before we release the bond. This number is a reflection of our clients’ standards as well as our own.
- The average deduction was $672, the majority of these claims were final rent payment up to the date of vacating along with some minor cleaning
- In less than 4% of cases where tenants vacated and we made a bond claim, the tenants disputed it necessitating us to go to tribunal defend the claim. Most disputes, fights and arguments aren’t about the money. It's how people feel they are treated. Key words we listen for "it's the principle that matters". As soon as tenants say that we know they feel a lack of respect and will fight out of pride.
- In less than 3% of cases where tenants vacated did we not fully recover everything our clients wanted. In these cases some owners were going for full replacement cost. The tribunal will only ever award depreciated value. In most cases, as the Referee says, the tribunal is a place where no one walks out happy.
A lot of numbers so let's put it another way:
If we manage your property for you, then in each year you stand 1:200 (1 chance in 200) that your tenant will move out and leave owing money which we won't recover. We aren't perfect, but that's not bad odds.