Q: My condo unit has been empty since the beginning of the pandemic. My tenant had to cancel our lease agreement prematurely because he lost his expat position and had to return to his country of origin. Is it really hard to find a tenant these days? Help!
Prof. Eden Dayrit, REC REA REB: Yours is not an isolated case. Generally speaking, the steady and strong pre-pandemic demand for the purchase and lease of condominium units within the city has waned significantly; in favor of vacant lots and house and lots (H&L) in the periphery of the metropolis and nearby provinces during the pandemic. Some even opted to go back to their hometown, even if it meant hours-long bus, boat or plane rides because of the following, among others:1. Reorganization or total closure of both local and foreign businesses that lead to abrupt employee downsizing and termination of housing benefits.2. More and more businesses adapting the work-from-home (WFH) set-up that diminished the demand for residential units near Central Business Districts (CBDs).
3. Now that we mostly stay at home, the need for bigger livable space and fresher air outpaced the convenience of living in a condo unit in the middle of the city. A common sentiment we hear from clients is that no matter how big the floor area is, it does sometimes seem claustrophobic.4. More areas covered by more internet providers offering stronger internet connection, making WFH a permanent option for some companies.90% of my closed transactions YTD 2021 as a real estate broker are lot listings in the south of NCR; several vacant lots in Muntinlupa, Punta Fuego and a H&L in Tagaytay to name a few. On the flip side, inquiries for residential and commercial (specially office spaces) condominium units are down by about 50%, making it a little more challenging to close a condo sale/lease.
But fret not, here are some practical tips to help you find a tenant:1. Clearly identify what you’re offering to the market. This goes beyond the unit floor area, furnishings and appliances included or the rental rate; which by the way, are the basic info that should be included in your ads. I prefer rental rates that are inclusive of association dues, for your peace of mind. List down everything, specially those who rent out furnished and annex to the lease contract.2. Still on identifying your offer to the market, ask yourself, what sets your unit apart? Is it one of the few corner units with balcony facing the amenities at the penthouse level with a higher than usual ceiling and an exclusive floor to ceiling window treatments? Be as specific as you can. Any improvement helps. But, also manage your expectation that majority of the market might only need the basic stuff considering their tight budget this pandemic. Any advantage your unit may have can sometimes seem irrelevant to the prospect tenant, just don’t take their comments personally. Do an Ariana and say “Thank you, next!”
3. Check the competition. Compile similar listings and note all pertinent information that will further make your unit unique. But a little caveat on uniqueness. In appraisal, there is a concept of over improvement that doesn’t add value to the unit. There is only so much improvement you can make on a unit that will not narrow down the prospect tenants that will have the same taste as you. I remember handling a beautifully interior designed unit donned with shocking pink accent walls and wild printed rugs that sincerely reflects the fashion-forward thinking of the landlord. I advised her to cut down a little on the flamboyance as we were finding it hard to find someone who appreciates the peacock feathers on her headboard. Makes sense?
4. Another note on the competition, it sometimes all boils down to the price. Whenever we do comparative market analysis to determine the fair market value of units, we draw a line at the average rental rates as the maximum amount you can realistically ask from the market, considering all things equal. Listing higher than that, without any justification for the price, will make your unit seem expensive. There are 2 critical points I share with my clients. First is the maximum list price and second is the minimum acceptable offer price which is equivalent to the lowest priced listing in the market. This sets a clear target for you. If the offer falls within this range, even if it is lower than you originally expected, the offer is acceptable.
5. Finally, like I always say, hire a professional to handle the listing for you. The professional fee of 1-2 months (ask me what warrants a 2 month PF) for every year is well worth the shorter vacancy interval of you not receiving income and your peace of mind that you don’t have inventory sitting empty in the market.I hope this helps.
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