26 Applications Before We Even Opened the Door. That's Melbourne's Southeast Right Now.

It was the day before Christmas.

Three of our property managers were on site. The open inspection wasn't scheduled to start for another eight minutes. And the cars were already lining the street.

By the time we opened the front door, we had 26 rental applications sitting in the system. Twenty-six groups of people, desperate to lock down a roof over their heads, willing to fill out paperwork and hand over pay slips before they'd even walked through the property.

The neighbour came out and asked if we were holding an auction.

We weren't. We were renting out a converted house in Melbourne's far southeast for $1,300 a week. And the demand was so ferocious that even on Christmas Eve — a day when most of Australia is cracking open beers and wrapping presents — people were queuing on the street to see it.

What $1,300 per week looks like from the inside

This property was a standard house on roughly 700 square metres. Nothing flash from the outside. Brick veneer, probably built in the late 1980s. The kind of place you'd drive past without a second glance.

We'd converted it into three separate living spaces. Three independent households, each with their own entrance, kitchen, and bathroom.

Unit 1: a three-bedroom at $470 per week. Unit 2: a two-bedroom at $460 per week. Unit 3: a one-bedroom at $385 per week — bills included.

Total weekly rent: $1,315.

The conversion cost sat under $100,000. On a purchase price of around $900,000, that's a gross yield north of 7% 1. In a market where the average Melbourne yield hovers around 3%, that number turns heads.

But yield is one thing. What I want to talk about is what happened at that open inspection. Because the demand story tells you more about where the market is heading than any yield calculation.

Why the queue stretched down the street

Melbourne's far southeast — Narre Warren, Hampton Park, Cranbourne, Berwick — has vacancy rates sitting below 1.5% 2. That's not a soft landlord's market. That's a warzone for tenants.

When vacancy is that low, every decent property gets mobbed. But there's a difference between a regular house inspection and what we experienced. A regular three-bedroom home in Narre Warren might attract 15 to 20 groups at an open. Our properties consistently pull 30-plus.

Why?

Because we renovate to a standard that stands out in a market saturated with neglected investment properties. Fresh paint. New SPC flooring (about $62 per square metre installed). Modern kitchen with functioning appliances. Clean bathrooms with proper ventilation. Deadlocks on every door. Working heater in the living area — minimum 2-star energy rating 3.

Sounds basic. And it is. But you'd be stunned how many landlords can't be bothered meeting the Victorian Minimum Rental Standards. Their properties sit on the market for three weeks. Ours rent in under 14 days 4.

"If you renovate to a standard that tenants actually want to live in, you don't compete on price," says Joey Don, Co-Founder of PremiumRea. "You compete on quality. And in a market with 1.5% vacancy, quality wins every time."

What I learned from talking to tenants at the inspection

I go to these open inspections personally. Not to play landlord — to listen.

Every conversation with a prospective tenant teaches me something that feeds back into how we design the next conversion. Here's what I picked up from this one.

Parking matters more than you think. The single most-asked question wasn't about the rent, the bond, or the lease terms. It was about where to park. We'd planned for this before we bought the property — front unit gets the garage, rear unit can park in the driveway behind the side gate, middle unit uses the street. But if we hadn't thought that through upfront, we'd have lost applicants over something as mundane as a parking spot.

Small bedrooms aren't a dealbreaker. One of the bedrooms in Unit 3 was compact — maybe 2.5 by 3 metres. A couple with a young child looked at it and immediately said "kids' room." We've since started designing our conversions with one deliberately smaller room, priced as a study or child's room. People pay for what they can envision.

Picky tenants are a red flag. One woman spent five minutes inspecting the gap around a sliding door. Another was checking individual power points. These tenants will file maintenance requests for a scuffed skirting board at 11pm on a Sunday. We flag them in our screening process. If someone is this particular before they've moved in, they'll be impossible to manage once they have 5.

The feedback loop is real. I heard a comment about aircon placement that changed where we install units on the next two projects. I noticed tenants gravitated toward the unit with the most natural light — confirmed our bias toward north-facing living areas. These aren't things you learn from a spreadsheet. You learn them standing in a hallway listening to strangers talk about what matters to them.

How we screen 26 applications down to three tenants

Having 26 applications sounds like a luxury. It is, sort of. But quantity doesn't mean quality. Our screening process is deliberately brutal.

Financial stability first. We need to see payslips and bank statements. The rent-to-income ratio has to sit between 20% and 30% 5. If someone's spending 40% of their take-home on rent, one unexpected expense and they're behind. We explicitly reject applicants whose primary income source is Centrelink — not because they're bad people, but because the numbers don't stack up for protecting the landlord's cash flow.

Background check through TICA and Equifax. Any history of eviction, unpaid rent, or VCAT judgments is an automatic disqualification. We pay for professional screening software because the free alternatives miss things.

Reference calls. Not emails — phone calls. We ring the previous property manager and the current employer. A written reference is worth nothing if you can't verify it.

For multi-tenancy properties like this one, we add an extra layer. We avoid placing tenants who are likely to conflict — a couple expecting a baby goes in a standalone property, not next door to a shift worker who needs to sleep during the day 5.

The internal scoring system gives bonus points to dual-income households and penalises pet owners (though Victorian law means we can't refuse pets outright — we add cleaning and damage clauses to the lease instead 6).

Out of 26 applications, maybe four or five meet every criterion. We present the top candidates to the landlord with our recommendation. The landlord makes the final call.

What this means for investors sitting on the fence

I get a lot of messages from people who are "still researching." They want to see more data. They want to wait for interest rates to move. They want someone to guarantee them a 7% yield before they commit a dollar.

Here's your data.

Twenty-six applications on Christmas Eve for a property renting at $1,300 a week in Melbourne's southeast. Vacancy under 1.5%. Cars lining the street before the open inspection started. Tenants offering to prepay months in advance just to secure a spot.

This doesn't happen in a weak rental market. It happens when demand structurally outstrips supply — when population growth, constrained housing approvals, and rising construction costs create a permanent shortage of liveable rentals in established suburbs 7.

And here's the part that matters for your investment thesis. When you can charge $1,300 a week on a $900,000 property, the holding costs disappear. Mortgage interest, council rates ($2,000/year), water ($650/year), insurance ($1,500/year), property management fees — all covered by the tenant. With room to spare 8.

"After 200-plus property transactions, I can tell you: the properties that perform aren't the pretty ones. They're the well-designed ones in high-demand suburbs where the tenant queue goes around the block," says Joey Don, Co-Founder of PremiumRea.

You don't need to believe me. Drive to Narre Warren on a Saturday morning and watch the open inspections yourself. Count the cars. Count the people. Then tell me the rental market is soft.