Guarantee Yourself A High Rental Yield
Australians are property obsessed. Of all the investment options available, we frequently turn to property investment to generate a strong and reliable return. While some people choose to purchase a property and sit on it for a while before selling, others opt to build a portfolio of rental properties and generate a stable income.
In many cases, the potential of the property – what you can do with it or how you leverage the income – can be dependant on the annual rental yield.
Here are some tips for improving your yield:
Furnish your property
While not every tenant is looking for a furnished property, it does open it up to certain niche markets. For those looking for a short-term rental or to move in quickly, it can make the decision a lot easier.
Along with the ability to charge rent at a higher rate, furnishing also offers tax depreciation opportunities. You can have a quantity surveyor list every essential item and create a depreciation
schedule, enabling you to claim for each asset’s value throughout its lifespan. This includes things like washing machines, fridges, and even dining tables.
Raise the rent
Pushing up rental prices can seem like the most obvious way to improve rental yield, but it’s surprising how many landlords don’t. It’s not about charging through the roof; it’s about charging in line with market value.
Make sure that you review the market every six months to get an idea of where you sit in comparison to other properties. During periods of low vacancy, in particular, you’ll have greater control over the amount you can charge.
Clean before showing
First impressions count, and when you show your property to a prospective tenant, you can be sure they’ll look at every little detail. A dusty shelf here or dirty skirting board there is all they need to decide that you’re not the landlord for them.
Focus on the big stuff, like applying a fresh coat of paint and steam-cleaning the carpets, but don’t forget the little things. Get into those pesky corners and get rid of any uncleanliness that detracts from the overall package.
Reliable tenants provide the best return
The process of finding a tenant is costly and time-consuming, so it’s important to get it right from the outset. No matter how high your rent, if your tenant is unreliable with payments, the money isn’t going into your pocket.
Conduct thorough background checks on every prospective tenant – find out where they’ve lived before and ask for references from previous landlords. If you’re struggling to attract good tenants, consider lowering your monthly rent. You may find that it produces greater long-term returns.
Invest in your property
When it comes to putting money into your property, the key is to think long-term. More often than not, tenants are willing to pay more for a property that sufficiently meets their needs.
Consider heating and cooling. Given the temperature variations across the country, investing in a dual system for your property goes a long way in improving rental yields. This ensures the tenants are happy and you’ll also be able to charge an additional $20 or $30 per week.
Consider allowing pets
Approximately one-third of Australians rent and over two-thirds of them have pets. Despite this, only 32% of landlords allow pets in their properties.
Of course, there are the obvious risks that come with allowing pets – they can cause issues with furnishings and neighbours – but ultimately the potential far outweighs the risk. Tenants with pets are often willing to pay more to rent your property and will happily provide whatever documentation you ask for in return for a pet-friendly rental property.
You need to be reliable too
The rental market is a two-way street, and as much as you are looking for reliable tenants, they are looking for an equally reliable landlord. A strong tenant/landlord relationship goes a long way in driving rental yield.
Ultimately, your investment property is your business,
and you need to run it as such. Fix maintenance issues when they arise and ensure your ‘customers’ feel that you care about their needs. Collecting references from previous tenants, who were happy with the level of communication or even the speed at which you addressed maintenance issues can help to create a solid relationship with your new tenants.
Once you’ve found the perfect property, it’s crucial that you do all you can to ensure that your investment is working for you and that it’s generating as much income as possible. A lot of the time it’s about noticing the small things and thinking about what you can do to make the lives of your tenants a little easier.