If you’ve held your investment property for a while now and it’s not delivering the rental returns you want, you’re probably wondering how you can increase it.
Rental yield is the difference between the income you receive from renting out the property minus the overall costs of your investment. Rental yields are usually expressed as a percentage. The higher the percentage, the greater the cash flow and the higher the return on the investment.
There are two types of rental yield: gross rental yield and net rental yield. Gross rental yield looks at the amount of rental income you receive over the year measured against the market value of the property. Net rental yield gives a more accurate estimate of your rental yield as it takes into account the ongoing expenses of your investment property, like insurance, strata fees, and so on.
A healthy rental yield is generally between 3-5% depending on the condition of the property and where it is located (i.e. regional, suburban, or capital city property).
If you own a rental property, here are some of the sure-fire ways to make your properties stand out among the rest and increase your rental returns.
1. Stay on top of maintenance
A property should always be presented in its best light. This makes investing in professional cleaners a must.
Arriving to view a fresh-smelling property is an undeniable benefit in winning over potential tenants. Even if your property has all the mod cons and has the makings of a great home - if the walls are dirty and the carpet is stained, your property could be sitting vacant for longer than you hoped.
It’s also important to ensure that everything in the property is working, eg. fix leaking taps, broken door handles, fans, air conditioners, etc.
2. Plan for some renovations
Forking out money to improve your property may sting a bit in the beginning but the rewards can be worth it. This is one of the biggest things you can do to increase rents and therefore increase your rental yield.
Renovations allow for a property to increase both its value and rent price - higher rent generally results in higher returns. Furthermore, renovating your property to make sure it looks modern and updated will attract fantastic tenants who will love your property like it’s their own.
For instance, a newly renovated kitchen and bathroom can significantly increase your rent. Simply repainting the kitchen walls, tiles, cupboards, and replacing hardware can make a huge impact. Even just replacing taps, showerheads, and other fittings will give your bathroom a new improved look.
There is nothing better than walking into a freshly painted home - spending some bucks for splashing the interior and exterior walls of your investment property will definitely make it feel new, fresh, and clean.
Try painting the walls with neutral colours that have a broad market appeal (like a creamy white) to make them appear more spacious and feel more open and inviting. Steer clear of painting walls in colours that would be unappealing to the vast majority of people, like bright red, purple, green, pink, orange, etc.
3. Replace carpets and flooring
If your budget allows, try to replace the carpets and flooring.
Timber and laminate flooring appear to be a popular option with renters - it can make rooms look larger and fresher. However, you can never go wrong with quality carpets, which can make a room more cozy and homely. This really depends on the kinds of tenants you are trying to attract.
You can always get all carpets professionally cleaned and timber or wooden flooring polished if you have a tight budget.
4. Improve the lighting
Installing pendants and spotlights is a big plus in making your property appear newly refurbished. Ditch any fluorescent lighting as they can make the property look dated.
5. Invest in appliances
By installing an air conditioner, you could increase your rent by as much as $20 per week. Some tenants won’t even consider renting a property without heating and cooling even if the property is in its tippy-top shape.
Meanwhile, white goods like washing machines and dryers are among the most desirable appliances for renters. Today it’s all about convenience and easy access. If you have the budget, you can also install an energy-friendly refrigerator.
6. Provide more storage
It is a must for any rental property to have enough storage - especially in apartments where storage is often at a premium. Built-in wardrobes are a great selling point when renting a property. Rooms look more organized, and it also saves the tenant paying out for new ones.
Try replacing the kitchen cupboard and pantry - your tenants will always appreciate more storage space in the kitchen.
7. Be up-to-date with security
Security is high on the list for most renters when looking for a property, especially with recent technologies. Consider installing a security door, alarms, and motion lights for that added peace of mind.
8. Get pet-friendly
Accepting pets will increase your rental potential as so many Australians have pets and yet so few rentals accept them. Tenants with pets are generally willing to pay more in rent to secure the property and generally have longer tenancies. Of course, it’s up to personal preference and the suitability of the investment property.
9. Maintain the garden
First impressions are everything! If the property has a garden, make sure it’s maintained and spruced up between tenancies. You may want to add features like benches or low-maintenance plants.
NOTE: you can try our upfront and ongoing cost calculator to find out how much your expenses would be after renovating/purchasing an investment property.
Collections: Property Investment