Boosting rental returns is now a key issue for the owners of the rental properties, especially in areas of increasing supply.
Blogger: Kevin Young, president, Property Club
The latest figures produced by Australian Property Monitors show that during the June 2014 quarter, weekly asking rents in Perth, Adelaide, Darwin and Canberra fell; while in Brisbane, Hobart and Melbourne, they remained stagnant, with Sydney showing the only increase of two per cent.
One good tip to boost rental returns is to list your properties with three local property managers rather than just one. That ensures the property is exposed to the maximum number of prospective tenants and the managing agents compete against eachother to provide the highest level of service in finding a tenant.
Apart from utilising the services of a number of property managers, landlords should look at making minor investments in their properties that will prove attractive to tenants and in turn increase their rental returns.
When considering rental returns, landlords should understand that anyone who invests in residential property is not just investing in bricks and mortar but also in the lifestyles of Perth residents.
In particular, lifestyle issues are impacting on the expectations people have of a home, whether they are renting or buying. People are increasingly demanding a higher level of fit-outs for rental properties and are willing to pay a higher rent for them. Key lifestyle features now demanded by renters include security, air conditioning and white goods such as a dishwasher.
Rental properties with a high level of security are now much easier to lease and have a higher rental return. Therefore, rental property owners should ensure that, for example, the property has security doors and security window locks. It also might be attractive to renters if a garage door was installed if the property has a carport.
Installing an air-conditioning unit as well as a dishwasher are two other key features that prospective tenants increasingly want in a residential property.
Split reverse cycle air conditioning systems are the most popular with tenants because they allow for temperature control during both the summer and winter months.
When considering air conditioning systems, landlords should check relevant body corporate rules in relation to wall mounted air conditioners as they may be prohibited in favour of a ‘split’ system.
Ensuring that your property is well secured and has additional features such as a reverse cycle air conditioner means that the home will attract a higher number of prospective tenants.
This is particularly important during a time of higher vacancy rates and will ensure that your property is less likely to remain vacant.
A property which has these three features can often command an additional rent of $30-plus per week and, equally importantly, is likely to have a lower vacancy rate. For most investors these items will pay for themselves over about three years, mainly through depreciation and the extra rent.
Investors should also ensure that their property is properly maintained over the longer term. Every four to five years, rental properties need to be repainted and in some cases recarpeted. Those rental properties that are not maintained to a high standard are often difficult to lease and very often the landlord has to drop the rent significantly to attract a tenant. This highlights the need for landlords to ensure that they use a professional property management company such as Wentworth Mutual, who undertake regular maintenance reports on the properties they manage on behalf of landlords.
If you own a suburban property with a garden, it's a good idea to ensure that you have a gardener contracted to maintain the outdoor areas. These expenses can be built into the rent and engaging a contractor to maintain the gardens ensures that they are always maintained. Rental properties with poorly maintained gardens are more difficult to lease and achieve a lower rent compared to a similar property with well-maintained gardens.
Landlords can also boost their rental returns by considering leasing their property to a tenant with a pet.
Pet owners will generally pay a higher rent to secure a rental property and the landlord can request a pet bond from the tenant to cover expenses for any damage.
About Kevin Young
Kevin Young is president of Property Club, which he founded in 1994 to help Australians on average incomes and above to fund their retirement through property investment. During the past 20 years, Property Club has emerged to be one of the most successful independent property groups in Australia, assisting thousands of members to become property millionaires. Kevin Young owns a substantial property portfolio comprising of over 180 properties and has been listed on Queensland's Top 100 Rich List.
Further information on Property Club can be found at www.propertyclub.com.au