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#1 Increase the RENT
Be better than the 'average'
First thing is to make sure the property is rented
to good tenants. Do some research to determine what the
'reasonable' rental return for your property is.
Potential Tenants will generally have a pretty good idea
of what the market rents are, but if the rental market
is tight, don't make the mistake of comparing just what
is on the internet, as this may be the 'bottom' of
the heap properties.
Make sure that when it comes to
putting you property on the rental market that you do
everything you can to maximise the rental outcome. Good
presentation and marketing of your property can add
5-10% to the rental yield.
Presentation
A neat, clean and tidy property widens
the appeal, and differentiates your property from others
on the market. Make sure you repaint regularly, carry out the necessary repairs and keep outdoor areas looking good.
To keep your property looking good,
you might even consider adding an optional maintenance
cost to a lease for lawns, gardens, pools etc for
tenants that may not want to do these things themselves.
Tell them the 'features', sell them
on the 'benefits'
Particularly in these days of
interstate or even international migration, there is
pretty good chance that your prospective tenants are not
familiar with the area. So its a really good idea to
make a list of 'features' & 'benefits' of living in your
property. How many bedrooms? Is the house in a quiet
street?, is it close to public transport? Is there a
good bakery, restaurant, cafe nearby? Ask previous
tenants what they liked about the house. You might even
like to turn this into a brochure or information pack to
hand out to prospective tenants.
Some Cheap Upgrades to Increase the
Rent
There are some things that you can do
that will make a difference to the rent without costing
you a fortune. Look for things that can provide an
additional 'benefit' for the tenant.
Hot or Cold?, make them
comfortable, a reverse cycle air conditioner will cost about $2000
installed, is depreciable and probably means you can raise the rent a little.
Security or safety as issue?
add window locks, door deadlocks, or a security system
from about $500. This may also reduce insurance
premiums.
Consider allowing pets? About two-thirds of Australians are pet-owners
but very few rental properties allow pets. It’s worth considering a sensible pet policy, which would allow pets in a rental property as long as all damage
is minimised and is repaired at the end of the lease period.
Some Big Upgrades to
increase the Rent
There are some things you can do with
a larger capital investment to make a significant change
to the rental return. The most appropriate things will
be ultimately be determined by the nature and location
of your investment property and the expectations of
tenants in your area. For example in the inner city, a
car park may be highly valued, but further out of town
may be just expected.
Lock Up Garage / Off Street Parking
- Australians are big car owners. Even if they use
public transport, they will still value a safe, secure
place to store their car. Is it possible to add or
improve the amenity of parking/storing a car at your
property? This might mean a new carport, it might mean a
lock up garage, or it might mean just providing a spot
to park the car.
Updating / Renovating the Kitchen
and Bathroom - If the kitchen or bathroom in your
property is tired and dated there is no doubt that a new
kitchen and/or bathroom can add between $20 and $50 to
the rental return per week.
However both these projects can be
expensive and problematic when you have tenants in
place. You might want to plan for them to done
in-between leases or when they are on holidays if
possible.
Another Bedroom - As with
buyers in terms of capital value, so it is with tenants
in the rental market that the number of bedrooms a
property has is a distinct 'search criteria' for
perspective tenants. If you have 4 bedrooms instead of
3, then you are almost certainly in a different price
bracket.
Is there an opportunity to add another
bedroom? Consulting a builder may be a good way to
determine whether this is possible and what sort of
budget would be required.
Fencing the Yard - Making a
yard suitable for children (or maybe even pets) is a big
positive. This might include a fence, but also consider
yard access (for a boat, caravan or trailer) and whether
the yard is secure and lockable.
How much of a difference will it
make?
Washington Brown is one of Australia's foremost
Quantity Surveyors. Sign up to receive their premium
property investor information and on their web site you
will find a range of tools to evaluate your property
investment.
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