Boosting rental return on investment
You’ve taken the plunge into the investment property pool and now have to find tenants. Although most rental markets throughout Australia remain tight, there’s still a need to put your property’s best foot forward to attract optimum returns.
Here are some of the ways you can add value and ask for more rent and get that rental return on investment.
Add or upgrade appliances
If your rental has no dishwasher, add one. You can ask an extra $5-10 a week in rent and tick one of the big convenience boxes for renters.
European or stainless steel appliances in the kitchen can also add appeal, especially with the proliferation of would-be Masterchefs.
If you have an older unit with no internal laundry, take a leaf from the Europeans and install a front-loader washing machine under a bench in the kitchen. You could also add a wall-mounted clothes dryer in the bathroom if there’s room, or install a retractable clothesline on a balcony. Expect to collect about $30 extra a week with internal laundry facilities.
You can charge $20-30 a week extra by installing an inexpensive, wall-mounted, reverse-cycle air-conditioner, especially if the property is in a very hot or cold climate. Tenants in hot climates will also appreciate — and pay a little extra for — ceiling fans if you don’t want to fork out for air-conditioning.
Fully-furnished rentals do attract higher yields (from $80 upwards, depending on the property and area), but are not for everyone. Renters who are in transient professions (defence force, teaching), relocating long distances, leaving a relationship or moving out of home for the first time are more likely to target furnished rentals. Others may be put off if a place is furnished because it means their gear has to be stored.
Do your homework on the area and the type of renters it attracts before stocking up on extra couches.
You don’t have to build a garage to provide protected parking. Consider building a carport over a driveway. A simple $5,000 carport will probably pay for itself through extra rent in around two years.
Eye for detail
Glimpses of gleam can have a big visual impact, just as worn, rusty and scratched fixtures can detract. Modernise older properties with small details, such as new handles on drawers and cabinets, more contemporary light fittings and sparkling stainless steel taps. You can also give a stale bathroom a quick and cheap facelift with new towel rods and hooks, a large mirror and a new shower screen. These little features are hygiene factors that will attract a higher-paying tenant.
Built-in wardrobes are highly sought, so make sure you have them in every bedroom. They not only attract extra rent but broaden the appeal of your property. You can also add storage by reconfiguring existing wardrobes and kitchen cabinets.
Think about outdoor storage too, such as a shed or garage shelving, as tenants are likely to have bicycles, sports gear or camping equipment to stow.
Insurance statistics show renters are twice as likely as owner occupiers to be burgled, often because security is not as stringent. Make your place less appealing to burglars and more enticing to renters by installing security screens on doors and windows. Just ensure you don’t bar windows, as they can pose a safety hazard in the case of fire.
Reduce energy costs
Tenants are often prepared to pay a little more in rent to save a lot on their utilities. Replace all standard light bulbs with energy efficient ones and switch the old electrical hot water system for a solar-boosted one. Make sure you promote the property’s energy efficiency when advertising for tenants.