Boosting rental yield isn’t about spending thousands but rather focusing on a few key factors to give your property a unique edge.
Fortune favours the brave. Dare to offer a point of difference in your rental property and watch the tenants – and the money – roll in. Whether you target a niche market or simply throw in a few extras, there are many creative ways landlords can boost their rental yields.
Tenants will be willing to fork out more in rent if you offer them a few bonus trimmings, advises Rob Farmer, CEO of property management group RUN Property. “One of the reasons I love investing in property is that there are things you can do to increase both the value and yield of your investment – it’s amazing how even the little things can make a big difference!”
Furnish the space
Michelle Galletti, real estate agent and managing director of Just Rent Sydney, says landlords can boost their cash flow by up to $200 a week simply by fitting out the property with simple, stylish pieces.
This was the case for a recent client of Galletti’s, who furnished a one-bedroom apartment in the Sydney CBD and subsequently raised the rent from $420 to a massive $620 per week.
The decision to furnish ultimately depends on where the property is located. Galletti advises that some areas, such as inner-city and metro fringe suburbs, are better suited to furnished properties than others. There needs to be a market for the product and a sufficient pool of interested tenants.
Galletti says another advantage of furnishing a property is the tax concession element. “The good thing is that when you furnish a place, you can depreciate it as well,” she says.
Essential items include a bed/s, fridge, TV, couch, washing machine, wardrobe and dining table. Furnish the property in a modern, contemporary fashion that will appeal to a broad cross-section of tenants – not your own personal tastes.
Give them some air
“The simplest solution is to install an air-conditioning unit which has heating functionality as well. Just by doing so, you may be able to increase the rent from $350 per week to $380 per week, as one of our clients found with their apartment in Elwood, a popular beachside suburb in Melbourne, where they added an $800 air-conditioning unit,” says Stankovic.
If your property is located in the high or low reaches of the continent, heating and cooling carries a lot more weight and may be some serious bait for tenants.
Throw in some extras
The simple act of adding a dishwasher can earn you an extra $260 in rent a year – almost half the cost of a mid-range machine. It’s an even better return when you consider that the average life of a dishwasher is between nine and 12 years, according to www.dishwasherguru.com.
“You can install a dishwasher for a small investment of approximately $1,000, making your property more appealing to a wide range of tenants while also increasing the rent by around $5 per week,” advises Bright.
Add an entertaining area
Why not add a Balinese-style gazebo to the backyard to improve both functionality and appearance? These huts have a life expectancy of around 15 years, depending on weather, and not only look attractive, but are also weather-proof, durable and have natural insulation qualities.
Alternatively, investors on a tight budget can purchase shadecloth and hang it outdoors to offer an escape from the sun in the summer months. A safe, shady play area will be particularly attractive to the family tenant market.
Give the car a home
Stankovic adds that investors can choose a tailored option to suit both their financial and space requirements. “Parking is an important factor, but it doesn’t have to be expensive,” she says. “Instead of building a garage or a full carport, consider creating a shade-sail carport in the driveway, which won’t cost anywhere near as much to implement but will provide potential tenants with undercover parking space.”
Add storage
Stankovic suggests that storage space can be a major bonus for your renters. “For tenants, storage space is always important, so it’s worthwhile considering putting built-in robes into the property if it doesn't already have some, or other alternative storage such as a cupboard under the stairs or a shed in the backyard,” she advises.