Are you getting the rental income you deserve? There are a number of simple things you can do to boost the rental income from your home or investment property in Australia. With nearly twenty years experience in investing in property in Australia, I share some of my experiences.
It is best to think about rental return not in terms of the weekly rent you achieve, but the net rent you make over the course of a longer period, taking into account vacancy periods and letting fees. It is no good having a high rent, if your tenants are always moving out at the end of a 6 or 12 month lease, and your house sits vacant for a couple of months between tenants. In future posts I will share my experiences on improvements you can make to your property to boost your returns further.
1. Good Quality Photographs For Advertising
Websites like realestate.com.au and domain.com.au are now the dominant research tools for prospective tenants finding their next home. Whether or not they decide to inspect your property is based on how your property is presented on these websites. The best way to ensure your property is presented in the best possible way is to ensure the photos used present your property in the best light. A quick review of www.realestate.com.au rentals will show you how badly some landlords market their properties. You don’t need to use a professional photographer, but just ensure the photos you use are of a high quality. Photos that work the best are ones showing the home in a furnished and tidy state (rather than pictures of empty rooms), that way people can picture themselves and their furniture in your house. You may already have photos of your home that you can send your property manager, or you can ask the property manager or a friend to take some good photos for you. The more photos you put on www.realestate.com.au the better.
2. Allow Pets
When I originally rented out my first investment property I was reluctant to let tenants keep a pet. I was concerned that a dog would destroy the garden I had spent a lot of money landscaping, or that a pet cat would ruin my new carpet or stick their claws in the curtains. The reality however has been the opposite, and tenants with pets tend to be some of the better tenants I have had. Due to the limited availability of rental properties that accept pets, tenants with pets will on average stay in the property longer and pay a slightly higher rent than tenants without pets. In some (if not all) states in Australia you can also charge an additional bond to the tenant for allowing a pet to stay at the property. This strategy is also particularly good when the rental market is weak as it helps to differentiate your property in the market place.
3. Increase Your Rent
I have come across lots of property investors that are reluctant to increase the rent on their investment property for fear of losing a good tenant, and I know of many cases where a long term tenant is paying 20 to 30% less rent than the market will tolerate. While I empathise with this position, there is an appropriate balance to be struck. As the property owner, you need to treat property management as a business that should give you a good return on your investment. Equally, a good tenant will cost you less in maintaining the property in the long run, and so it also makes good business sense to reward the tenant.
I have found that when the rental market is quite hot, and rents are rising quickly it is important that you regularly review the rent on your home. You could include in your lease agreement that the rent will be adjusted every 6 months in line with market movements, or it will automatically be increased by, say, cpi, 2% or $10 per week every 6 months. It is much better to build in regular smaller increases in rent rather than asking for a larger rent increase less regularly.
If you maintain your property well and treat your tenant with respect, then as long as you are not asking for above market rent this is a practice every property owner should implement.
Let me know what tips you have for boosting the income from your home. What has been your experience in implementing the above tips?
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.