Before you jump into investment property, it’s important that you do your research to ensure you gain the maximum amount of rental yield. There are numerous factors that can impact on the rental dollar you make and you can do a few simple things beforehand to prepare.
A key question you may ask is how to improve the return from your investment property? Some key factors include location, geography, property type and overall economic conditions. It also very much depends on the price of the property at the point of purchase. If you pay a high price for a house in a popular location, you would hope that rental demand is high enough to offset your high costs of ownership. This can be a pitfall for many investors who assume that because a property is in a popular location, it will yield tenants. However, this isn’t always the case as it is important to look at the condition of the property.
This also applies to which property you decide to invest in. A two-bedroom property will probably cost $150,000 more to purchase than a one-bedroom property, but in most cases, will only achieve an extra $30 or $40 a week in rent, which might not make the investment worthwhile.
Director of buyer’s agency Buyer Solution Australia, Janet Spencer says, “When investing, think very clearly about your investment goals. Do you want capital growth? As the properties that reward investors with strong growth tend to be lower yielding in terms of rental return.”
Considering who your ideal tenant is always a good place to start in determining where and which property you invest in. Are you targeting high-income or low income earners? Or perhaps students, who would be looking for more affordable prices?
Action Plan
- Understand what represents value to your tenant
- Consider offering a service, such as an occasional gardener, when increasing the rent
- Find out the vacancy rate in your suburb to understand where you fit in the market
- Respond to maintenance requests immediately
- Be up front about rental increases in advance
Talking to a property advisory may also be a good starting point. If you need any more information or assistance, please do not hesitate to get in touch with the team here at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
