Property owners are coming under increasing pressure from rising costs, falling returns and more competition for new living spaces which are having a negative impact on their bottom line. Landlords have to come up with new strategies on how they are going to attract and retain tenants and maximize their yields.
Competition in the investment property market is getting stiffer by the day due to increased investments in this sector. The strong investment climate is driven by the generous negative gearing tax breaks. Property investors are also diversifying their assets and doing heavy promotions, factors which have anchored the sustained growth seen in the industry.
Some 1.5 million households in Australia currently own investment properties. The number of Aussies owning multiple investment properties has been increasing over the years. But for many of these landlords, the hardest part is often getting maximum returns from their investments. Owning so many investment properties can be a huge financial burden and unless you can figure out how you are going to optimize your yields. Here are some simple strategies that you can use to squeeze more cash from your property investments:-
Add a few cosmetic changes
First impressions matter and sometimes, consumers are willing to pay a little extra if they can derive some extra value. You can add a few cosmetic changes that will boost the liveability of your investment properties and thus justify charging a little extra for these. For example, if your property has a front-yard or a backyard, you may consider doing some landscaping, planting trees or adding a low maintenance garden that will make the property more attractive to buyers. The small things often make a huge difference.
Do some renovation work
Spruce up a bit to make your investment property more attractive. Cheap renovations will not cost much but they pack a punch. Some of the areas that you could focus on include the kitchens and bathrooms where you can do a little renovation such as adding new tiling, painting or refacing the cabinetry. You can also spruce up the guttering, landscaping and paint the house to give it a fresh look.
Add a new room
Generally, adding an extra room to your property generates an additional 10% in rental yield. On average, bedrooms in many Australian homes are 12 square metres and with a construction cvost of $2200 per square metre, it wouldn’t cost you an arm and leg to add an extra room. The ROI is also good given that you are going to recoup the cost in less than two years.
Create some attic conversion
Whether an attic conversion will fit in your existing property depends on the amount of roof space available. If it is realizable within an existing building, it can be a very cost-effective way of generating more space on your property and this will ultimately result in higher rental yields.
Add a shed or a garage
A garage or a shed might not cost you much but it counts a lot in the mind of the buyer since many tenants now prefer off-street parking in their premises. A double garage typically measures 36 to 40 square metres with an average construction cost of $1800 per square metre. However, you can shop for the best rates in the market and find better deals. If building a garage is too costly, you can also opt for a carport which is much cheaper.
Target specialist tenants
One of way to boost your rental yields is by targeting a specialist market such as international students. Australia is a top global destination for international students and the investment properties around colleges and universities are generating 8% on average in rental yields. By investing in properties close to learning institutions, you can tap into this lucrative market. In Melbourne, the weekly rate for average single bedroom apartments now stands at $500.
Do some styling
Stylish furnishings and slick property marketing will always result in higher occupancy rates for your investment properties. Hire a professional interior designer and stylist to help you choose the right furniture, artwork and cushions for your property.
If you are hiring a professional builder or home remodeling expert, insist on a written contract that will cover all aspects of the remodeling or renovation including the designing or styling of your home interiors.
When it comes to marketing your property in the home listing websites, ensure you invest in high quality and professional photography that will help present your property as a premium product. Most buyers will make a decision on whether to rent your investment property based on the quality of the photographs that you present online.
This is a touchy subject for many landlords. Since many landlords ban pets, allowing pets on your premises is likely to attract the tenants willing to pay the premium rates. However, it is important to factor in local rules on the keeping of companion animals.
Invest in granny flats
Granny flats are currently hot property pieces in Australia with rental yields of between $200 and $400 depending on the location and the quality of the property. Building costs vary from $15,000 to $30,000 but it is important to ascertain whether the local rules allow you to rent out your granny flats to non-family members.
Add a craft or study space
This is another novel option for increasing rental yields for your investment property. With some clever joinery work, you can convert some of your spaces into study rooms or craft spaces. Done well, it can be a really trendy feature for your property.