Blink Property
Scoring great deals on property purchases is one way to make money as an investor, but that’s just one piece of the puzzle.
Rental return is your other big money-spinner and staying on top of it is a constant job.
Maximising your rental returns will boost your cashflow and allow you to redirect more money into building wealth or paying down debts.
Here are six tips to turbocharge your returns and get to your goals faster.
Australia is made up of thousands of micro-markets, each with their own economic drivers, supply and demand ratios and nuances in the rental market.
A suburb may have cheap properties with decent rents on offer, but would-be investors still need to scratch below the surface.
There’s no point picking up a bargain property in a town of 2000 people, only to have the one factory that employs most the residents close down. You could find yourself with no re-sale value and no one to pay your rent.
Before investing in an area, research what is driving the local market. Does it have multiple employment hubs, educational institutions, or proximity to public transport to CBD areas? Are young workers moving in or out of the area? Are there infrastructure projects or significant developments planned?
Finally, what is the local vacancy rate? Most Aussie capitals are sitting at 1% or lower in 2024, meaning it is very much a landlord’s market. Generally, anything lower than 3% suits landlords, while anything higher can mean you are risking costly vacancy periods.
When you have bought a property and are preparing to set a rent, don’t just accept what the current tenants are paying. In most Australian markets, rents have risen considerably over the last couple of years and properties that have existing tenants may not have been achieving market rates.
Analyse other asking rents of similar properties in the area and engage a property management firm such as Blink Property for an estimation.
If the rent is $50 a week lower than it should be, that adds up to more than $2500 a year you are missing out on.
Just remember that if an existing tenant is on a lease agreement, you will need to wait until the end of that agreement to increase the rent.
Not all renovations have to be super expensive and take forever. There are a number of simple tweaks you can make to boost the value of your rental without breaking the bank. Fresh paint, modern fittings and fixtures in kitchens and bathrooms and even landscaping can generate more competition between renters.
Landlords are also increasingly adding energy-efficient appliances and features these days, as they reduce bill cost for tenants and can appeal to the environmentally conscious.
If you have good tenants, it can be worth trying to keep them long term by allowing them to make personal changes to your property, or offering not to raise rents for a fixed period if they commit to long term leases.
Even in a strong market, turning over tenants every 6 or 12 months can eat into your returns in the form of advertising and leasing costs.
And if they’re happy, they are generally more likely to treat your property better.
Staying informed about tax deductions can be a very simple way to earn yourself a lot more money each financial year.
There are the obvious deductions, such as property management fees, interest paid on mortgages and maintenance costs, but it’s also worth speaking to a finance professional about different ways you can structure your investments and finances to maximize tax returns.
Getting it right could be the difference of thousands of dollars a year, which will be compounded if you have multiple properties in your portfolio.
Embracing smart home technology in areas like security and comfort of living can attract high quality tenants prepared to pay a premium.
There is also property management software that can allow you to cut down on the time spent managing the admin side of your portfolio.
