Category Archive: Rentals

  1. How to Compete in a Changing Rental Market

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    In a changing rental market clearly favouring tenants, how do you ensure your investment property remains desirable to potential tenants? Or if a landlord, how to ensure your tenants are happy and stay put within the property? There is one thing for certain, in this changing property market, tenants tend to have more of an upper hand. With more rental properties on the market, they have the flexibility to take their time and be more choosey in their needs vs wants. In turn, this gives tenants a little more bargaining power.

    So what can you do to ensure your investment property remains attractive to tenants? Both potential and existing? Sometimes it just takes that little bit of extra care….

    Top Tips to Make Your Rental Property Stand Out

    1. Ensure all maintenance jobs are up-to-date

      Is your property in the best shape it can be? Or do you have leaking taps, ripped screens or paint needing tending to? New tenants looking at their potential new home will take note of these things. This will be their new home. They want to know it is well-cared for and has a landlord that keeps up-to-date with any maintenance and repair issues.

    2. Street appeal

      How does your property look from the street? Are the garden and lawns well kept? Is the yard free of garbage and weeds? Are the window screens all in good shape? Is the exterior paint in good condition and all exterior lights working? Think of how your property looks to those driving by. Enhance street appeal with some potted plants or addition of a garden bed.

    3. A fresh coat of paint and carpet

      Oh how far a fresh coat of paint can go! A fresh coat of paint can instantly take your property from drab to fabulous overnight. It lifts the light, mood and tone of your home and gives it a fresh and welcoming feel for new tenants. If the carpet in your property has seen better days, consider new carpets throughout. At the least, ensure you conduct a thorough carpet clean.

    4. Make the kitchen and bathrooms shine

      There are some rooms in a home that instantly attract tenants – the kitchen and bathroom. The kitchen is such a central area of a home where families cook and share meals with loved ones. Make this room the centrepiece of your property. Ensure it is clean and presentable. Make sure all cupboards are on their hinges, sinks and cupboards are clean. It is amazing how much simply adding new handles to cupboards can lift a kitchen. Throw in some luxurious hand soaps and moisturisers on the kitchen and bathroom sinks with some flowers for that added touch.

    5. Be reasonable

      Above all, in a competitive rental market, it is important to be reasonable with your asking rent. Therefore it is essential that you do your homework. Know what the market around you is doing. What is the going rental rate for a comparable property? How long are they sitting on the market? Remember a few less dollars every week is better than a rental property sitting vacant for weeks or months because your asking price is too high. Check with your Property Manager about conducting a rental appraisal on your property. If your property is currently rented and you are happy with your existing tenants, consider leaving a rent raise on the backburner until a shift in the market.

    Chat to your Property Manager to ensure your property is in the best condition possible, with a fair asking rent and you’ll be on your way to finding, and keeping, your ideal tenant.

  2. What is My Rental Property Worth?

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    As a savvy investor, this should be a question you are asking yourself on a regular basis. Checking in on your rental property and its current market value is an important step in the property investment game. So, how do I do that you ask? What steps do you need to take to asses the value of your property in today’s market?

    In short…

    What is my rental property worth?

    There are several key indicators you can look at to assess the rental value of your property.

    Similar Properties

    Start by looking at similar properties that are sitting on the rental market. Are the rents they are offering in line with your property. Are they higher? Lower? On par? Look at the area, number of bedrooms/bathrooms and condition of property to make a suitable comparison. This should give you an indication of whether you are sitting in the correct rental ballpark.

    Vacancy Rates

    How long are empty properties sitting on the market? Is it days/weeks/months? Is supply outstripping demand? In a slower market, properties will sit on the market for longer, with less urgency from prospective tenants.  A healthy vacancy rate is considered to be between 2-3%. Check your suburb with this handy Vacancy Rate tool by SQM Research.

    Rental Yields

    Rental yield measures how much cash your property produces each year as a component of its value. So for your rental property, this equates to the rental income generated per year when compared to its value.

    There are two types of rental yield: gross and net.

    Gross Yield

    The most commonly referred to and easiest to calculate, yet also the most overrated source of industry data. It determines the rental income alone as a component of the value. Be aware this is not an accurate provider of rental yield as it doe not take additional investment expenses into account – it purely looks at rental income compared to value alone.

    Rent: $400 per week

    Value: $475 000

    Gross Yield = $400 x 52 wks ÷ 475 000 x 100 = 4.38%.

    Net Yield

    Harder to calculate but more important as it takes all other expenses related to the property into account including rent, vacancy rates, insurance, repairs, management fees etc. The net yield takes off these additional yearly expenses from the yearly rent, then divides by the value. Note net yield does not take mortgage interest and tax into account as these figures are not directly related to the property itself.

    For example:

    Rent: $400 x 52 = $20 800

    Yearly Expenses (total of insurance + fees + repairs + water + rates) = $3000

    Net Income = $17 800

    Net Yield = 3.73%

    Smart Property Investment offer a handy postcode search tool to compare gross yields of suburbs across Australia.

    Above all, your Property Manager should help to guide you through this process and offer recommendations to you. They are living and breathing the property market in your area on a daily basis, are are best suited to offer advice, If you are fining your Property Manager isn’t giving you the advice you need, get in touch with us for an in-depth market appraisal.