How to increase your rental yield

How to increase your rental yield

Market places change. These tactics can help investors increase their rental yield, regardless of price and market conditions.    Cosmetic renovations  Humans can be superficial. So even a basic cosmetic facelift to your investment property may be enough to command extra dollars in rent each week.  This could be a fresh coat of paint, more modern light fixtures, or updated blinds and curtains to maximise light. The rule is to keep it simple, not blow the budget, and ensure all changes you make are mostly timeless.    More substantial renovations  No amount of fresh paint will help if the kitchen and bathrooms look like something out of the dark ages.   Substantial renovations, like a new kitchen and bathroom, or new flooring, require capital and time, and of course a loss of rent, but can dramatically increase your yield. Apart from the immediate increase in rent, it will also reduce how much you will spend on repairs and maintenance in the long term, as you will have new appliances and fixtures.  Assess similar local properties to understand what the local standards are to avoid overcapitalising and to assist with budgeting.    Add furnishings  Furnishing a property can instantly lift its rent, so long as this is appropriate for your location.  As an example, furnished properties may be ideal near universities where there is high demand for “turnkey solutions” by students. In this case, styling should reflect a younger demographic, and cater for potential wear and tear from socialising.  Travelling business people may also require furnished properties near airports or city centres, and may prefer not to spend through the nose on more expensive...
Tenant problems to be aware of

Tenant problems to be aware of

When you first purchase an investment property, it’s easy to think of rent as a passive income stream that simply takes care of itself. But tenants can cause you problems….  Most tenants comply with their obligations, and are respectful of their landlord’s property.  If you’re planning to be a landlord long term, however, there are a couple of tenant problems you’re almost certain to face. Fortunately, landlord insurance could offer a mix of options that may be able to cover you against some or all these risks, so if the day comes you won’t be left empty handed!  Tenants leave without telling you  Contractually, every tenant is required to give notice before they end their lease at a property.  Sometimes, however tenants leave with short – or no – notice for a variety of reasons.   When tenants leave in a hurry, it’s sometimes difficult to retrieve the rent you can lose while preparing the property for occupation and finding new tenants.   Landlord insurance policies may cover you for up to six weeks while you search for a replacement tenant, and could help to reduce your out of pocket losses.  Tenants stop paying their rent  This is the big one. Failure by tenants to pay their rent is more common than you think. In fact, claims for rent make up more than 40% of all applications to Australian tenancy tribunals.   Sometimes by the time you’re able to replace your non-paying tenants with new tenants, you may have lost more rent than is covered by the bond.   Landlord rent default insurance is generally available as an optional cover that can protect you from loss of rent for a period...
4 ways landlords can benefit from tenants with pets

4 ways landlords can benefit from tenants with pets

With floor stains, scratch marks and garden damage a potential outcome, why should you allow pets onto your property?  The decision to allow pets into your investment property is important – and when you start thinking about dog hair, possible claw marks and minor damage to your half-a-million-dollar investment, it’s tempting to say no, and this is what the majority of Australian investors do. The math is pretty straightforward: if you exclude every potential tenant who owns a pet, you’re eliminating a huge number of households from your rental pool – 60%, according to the Australian Companion Animal Council. And yet, a survey by the Real Estate Institute of Australia showed that 40% of investors don’t allow pets, and 28% weren’t sure if they would or not. Talk about finding a niche market of renters! If all those renters with pets – and there are millions of them – are hunting for the rare property that will allow their furry friends to stay, doesn’t that make pet-friendly homes a little more sought-after? Yes it does, and in fact realestate.com.au says that renters are often willing to pay a little extra to cover their pets staying too. How can you benefit from allowing pets? Higher rental returns. Pet owners can be willing to pay a little more if it means the difference between keeping their pet or not. Larger pool of renters. Having a property that’s desirable to a significantly larger pool of households – and in fact, one that sets it apart from most of the other listings on the market – can significantly reduce downtime between tenants. Longer tenancies. The...
How to find the best tenants

How to find the best tenants

Tenants are an important part of your investment property succeeding, so here are some tips on getting the best tenants and minimising tenant turnover. Find the right property manager Finding the right team to manage your property is critical. Too many people do property management because they think they should rather than they want to do it. They must: • Have a dedicated property management division. • Have experience and have had previous success with problematic tenants. • Have an agency principal involved in the function of the property management division. • Have a manager that does/oversees inspections. • Has good programs and processes for vetting applications and monitoring rental arrears. Update your property By keeping your property in top condition, you’ll attract tenants who take care of their belongings and property, and it will also keep you ahead of the competition. Ensure property updates suit your target demographic. Set the right price Keep your rental price in line with similar properties in the area or other landlords will gain a competitive edge in the search for good tenants. Your real estate agent should advise you about the current market and how much similar properties in the area are being rented out for before deciding on a realistic price. Always run a credit check It’s a good idea to include a credit check in the screening process as it is usually safer to choose a tenant who has good established credit. Ensure reference checks are being performed Ensure your property manager makes reference checks with the applicant’s previous landlords, who can clarify whether the tenant paid their rent on...
Property 101: Airbnb guests breached tenant’s lease of property

Property 101: Airbnb guests breached tenant’s lease of property

This is an old decision but one that should be remembered. In June 2016 the Supreme Court of Victoria handed down its decision in the case of Swan v Uecker [2016] VSC 313. The case is heralded as a victory for landlords after the Supreme Court held that, by allowing Airbnb guests short-term use of their rented apartment, the tenants had breached their lease by sub-letting the property. The Landlord (Swan) leased her apartment to the Tenants (Uecker and Greaves) pursuant to a residential tenancies agreement (lease). During the course of the lease the Landlord became aware that the Tenants were making the apartment available to guests via the Airbnb website. The Landlord had not consented to the use of the property in that way. The Landlord subsequently sought an order for possession from the Victorian Civil and Administrative Tribunal (VCAT) on the basis that the Tenants breached their lease by sub-letting the property, without the Landlord’s consent, when making it available to Airbnb guests. VCAT dismissed the application. The VCAT decision held that, despite offering the property to Airbnb guests, the Airbnb Agreement between the Airbnb guests and the Tenants as hosts did not entitle Airbnb guests to exclusive possession of the property and granted a mere licence to occupy. On this basis, the Tenants “had not sub-let their tenancy agreement” with the Landlord. The Landlord appealed to the Supreme Court. The Supreme Court held that the Airbnb Agreement between Uecker and Greaves and the Airbnb guests was characterised as a lease, rather than a mere licence. Accordingly, the arrangement to allow Airbnb guests to occupy the property constituted...
New strata laws and their benefit to investors

New strata laws and their benefit to investors

In case you haven’t taken the time to update yourself more than 90 strata law changes passed by the NSW Government came into effect on 30 November 2016 and investors looking to renovate their apartments could reap the rewards. The laws, which changed as part of the usual 10-year re-evaluation, have been viewed as potentially revolutionary for apartment owners, due to a change in the “strata renewal” clause which will allow 75 per cent of owners to support developmental changes instead of the previous 100 per cent. The changes present great opportunities for investors in older blocks, opening up the chance to sell to developers or renovate to increase capital growth without 100 per cent backing by other owners. The new laws have been designed to not only make it easier to update ageing buildings, but to increase density as part of the government’s urban renewal strategy. Apartment owners can choose to cash in by selling to a developer, but they may be better off holding on and redeveloping their property to perhaps add a penthouse or other amenities with the benefits shared by all owners. Not everyone is happy with the changes; critics of the laws have said they provide unfair pressure on financially vulnerable residents who may be forced into changes they do not support. Other changes that came into place include the role of developers in strata committees – they are no longer able to act as strata managers or vote on building defects. Owners need to review the funding of a 10-year capital works budget (previously called a ‘sinking fund’) at their initial and annual meetings; previously...