Real Estate Investment:Today

Proven strategies to boost rent on your investment property

Key takeaways

Landlords can increase the amount they charge for rent, but there is a fine line between improvements that can increase rental income and those which may leave you over-capitalised. 

You can use property improvements to support your rent increase.

Timing is particularly important in states where market evidence is required to support a rental increase.

If you want to increase the rental yield on your investment property, there are proven strategies to bring in a higher rent without driving tenants away.

With the right improvements, landlords can increase the amount they charge for rent, but there is a fine line between improvements that can increase rental income and those which may leave you over-capitalised.

The good news is that although increasing the rental income of your investment property is a key priority for property investors, it doesn’t have to cost you a fortune.

Rental

What is important to note is that there are two recurring intervals in an investment property’s lifecycle where you can take proactive steps to boost your property’s rental return:

  1. Between tenancies by way of improvements
  2. At regular intervals during a tenancy by way of rent review

With this in mind, I’ve listed several strategies which are proven to boost your rental return, and which you can implement across your whole property portfolio.

Of course, this advice is general and does not take the place of speaking directly to your property manager or property investment advisor, who should be able to guide you on specifics such as the market rent for the area and what local tenants are looking for.

Increasing rental yield — improvements

1. Find out what tenants want

One of the first steps you should make when it comes to making improvements to help increase rental yield is to find out what prospective tenants want to see in a property.

After all, as a landlord, it’s easy to get caught up and throw good money after bad when it comes to making improvements to your property.

You could spend thousands repainting or installing a dishwasher, when an air conditioner may have made the property much more appealing to potential tenants, at half the price.

Consult your property manager for their advice on what a tenant is looking for in your area and focus your attention and your funds on this.

And if you’re unable to offer some of them, such as off-street parking (which you can’t manufacture out of thin air), perhaps you can make up for this with another coveted feature, like solar panels to reduce their energy costs.

2. Renovate

A well-planned renovation will of course increase the asking rent, but it can also mean a significant outlay.

Or does it?

It doesn’t have to be a super-expensive renovation with all the bells and whistles – improvements as small as a fresh coat of paint or new door handles on the kitchen cabinets could be enough to attract more tenants and bump up your asking rent.

There are myriad minor changes you can make that will give the property a new lease of life: think sparkling new taps, adding a second air-con unit in the master bedroom, or ripping up the tatty old carpet and polishing the boards underneath.

Many small jobs can even be done yourself, saving you the extra expense of calling in a tradie.

Renovation

If on a tight budget fix what is “broken” first; if the front fence is falling down and the gate won’t open, your tenants aren’t even in the front door and they are already worried.

And if you have the budget to do more, the kitchen and bathrooms are big drawcards for tenants but they involve a lot more upfront cost, especially if you do both at the same time.

Whatever you decide to renovate or add to your investment property, you need to make sure that you’re investing your time and money into something a tenant is looking for, as we discussed above.

After all, ducted heating in Darwin is probably not a feature tenants are looking for but ceiling fans on the veranda and a water tank in the backyard could make the world of difference to the amount of rent you can charge.

Also, make sure you crunch the numbers to make sure the investment will pay off, and consider speaking to your accountant to ensure you understand exactly what is tax-deductible, as this may inform your reno choices.

3. Add a unique selling point

Have a look at the rental listings in the area.

How many have alfresco entertainment spaces, ducted air conditioning, or solar panels?

It’s well worth considering adding something to the property that will make it stand out from the rest, allowing you to justify why it is a little more expensive to rent than similar nearby properties.

What you choose to add will depend on the location and your target tenant of course, but remember that by improving what you’ve got to offer you could actually begin to attract a whole new demographic – one that has more spare cash to splash out on rent.

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