The average residential investment property in Australia has a rental yield of just 3%, according to SQM Research. With returns so low, holding property long-term can be expensive and difficult.
With that in mind, to help you get the best out of your investments, we’ve taken a closer look at nine quick and easy ways to increase your property’s rental yield.
1. ADD A BEDROOM
The same exact property with an extra bedroom will almost always rent for more. If it’s easy and affordable to do so, consider adding a bedroom by repurposing a second lounge or building an extension. If your property goes from two to three bedrooms you may also attract a different type of tenant, such as families.
2. CUT YOUR MAINTENANCE BILL
One of the easiest ways to cut your property’s expenses and increase your rental yield is to minimise the amount of maintenance required. For example, you could pave the backyard instead of grassing or planting it, or you could install newer fittings so that you will end up replacing them less often. Whatever you do, try not to hurt the house’s appeal when you make changes.
3. COSMETIC RENOVATIONS
Extensive and expensive renovations may not be worth the cost as they sometimes only result in a small improvement of your rental yield. Cosmetic renovations, on the other hand, can be cheap – or even free – and may increase the amount of rent you can charge. A new paint job, new carpet or even a fresh polish on wooden floors can make all the difference.
4. RENT BY THE ROOM
In big cities like Melbourne and Sydney, renting by the room to students and young professionals is becoming increasingly popular. This strategy may be risky and require more work but if you’re willing to try, it could allow you to charge more in your lease agreement.
5. RENT IT FURNISHED
Furnished properties usually rent for 10% to 20% more, depending on the quality of the furnishings. They may come with more costs, and the tenancies may be shorter term, but if you’ve got spare furniture this is a great way to increase your rental yield.
6. SET THE RENT HIGHER
The most straight forward way to increase your rental yield is to simply set your rent higher. If your property is unique, or rentals in the area are hard to come by, you may get lucky and lease the property out for more than you expected. However, if you set your rent too high you could struggle to find tenants, so talk to a quality local real estate agent before pricing your property.
7. REVIEW YOUR MORTGAGE
Mortgage interest and loan fees soak up most of the income from the majority of rental properties. Cut this expense by reviewing your mortgage with the help of a broker and you could instantly start making more from your property.
8. GET YOUR TAX POSITION SORTED
Many investors don’t claim all the tax deductions that they’re entitled to, so they end up paying more tax than they need to. Having a specialist property accountant prepare your tax return may seem expensive, but it could make you thousands in the long run.
9. CONSIDER SHORT-TERM RENTALS
Short-term rentals and holiday accommodation usually charge a higher per-night rate, and if the right property is managed well, they may achieve far higher rental yields. Keep in mind that renting your property this way may be riskier and comes with a higher chance of vacancies. But if you rent it out consistently, you could pull in more than you would with a traditional long-term lease.