S.A.D.- Key to Boosting Rental Returns During Times of Higher Costs
The acronym S.A.D. highlights three key features that will help ensure home investors achieve the maximum return from their investment.
According to Mr Cox, the median weekly rent for a house in Perth remained steady at around $370 during the June quarter 2010.
With recent interest rate rises, combined with larger increases in council and water rates, landlords need to boost rents to ensure that they can service their loans. The property management division of Peard has found that simple improvements to a rental property can make the property more attractive to renters and boost weekly rents.
One of the challenges for a landlord is to make a point of difference between your rental property and other rental properties advertised. For example, security, air-conditioning and a dishwasher are now three features that prospective tenants demand in a residential property.
We developed this S.A.D. acronym as a guide to many first time investors in real estate who often have a sad experience and become disillusioned because they quickly buy an investment property which they later find is difficult to rent and therefore achieves a lower-than-expected return on the money invested.
Lifestyle issues are impacting on the expectations people are wanting from a home whether they are renting or buying. We are finding that people are increasingly demanding a higher level of fit-out for their home but are willing to pay a higher rent to get it.
Anyone who invests in residential property is not just investing in bricks and mortar but also the lifestyles of Australians. People who are renting a home now want features that reflect the growing concern about crime in our society, for example. This is why the issue of security is now gaining added importance amongst tenants.
A property which has these three simple features can often command an additional rent of over $40.00 per week and, equally importantly, is likely to have a lower vacancy rate. For the investor/owner, all of these items will pay for themselves in about two to three years through depreciation and the extra rent.
It is also important to ensure that regular inspection reports are produced. A poorly maintained property will be much harder to lease in the current market and will be penalised by lower rents.
For example, a property with poorly maintained gardens will discourage prospective renters from even viewing the property as it creates the impression that the interior of the house is also poorly maintained.
Article by Stuart Cox, The Peard Real Estate Group
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