Boosting the rental yield of established properties
There are a few small projects you can do to instantly increase your rental returns. Damian Collins from Momentum Wealth explains your options.
On 17 January 2014, Our Managing Director, Damian Collins, was invited to speak on this topic on Smart Property Investment magazine’s ‘The Weekend Project’.
Hear what he had to say in the video above and transcript below.
“A couple of quick ways to boost your rental yield on an established property would be, firstly just a minor makeover. A lot of tenants are more than happy to pay a reasonable amount more for nice carpets, a bit of paint. It doesn’t have to be excessive, just to make it nice and clean and presentable. So that would be one of the first things I’d be look at on my rental properties.
Potentially you might be able to furnish a property, that’s going to be really specific on the area and the type of tenant who might be going to your property. So for example if you’ve got an executive market they might be certainly wanting something furnished for 6 to 12 months while they come into a particular city, or if you’re near a university, a furnished property might also suit. Your yield can be strong on those, potentially 15-20% returns on the furnishing. Now, you just got to be very careful though. In suburban property locations, generally, people don’t want to have furnishing. So just be very careful in the areas you select.
Another thing investors can certainly look at is granny flats. That’s an opportunity in Sydney and Perth particularly. Granny flats can be a great way to potentially boost your yield. Spend $120k or so on construction, and potentially getting 15% yields, even higher, on the actual granny flat, but when you blend the yield with the front properties getting gross yields of 6.5% to upwards of 8%. And when you look at interest rates, in the current market we are the 5’s (5%), that’s a pretty good overall rental return on that sort of property.”