Friday, November 11, 2011

How to make your rental investment more attractive to tenants

We have many ex-state homes on our books and in a few situations the homes are identical. This gives us a great opportunity to see what makes a property more attractive to potential tenants and what will increase its popularity and help it achieve a higher rent.

We recently added a new property to our portfolio. While visiting the property for the initial appraisal I had the odd feeling of deja vu. It wasn't until later that evening that I realised that though the cladding was different the basic floor plan was identical to a property that was only a 2 minute walk away. The previous owner had made some minor changes to the property. They had opened up the kitchen area by removing the laundry room. They had also modernised the bathroom and kitchen and installed a heat pump. Other than that the bedrooms and living room remained the same. This property proved very popular and we managed to rent it quickly for $350.00 per week. The property down the road was more attractive from the outside and had a fenced back yard but had trouble renting for $290.00 per week.

In another suburb we have another 2 properties that had the same original floor plan. The previous owner of one split the living area into two making it into 2 very small bedrooms and made the larger bedroom into the lounge. This made a 2 bedroom property into a 3 bedroom. They currently get around $315.00 per week for the property. The house is on a large bit of land and also has a garage. A few houses down the road is another house is on a subdivided section, which has no garage and is in its original condition. This property gets around $280.00 per week. All these properties are in a similar location so the potential to increase the rental on these properties is huge.

The third property is in a block of 2. The only difference between the 2 is that one has been well looked after. Maintenance has been attended to on a regular basis and the property has had good tenants in it who have looked after it well. This unit is the back one of the 2 and only has a carport. This is rented for $300 per week. The front unit on the other hand has a double garage and large storage area and it also has great sea views. On the downside maintenance has been neglected and the tenants did not take care of the place (please note: we were not managing this property!) This unit despite all the positives it had going for it was only rented out for $260.00 per week. Remember the other was achieving $300.00 per week.

We've just taken on the front unit. Under our care it has recently undergone a thorough clean and tidy and a modern paint scheme. The bathroom and kitchen are still yet to undergo modernisation but in its current revitalised state we have an applicant who is willing to pay $310.00 per week for the property. That's $50.00 extra per week or $2600.00 per year for a bit of well needed TLC. A recent valuation of the 2 properties revealed that
lack of maintenance made a $20k difference between the units. Again, with the potentially better property being valued lower as it was neglected.

With so many houses available on the rental market its important as landlords that we make the right decisions with maintenance and work that is needed to our property. A small insignificant change such as a good clean and a fresh colour scheme can greatly increase the appeal of a property. When making substantial improvements to the property its important to investigate what the market wants as the wrong expensive renovation might not improve your rental yield. While other well thought out changes could not only put significantly more money in your pocket but may also significantly increase the value of your property and its appeal to potential tenants.

When we do rental appraisals we are happy to share our observations with clients and prospective clients on how they could improve their rental yeild and property value. Book your free appraisal today to get the benefit of our experience.

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