How to get top rental returns?

[Peter_Tersteeg]

Rental yield is a major focus for investors these day (has been for quite some time). I'm putting together an info ideas sheet on ideas for increasing the rent received. Some of my initial (and somewhat jumbled) thoughts:

* Cosmetic renovation. Painting, carpeting, better lighting all add to a properties appeal to get top rental dollar.
* Major renovation. Will require more planning and work, but can yield excellent results.
* Build a second dwelling or a granny flat. Get a second income source for the property.
* Renting by the room.
* Build 2-3 properties, sell some down on completion to reduce debt.
* Developing multiple townhouses or units. The economy of scale can reduce your cost to own the property, but it still gets great yields.

Feel free to add ideas and experiences.

 

[Corey Batt]

Convert into more bedrooms. There's still a large number of old two bedders which can be converted into 3 bed and significantly increase rent.

 

[Kinnon Bell]

- Holiday let if it's in a tourist location
- Zoning dependent let as offices
- Rent out garage / shed separately as storage
- For the first week put it on the market for more than you think you will get for it (worked for me for all but one time as I had a bit of time to play with before they were ready)

 

[depreciator]

Rent out the car space separately if it's in an area where daytime parking it tight - in the building we are in in the CBD residents rent out spaces 9-5 to people who drive to work.

Consider also ideas to make a property more attractive in areas when there are lots of similar properties competing for the same tenants. I spoke to a client once who was having trouble renting out his 2 bed apartment because there were others on the market in his building. I suggested he bung in a big telly (and depreciate it) to differentiate his apartment. That worked.

 

[DontSailBackwds]

As a long time renter I'm looking for location, space to live in, tidiness, security, and storage space. As long as the kitchen and bathroom are clean and they work I don't care where the benchtop was quarried from nor how many gigalitres the 9 showerheads in the spa can squirt at me.

I rent the "worst house in the best street" and at a good price so I'm probably not a tenant who will make you rich. We've been there more than 5 years, had minimal rent rises and only bother the (very good) property manager when we think something will fall off the house. The house is tidy but if you bought it for a PPOR you'd be spending north of $200k on a reno, given the area (Sydney lower north shore). It's a brick semi (low maintenance) with a quite-dodgy extension which would be the first thing to go.

* Cosmetic renovation. Painting, carpeting, better lighting all add to a properties appeal to get top rental dollar.

These ones are the easy wins and I think you'd have to have a good reason (i.e. a solid plan) to go beyond them. I would order them as paint, lighting, then carpet (unless the carpet is ultra-fugly). Dark and gloomy won't win you any favours so lighten the place up. Rugs can hide a multitude of flooring sins and tenants know that.

Nice touches like an outdoor area, deck or nice garden (maybe, they require maintenance) or some focal feature like that will make your place stand out but only if the basics are good.

Apply the 80/20 rule - 20% of a renovation will often get you 80% of the benefits.

Manage the property's expectation - are you renting a palace or a shack, to executives or ice addicts?

Still, I don't own any property so feel free to call BS on this.

 

[BayView]

I suggested he bung in a big telly (and depreciate it) to differentiate his apartment. That worked.

Did the tenants "depreciate" it into the boot of their car when they did a runner?

 

[Richard Feynman]

Some additional ideas:

- Offer to cover utilities/internet for higher rent
- Consider furnishing if it suits the area
- Rent short term e.g. Airbnb, Stayz
- Create a special room with 50 power points and good ventilation and advertise the place on gumtree

 

[wylie]

Some additional ideas:

- Offer to cover utilities/internet for higher rent

I would never do this. Tenants will leave all the lights and air-con running and take 50 minute showers... just like my kids do (well... not 50 minutes, but looooonger than my showers).

 

[miss green eyes]

I would never do this. Tenants will leave all the lights and air-con running and take 50 minute showers... just like my kids do (well... not 50 minutes, but looooonger than my showers).

+1
I've done this when flatting and my flatmates turned the heater on and opened the doors and windows.
To be fair, I'd probably do the same.
That's why we all gorge at all-you-can-eat buffets.

I agree with the paint and carpet. especially if the carpet smells or has blotches on it.
Not sure about lighting. Is it expensive to convert, say, a lightbullb to trendy downlights? I don't think it would make a difference to me, as a tenant.

New kitchens and bathrooms are always nice. If they can be done inexpensively why not.

 

[miss green eyes]

Some additional ideas:

- Consider furnishing if it suits the area
- Rent short term e.g. Airbnb, Stayz

About the furnishing - can that work against you if a tenant already has their own furniture?

About AirBNB - ohhhh, I just started a thread on this a few days ago. Legalities galore.
I know some LLs won't bother with the legalities, and if you're staying at some of the high-rises in the CBD where most of the building is sub-let anyway, no one will bother reporting you to the council either.

 

[redwing]

Did the tenants "depreciate" it into the boot of their car when they did a runner?

Nope - Owner Depreciates, Tenant Appreciates

 

[Rhinsor]

Install small split system aircon in lounge room and maybe main bedroom.

 

[INVSTOR]

Consider pets

 

[vbplease]

Consider pets

I was just about to add this..

Consider kids?

 

[BayView]

Consider pets

They have pets anyway and don't tell the owner or the agents, usually - so you may as well allow them and whack a bit more on the rent

We've always allowed pets.

Usually less damage to the house than kids. (I have 3 kids)

 

[Xjas]

- Create a special room with 50 power points and good ventilation and advertise the place on gumtree

LOL, When I was young and naive I looked at a house that had one room with at least 30 powerpoints, I was quiet perplexed as to why you would need so many, the agent didn't seem to know either or didn't want to say it.

 

[miss green eyes]

LOL, When I was young and naive I looked at a house that had one room with at least 30 powerpoints, I was quiet perplexed as to why you would need so many, the agent didn't seem to know either or didn't want to say it.

call me naive, but all this eludes me....?
Can someone hit me over the head with it please?

 

[BayView]

call me naive, but all this eludes me....?
Can someone hit me over the head with it please?

Running a drug house - probably growing MJ and needed the powerpoints for the lights.

 

[S.T]

Know your competition, check adverts of rentals on the area and make sure you have the same, or better features for your property. If you stick to this, your property will rent easily. e.g. Air con, renovated bathroom, gas cooking, gas heating etc.

 

[miss green eyes]

Running a drug house - probably growing MJ and needed the powerpoints for the lights.

I see. Thank you.
Or a tenant could run powerboards out of the existing powerpoints I guess. Plus extension cords connected to powerboards from the other powerpoints in the house.