With rental yields throughout the country languishing at all-time lows, it's now more important than ever to ensure your investment has maximum tenant appeal.
Blogger: Shane Kempton, CEO, Professionals Real Estate Group
The latest figures from CoreLogic RP Data show that during August 2015 capital city rents had increased by just 0.7 per cent, their slowest annual rate of growth on record.
In this challenging environment, finding a tenant who is prepared to pay a premium rent is now a key priority for landlords so that they can boost rental returns.
This is particularly the case for first-time investors who perhaps heavily geared, and rents are an even more critical issue to ensure they can cover their mortgage repayments.
Most first-time investors make the mistake of buying an investment property that will not appeal to a broad range of renters and this limits their potential rental income.
Below are 10 key points that first-time property investors should consider when selecting an investment property.
1. Check the rental vacancy rate for the area with a number of property management properties to determine the overall demand for rental properties and the rent you can expect before deciding to purchase a property.
2. Generally pick an area within a suburb that has a lower number of rental properties, as this will make your rental property more attractive to tenants. The property should also have good street appeal and be clean and tidy in the inside.
3. Buy a rental property that is close to social infrastructure such as shops and schools. This will appeal to younger families who rent.
4. Renters generally have a lower level of disposable income so rental properties with easy access to public transport are in high demand.
5. A large proportion of tenants tend to be younger people or single parents. As a result, higher-density properties, such as apartments, are becoming more popular with tenants.
6. The property should have ‘extras’ that appeal to tenants, such as dishwasher and reverse cycle air-conditioning.
7. Security is now a major factor for tenants. The property should have good security to the windows and doors. If it is a stand-alone property, an alarm system will appeal to tenants as well as a garage.
8. If you are buying an apartment, find a complex that has security parking as this is becoming a key issue in the inner and near-city rental market.
9. Include gardening expenses in the rental fee for a stand-alone property because many tenants do not want the headache of looking after gardens.
10. If you are planning to rent the property furnished, make sure the furniture is high-quality and clean. Tenants leasing furnished property generally have high standards.