Paul Bennion

Boost your rental returns despite rising vacancy rates

By Paul Bennion

Fitting your investment property with the most desirable features will make it is less likely to remain vacant between leases.

Blogger: Paul Bennion, managing director, DEPPRO

One of the biggest challenges that many landlords will face over the coming year is finding a suitable tenant for their rental property who will pay a satisfactory level of rent.

This is particularly the case in capital cities such as Perth and Darwin where the resources slowdown has seen an explosion in vacancy rates, and where there is now a downward pressure on rents.

In other parts of the country, slowing population growth rates combined with a boom in residential building activity over the past three years have also resulted in vacancy rates beginning to rise.

In such an environment, a key consideration when buying an investment property is selecting one where rents can be quickly boosted by cosmetic and inexpensive improvements.

For example, there is still a plentiful supply of older-style homes in Perth and Darwin that can be purchased at competitive prices and where rents can be significantly boosted through simple improvements.

Buying an older property and making it ‘new’ is an attractive financial strategy for astute property investors. Just replacing old carpets and repainting can make a home feel like new for many tenants.

Changing lifestyles are affecting the expectations people have of a home, with tenants increasingly demanding more features in rental properties and willing to pay higher rents for them. Key lifestyle features now demanded by renters include security, air conditioning and dishwashers.

Ensuring that your property is well secured and has additional features such as a reverse cycle air conditioner means that it will attract more prospective tenants.

This is particularly important during a time of higher vacancy rates and will ensure that your property is less likely to remain vacant.

A property with these three features can often command an additional rent of $40+ per week and, equally importantly, is likely to have a lower vacancy rate.

However, property investors should undertake a tax depreciation schedule before commencing these renovations to ensure they receive their full tax benefits.

For most investors, these items will pay for themselves over about three years, mainly through depreciation and the extra rent.

By ensuring that the investment property has these features, the investor helps to keep the vacancy rate low, thereby maximising the rental return of the property and their cash flow.

If you own a suburban property with a garden, it is a good idea to ensure that you have a gardener contracted to maintain it. This expense can be factored into the rent and ensures that the garden is always maintained. Rental properties with poorly maintained gardens are more difficult to lease and achieve lower rents compared with similar property with well-maintained gardens.

Landlords can also boost their rental returns by considering leasing their properties to tenants with pets, because a large proportion of households now own either cats or dogs. Pet owners will generally pay a higher rent to secure a rental property and the landlord can request a pet bond from the tenant to cover expenses for any damage.

About the Blogger

Paul Bennion

Paul Bennion

Paul Bennion is the managing director of DEPPRO tax depreciation specialists.
DEPPRO Pty Ltd is Australia’s leading property depreciation company, specialising solely in the preparation of tax depreciation reports for residential, commercial, industrial and leisure investment properties.

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