Finance advice
Sandrina Postorino

6 ways to increase your yield in a tough market

By Sandrina Postorino

As the old saying goes, “Don’t bring me problems, bring me solutions”. And, as property investors, there’s one big problem facing most of us at this stage of the property market cycle: falling rental yields in the face of rising house prices.

So instead of analysing the problem, below are several solutions. These six tactics can help investors increase rental yields regardless of price.

1. Cosmetic renovations

Humans are sometimes a pretty superficial bunch. So even a basic cosmetic facelift to your investment property may be enough to command a few extra hundred dollars in rent each week.

This could include a fresh coat of paint, more modern light fixtures, or updated blinds and curtains to maximise light. The key here is to keep it simple, not blow the budget, and ensure all changes you make are mostly timeless.

Bright pink feature walls and rose gold taps may currently be “in”, according to House Rules, but you wouldn’t want to update cosmetics every few months to keep up with trends.

2. More substantial renovations

On the other hand, no amount of fresh paint will help if the kitchen and bathrooms look like something out of the dark ages.

Substantial renovations, like a new kitchen and bathroom, or new flooring, require capital and time, and of course a loss of rent, but can dramatically increase your yield. Apart from the immediate increase in rent, it will also reduce how much you will spend on repairs and maintenance in the long term, as you will have new appliances and fixtures.

So assess similar local properties to understand what the local standards are to avoid overcapitalising and to assist with budgeting.

Because an updated bathroom can do wonders for lifting rental revenues. But there’s no point installing a luxury spa bath with water feature if renters really just want the facilities for a five-minute shower.

3. Add furnishings

Furnishing a property can instantly lift its rent, so long as this is appropriate for your location.

As an example, furnished properties may be ideal near universities where there is high demand for “turnkey solutions” by students. In this case, styling should reflect a younger demographic, and cater for potential wear and tear from socialising.

Travelling business people may also require furnished properties near airports or city centres, and may prefer not to spend through the nose on more expensive serviced apartments. In this case, styling should be simple, but modern and elegant.

And don’t forget – many pieces of furniture you buy for your property that are under $300 are an instant tax depreciation write-off. Added bonus!

4. Self-manage

Sometimes increasing the rent will simply be impossible. So the trick here is to reduce your expenses.

The most obvious and quick way to do this is to take out the real estate middleman, and switch to self-managing your property.

Many investors may think they’re not qualified to do this, that it will be complicated and time-consuming, or that they don’t even know where to start. But there are now a whole host of apps and digital platforms that can help to streamline this process for you – at a one-off fee that is an absolute fraction of the cost of a real estate agent.

Self-managing can be especially attractive if you have done a substantial renovation on your property, as you will have a lot less maintenance and repair jobs to organise, effectively reducing the job to finding tenants and then collecting the rent. Something to think about.

5. Switch it up between long-term and short-term

Airbnb and Stayz are fast becoming common ways to make some extra rental dollars. But it pays to be strategic about this to cater for the extra hassle that may come along.

One way to maximise your rental dollars is to apportion six or so months of the year to regular, long-term renting, and only opt for short-term renting during the high-demand months. An example of this might be a beachside property which is likely to be in high demand from holidaymakers during the warmer months, but which probably more strongly suits a six-month lease over the colder months.

For property investors who don’t want to get their hands dirty, a whole host of Airbnb property management apps are now also popping up. This means outsourcing all of the hassle, for a small percentage of the extra income.

6. Renegotiate your mortgage

Finally, you could simply seek to pay less interest. This is also becoming easier than ever before, as more non-bank lenders enter the market and increase competition and pressure on banks.

The first step here is to find someone who is offering a lower rate than yours, ask your lender if they’re willing to match it, and be ready to walk if they won’t. Keep in mind that the interest rate alone does not determine the competitiveness of a mortgage product.

There are many other fees and charges, and you need to evaluate your payments overall to decide how much you will save by changing products.

But the savings can often more than compensate for the short-term inconvenience of switching.

So, what are you waiting for?

 

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About the Blogger

Sandrina Postorino

Sandrina Postorino

Sandrina Postorino is the managing director of Landlords Choice.

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1210 (52) {
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
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  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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