How to get the most out of your rental property

Ways to maximise rental property return

Know the renter’s rights

The changes in the Rental Tenancies Regulation that came into effect in March, 2021 have allowed renters to have a bit more control over their rental applications, explains Andrew Duncan, founder and managing director of services marketplace, Sorted Services.

These changes mean that renters want to know more about the properties they are looking to rent, and they have a right to this information, such as whether the property is on the market for sale, is being repossessed, and whether the property has asbestos in it, Duncan explains.  

“Renters also can’t be unlawfully discriminated against by rental providers, such as refusing to rent a property to an applicant or determining consent for disability-related modifications.

“Rental providers will also now need to provide a valid reason if they choose to end a tenant’s lease – ‘no specified reason’ is no longer an acceptable answer,” Duncan says.

Upgrade the flooring

Flooring is often ignored by landlords, and it’s easy to understand why. It can cost a small fortune depending on the size of the property.

Duncan says: “Flooring can often be a make or break for many renters. If the carpet is stained or the floorboards are all scratched up, it might be time to pull them up and start anew. It will almost certainly modernise a property in the blink of an eye.”

Energy efficient lighting

Reducing power bills and introducing better quality lighting will make a big difference to how your property is viewed by potential tenants.

The same goes for energy efficient heating and cooling. Undertaking an air conditioning service can improve efficiency and reduce power bills for tenants, and even reduce bacteria in the property.

Security

Making sure the property is secure comes down to more than just the lock on the front door.

Cameras, solid garage doors and a double locking mechanism on both the front and back doors will not only make the tenant feel more secure, but it will help protect against break-ins. 

Pet proofing

The pandemic has seen a huge uplift in the number of people working from home, and also having pets. So making sure that your property is pet proof will help you secure a great tenant.

This extends beyond adequate fencing. A doggy door in the back of door can seal the deal with renters with a pet, so consider whether you can add one. Best of all, this addition won’t interfere with the security of the property.

Overall presentation

Whilst the commitment to a rental agreement is not as permanent as purchasing a property, renters are generally looking for cleanliness, comfort and good amenities. When there is much competition in the rental market, the well presented, neat and tidy property wins, advises Carolyn Purnell-Webb, partner and manager of real estate firm Kay & Burton.

“Make sure you present the property well and ensure it’s ready to move into as a good agent will negotiate with the renter to try to start the rental agreement as soon as possible to minimise loss of income caused by vacancy,” Purnell-Webb says.

Focus on annual return

Take into consideration the overall annual result, not just the weekly rent when pricing your property,

“A short-term focus can be a trap as a full year factors in vacancy periods which are best minimised – every week the property is vacant reduces the annual income by approximately 2 per cent. Price properly to avoid this by balancing healthy ambition with market realities,” Purnell-Webb says.

Choose the right property manager

Don’t just go for the cheapest agent.

Rather than focusing on the weekly commission paid to a letting agent, look at the cost over the course of a year, she says.

“For example, if you’re looking to lease out your $700 per week property, and there is a 1 per cent difference between agencies, that works out to be a difference of only $7.43 per week,” Purnell-Webb explains.  

This is a cost difference you could re-coup just by engaging an agent who will lease your property quicker and for more rent than that of the other agent.

Ask yourself which agent will get the best possible outcome, she says.

Renter selection

Ensure thorough checks are carried out, paying particular attention to the rental history (if they have one).

“Consider their intentions for the length of tenure and ensure that you’re selecting renters whose plans seem to fit with yours,” Purnell-Webb says.

“It’s far better for your annual return to avoid vacancy and the additional wear and tear of a revolving door of renters over a period.”

Select renters with a history of prompt payments and care for their property. Checking defaulting renter databases can uncover renters who have defaulted in the past, she adds.

Also consider adding landlords insurance to cover your investment property for a variety of tenant related incidents and a range of insured events such as fire, flood and storm.

Consider the season

Seasonal market conditions will impact how much you can charge in rent each week.

For example, a property with a pool will be highly sought-after at the height of summer, so having your rental agreement expire in June and trying to re-rent during winner will be disadvantageous if a renter vacates then. A good agent will think of these things when establishing the vacancy date with the renter.

“Agreements don’t have to be exactly 12 months and can be negotiated between the parties. Be flexible for the right renters and begin with the end in mind,” Purnell-Webb says.

^{The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. RACV Lardlord Insurance issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.}