Landlords might be tempted to save money on maintenance in a tight rental market. It could be a costly mistake.
How can you make your investment property more attractive? In the current market, capital values in the most sought-after inner urban areas are continuing to climb and strong rental yields are attracting investors back into the property market off the back of very limited supply.
Therefore, the temptation for many owners is to reap the benefits of fierce competition for prime rental properties, watch capital values grow with only basic cosmetic touch-ups between tenants without further valuing adding.
But, taking the view that “people will rent anything these days” because of severe stock shortages is a short-sighted strategy that could prove costly when more rental properties become available.
Anticipating tenants’ needs should form a key component of a long-term property investment strategy. This not only entails keeping a property in the high-demand category for the long haul, but also safeguarding the higher rental yield by adding further capital value. This is particularly apt for established, older-style apartments and houses in the inner urban areas that may not have been upgraded to take advantage of new technology.
An increasing number of higher-income young professionals are opting to rent in a preferred lifestyle, inner-urban location rather than compromise and buy or rent a more affordable property further out from the CBD. It is the norm for tenants to pay about 30% of their income in rent. And, like eager homebuyers in the most in-demand property precincts, they are often prepared to pay a small premium to secure what they want.
Here are some simple options that will keep your asset on top of the tenant attraction list and add value without breaking the bank.
Cabling and wiring. Consider installing modest cabling for computers and pay TV. Check that plug points are adequate and in appropriate, practical locations.
Air conditioning/heating. A rental property is expected to have adequate heating or cooling, depending on the local climate. Minimise maintenance costs by avoiding the cheapest brands available. Opt for appliances with longer guarantees and ready availability of parts and service.
Built-in wardrobes and storage. Period-style homes and older apartments built in the 1930s and 1940s were not noted for their storage, such as built-in wardrobes or extra cupboard space! If these are absent, look at installing some. Adequate internal storage space is highly sought after.
Car parking. If there is room on a small house block for even one off-street car space, then seriously consider using it for this purpose. It will add considerably to the property’s value.
Energy savers. Some very simple options can add an attractive “green” edge to a property as people become more energy-conscious. Energy-saving light globes, water-saving shower heads and ceiling insulation will add to the property’s marketability.
Outdoor areas. Any easily accessed, very low-maintenance outdoor leisure space is a winner in inner-urban areas. Attractive, low-maintenance and drought-resistant landscaping solutions, such as paving and decking, can be cost-effective and simple. If your property has a garden, consider having it professionally maintained every couple of months.
Security. Basic security provisions, as outlined in the Residential Tenancy Act, are required by law, such as proper door and window locks. If you own an apartment in an older-style, established block and it doesn’t include an intercom caller identification system on the front door, it may be worth raising the issue at a body corporate meeting. Ensure door and window locks are in good condition and look at installing spy holes in front doors.
Natural light. You will often see period houses advertised for rent or sale with their ‘natural light’ emphasised. Smaller period homes, particularly worker’s style cottages joined in a row, have limited window space. Skylights can often overcome this problem and greatly increase their appeal.
Sure, today’s rental market is tight, but it won’t stay this way forever. Prime properties need more than just location. These are simple steps that ensure your investment can keep pace with the market.
This story first appeared in the Eureka Report.