What are the best renovations for improved rental yield?
These days, rising interest rates and additional investment property costs have many landlords wondering how to improve rental yield.
It’s not always a matter of simply putting the price up, as you may already be at the top of the market.
With this in mind, we have put together some tips for maximising rental yield. They may not all be applicable to your property but you should at least find a few ideas that will work in the short or long term.
What is rental yield?
Rental yield is basically your profit from rental income. That means it is the money left over after all expenses are paid for.
Obviously, the higher the rental yield, the less you are losing on the property. You may even find you can positively gear and expand your investment portfolio.
Renovate to improve rental yield
One of the most effective ways to improve your rental yield is to renovate your property between tenants.
It’s a matter of spending money to make money, but you will increase equity as well as the amount you can charge for weekly rent. If you plan a strategic renovation, you’ll be able to increase the aesthetic and functional appeal or perhaps even be able to add another bedroom so you can charge more.
Nine ways to add value to your rental property
Replace the floors or carpet: One of the first things to go in most rental properties is flooring. Tired old carpets, chipped tiles or dull floorboards will instantly make a home look worn out and reduce its value. Fresh flooring will instantly uplift a home, and if your budget is tight, you can even use floating flooring and place it directly over the old flooring.
Paint: It may seem a bit unlikely, but a coat of paint can instantly increase your rental yield. Fresh paint makes a room look new and liveable and helps tenants to feel that they are moving into an unlived-in home. Neutral and lighter colours can also make spaces feel bigger, which is always a strong selling point for tenants.
Replace fixtures: Replacing taps, cabinet doors, shower heads, and even light switches can help to make the place feel more modern and stylish.
Dishwasher: Who wants to live without a dishwasher these days? If your tenants have been going without, figure out if you can have one installed.
Add storage: Storage is a huge selling point for any property. People will pay a little more for a place that provides them with ample space to put their belongings. If you can add built-in robes or use free spaces like under stairs to add shelves or drawers, tenants will be drawn to your property.
Light: Anything you can do to add light to the property will also help. Rooms feel bigger when they are well-lit and will be more appealing to tenants. Sometimes cleaning the lights can make all the difference, or you could invest in a skylight if this is a suitable option.
Security: Tenants want their property to feel safe and secure. This can be achieved by adding security screens, ensuring doors and windows are easily locked and improving exterior lighting.
Temperature control: If your property does not already have air conditioning and heating, add it. This is a must-have for the Sydney climate, and many tenants will happily pay extra for a home that is comfortable all year round.
Maximise space: Is there a way the property can be updated to have a home office or extra bedroom? If so, look into a mini reno project. Another option, albeit a far more complex one, is to add a granny flat, studio or apartment in the backyard.
Bonus tips
This one isn’t a renovation tip, but one more possible way to add to your rental yield is to allow pets. Many Aussies want to have their four-legged friends with them and will pay a little extra to have them in their rental property.
Finally, talk to us. As the Neutral Bay rental property specialists, we can share our ideas to help you improve rental yield in a cost-effective way.
Need advice to maximise your rental property returns? Contact us today.
