This is a question which is asked time and time again by owners of investment properties.
What should I do to make my property more attractive to potential tenants?
Is it actually worth spending money on my investment property?
Will it make me a return?
The reason most people own an investment property is to make a return over time. This return could be in the form of an increase in the value of the property. A decrease in the overall debt associated with the property. Or potentially both. Each person’s situation is different however and I have not touched on a negative gearing consideration here, governments however have been looking at negative gearing for some time and considering reducing its benefits so you may wish to consider any potential changes to your long term strategy.
The rise of the long term tenant.
One thing is undeniable though.
More and more Australians are becoming lifetime tenants. The reasons for this are related to increasing property values coupled with increased rental values which in a lot of cases, in percentage terms, is outstripping the increase in the property values.
This means tenants;
- Are often paying more in rent than they would be if they had a mortgage for an equivalent property.
- Can’t afford to save deposit to purchase.
- Consequently have a shift in thinking from owning to permanent renting.
This has a lot of implications for the community which are not necessarily positive for the vast majority of Australians but that would be the subject of a different discussion, for now let’s just deal with what is happening.
So the shift is towards long term tenancies. This shift offers positives and negatives for property investors.
A lot of tenants aren’t just looking now for somewhere to live while they are saving to purchase a property, somewhere to get them from point A to point B. They are considering potential rental properties in a similar fashion to how an owner occupier might when they are going to purchase a home.
This means that tenants are far less tolerant of;
- Poorly maintained properties.
- Properties which won’t accept pets.
- Non air-conditioned properties.
- Homes which are in unsavoury positions like main roads.
If your property remains vacant because of one of these points, then this can easily start to add up to thousands in lost rental return and ongoing advertising costs.
They are looking for properties which they can put down their roots in and potentially live for 5 years, 10 years or even longer. This has a few implications for owners both in the way they maintain their properties but also in the way they select their properties in the first place.
Because tenants are looking for more from their investment properties it means that when they find what they are looking for they are prepared to potentially pay a little more to get it and they will effectively become the best tenant you will ever have as they almost have an ownership factor in the way in which they look after your investment property.
This means you will get;
- Longer tenancies.
- Less vacancy.
- Better looked after properties.
- Generally less reparative maintenance.
So how do you assess what to do to your investment property.
Easy, get the advice of an experienced property manager on your side and they will give you honest, sometimes brutal advice and perspective on your investment property. If you have a budget in mind let them know how much you are considering spending and ask them what they feel would have the biggest impact to the appeal and potential rental value of your investment property.
At Cream Property we can help you every step of the way from advice as to what to do and managing of the process of getting that work done.
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