Many first time investors don’t completely understand how their investment can earn them an income and will look to build their wealth purely through the capital growth of a property. In this article we will highlight a few tips and tricks as to how you can increase your yield for long term benefits. Firstly though – how do I calculate my yield? If your annual rent earned on a property is for example: $25,000 and the property is worth around $600,000 the formula would be 25,000/600,000 x 100 = 4.166% yield.
After an investor of ours purchases a property they will ask us for advice about how to get the maximum yield possible. We have a few basic requirements that we believe every investment property should meet in order to get many people interested and demand the highest yield possible.
Every property needs a dishwasher! For a few hundred dollars a dishwasher can be bought and installed as no one likes to envision themselves moving into their new home and scrubbing dishes every night. This one is a no-brainer, particularly if there are a lot of options for rent in the surrounding area. If a property is missing something as basic as a dishwasher it can often be quickly dismissed for this very reason.
Heating and cooling are now a necessity. It used to be the case that if you were trying to lease your property in summer then you needed an air conditioner – if it was winter then you would want to have a heater running for every inspection. It is now very much expected by tenants that they will have access to full climate control. A cheap and easy way to do heating if there is no built in system is to buy a few portable electric panel heaters (around $80 each) to place around the property.
Cleanliness, not only does this help to get you through the pearly gates it can also remarkably increase your yield as first impressions are key. If prospective tenants can picture themselves living in the property during their inspection they are far more likely to apply. At times you can achieve cleanliness by hiring a professional cleaner, other times a coat of paint or new carpet/curtains can go a long way.
If you can follow these tips you should be able to maximise your yield and make your investment property work a little bit harder.