Thanks to relatively high prices, investment property yields in Melbourne tend to be fairly low. Detached homes for example, have average rental yields of under 3 per cent, while units average at roughly 4 per cent, SQM Research's data shows.
However, with a little creativity and the right strategy Melbourne investors can improve their rental yields and make their properties work for them.
Increasing the yield on your Melbourne investment: cosmetic changes
In a recent Your Investment Property article the importance of cosmetic improvements was highlighted. The following are some examples of cosmetic renovations that could be effective:
- Washing the walls and repainting them.
- Clear rubbish from the yard and improve the garden.
- If the home is dark, install brighter lighting.
- New blinds and/or curtains.
- Clean, clean and clean again.
The above changes shouldn't break the bank, particularly if you do them yourself, but they could allow you to add an extra $50 or so to the rent each week, increasing the yield of your Melbourne investment property. That may not seem like much, but over an entire year it amounts to an extra $2,600 in your pocket.
At least 79 per cent of tenants thought off street parking was extremely important.
Adding off street parking
A Beesnees survey found that at least 79 per cent of tenants thought off street parking was extremely important when renting a property (this may be particularly true here in Melbourne where parking is often scarce).
That means adding off street parking could be the perfect renovation to increase your Melbourne investment property's yield. It'll cost around $1,000 to add a decent parking area, according to Onproperty, but that investment could pay itself off within three or four years through increased rent.
Install appliances that Melbourne tenants really want
A second hand washing machine and dryer combo may cost $400 or $500, but may make your property more attractive to prospective tenants. If your investment is a unit or apartment this could be particularly valuable, as often the tenants of such properties won't bring their own. They may be happy to pay slightly more for the convenience of using yours, allowing you to increase your rental income.
However, before you start painting walls and buying dryers on Gumtree – remember – without a Melbourne property manager your renovations may be for nothing. A good property manager will maintain a relationship with tenants, advise on reasonable rent increases and help to decrease vacancies.
With the right help and a smart strategy your Melbourne property investment will help secure your future, while providing your tenants with a safe, comfortable place to call home.