There is a direct correlation between a property’s appearance and the rental returns it can produce. Moreover, there is a distinct correlation between a property’s presentation and the tenants it attracts.
With the right improvements, landlords can significantly increase their rental property income. It is crucial to identify the balance between enhancements that genuinely elevate rental income and those that may lead to over-capitalisation. Therefore, careful consideration should be given to costly upgrades or extensive renovations.
How can I increase rental property income?
Optimising the rental income of your investment property is a key priority for forward-thinking investors, but it doesn’t have to be complex or costly.
Here are some practical and effective improvements that can make a big difference to your rental income:
1. Enhance street appeal
First impressions are paramount, particularly for rental properties. If your investment property is a house with a front garden, spend some time tidying up the garden beds, removing any weeds, cleaning the paths, painting the fence, and cleaning the windows.
If you own an apartment, perhaps add window boxes, clean the front door, or give it a fresh coat of paint, and add a new front door mat to make the place more welcoming. A positive first impression encourages prospective tenants to view the property favourably, potentially increasing their willingness to pay a premium for a well-maintained residence.
2. Refresh the bathroom
Renters are often willing to pay more for a well-maintained house with a clean bathroom. However, such an upgrade doesn't have to be expensive.
Improving the bathroom doesn't require a full renovation. If tiles are outdated or stained, tile paint can provide a fresh new look without the cost of re-tiling.
Simple updates such as replacing old showerheads, fixtures, or the vanity, removing mould, and swapping out shower curtains can dramatically improve the space, making it feel cleaner and more inviting.
3. Kitchen makeover
Just like the bathroom, upgrades for the kitchen don't have to be expensive or a full renovation. A fresh coat of paint can instantly brighten the space. Replacing cabinet doors or even their handles can achieve a refreshed look on a budget.
Updating outdated appliances such as the oven, dishwasher, or refrigerator also adds value, as tenants appreciate the convenience of quality inclusions.
These small, cost-effective improvements go a long way in improving the appeal and rental value of your investment property.
4. Improve tenant convenience with off-street parking
Providing a dedicated car space can be a significant advantage, especially if your rental is in a high-density living area such as the inner city or in a beachside suburb. The closer your property is to the city, the more value the parking space will add to your property.
Adding a carport or even creating a driveway is something that tenants will pay more for, as they prefer living in a property where parking is not a daily challenge.
5. Consider new living spaces
When aiming to increase your property’s rental returns, keep in mind that additional bedrooms typically allow you to command a higher rent.
Does the layout of your property allow for an additional bedroom? Perhaps your place has a separate dining room or some ‘dead space’ that could be converted into another bedroom, or perhaps an extra-large room that could be split in two. Adding an additional bedroom allows investors to charge higher rent.
While appliances are highly desirable amongst tenants, so are designated laundries. Having a space where a machine and dryer can be used and then hidden away is a huge advantage among renters, and they don’t mind paying more for the convenience. Creating an internal laundry doesn’t necessarily have to mean more expense. Instead, it's about optimising existing 'dead spaces'.
6. Add storage
Tenants highly value storage. Cost-effective additions such as built-in wardrobes in bedrooms enhance appeal and rental value. Prospective tenants envision themselves living in the space, and insufficient storage can deter them.
Many budget-friendly retailers, such as Ikea and Bunnings, offer a range of storage solutions that are affordable yet highly appealing to renters.
7. Consider an outdoor entertaining space
An outdoor entertaining space is a significant drawcard for tenants. It will make your place more enticing to renters and add value to your property when you go to sell. This can be achieved without considerable expense. Adding a deck, tiling a courtyard, adding a gazebo and BBQ, plus some outdoor furniture, are all considerable attractions for renters.
8. Make the property pet-friendly
Pet-friendly properties are in high demand. With some rental properties not allowing pets altogether, properties that do allow pets are favourable. It’s a well-known fact that people love their pets, and with this in mind, they are often willing to pay a premium for a rental property rather than be separated from them.
Understandably, though, pets can be a risk to investors. To reap the rewards of increased rent from pet owners, place some property safeguards in the contract, such as carpet cleaning at the expense of the renter or pet-related damage being paid for by the renter as well.
Stay up to date with your relevant state legislation as pet regulations are changing frequently.
9. Enhance interior lighting
Bright, well-lit interiors significantly enhance a property's appeal. Dark rooms can feel uninviting and cramped, but this can often be addressed with simple, cost-effective fixes, such as cleaning light fittings and replacing old bulbs with brighter, energy-efficient alternatives.
A light-filled space not only feels more welcoming but also gives the impression of greater openness, which can justify a higher rental price.
If prospective tenants perceive your property as being flooded with natural light and offering a sense of spaciousness, they are likely to pay more for your property as opposed to one that is dark and therefore feels smaller. Smart and clean lights create the illusion of space.
10. Optimise rental income
Conducting market research can also be another way to achieve higher rental returns. During your research, you may find that you are charging rent that is below the market standard, and therefore, it is in your best interest to raise it.
While some investors may be hesitant to increase rent due to concerns about tenant retention, if your rent is in line with market value, tenants will understand there is little advantage in seeking comparable properties elsewhere, as the cost will be similar or higher.
Investors can also increase the rent if they have provided a house with quality appliances, fresh fittings, and added extras. Tenants expect to pay more for these things, so raising the rent is an easy way to increase rental returns.
Moreover, keeping track of your outgoings is a crucial part of managing your finances as a landlord. This practice also identifies opportunities for cost reduction, thereby improving rental yield. Mortgage rates, for example, are often changing, and so it is important to check comparison sites that can help you find the best deals.
11. Improve security and safety standards
Tenants are more inclined to pay a premium for a safer home. For this reason, consider adding some extra security features to make the property safe.
Install tamper-proof screen doors and locks along with a Smart Home System that offers 24/7 security monitoring. Keep entrances clear by removing any obstructions, and ensure there’s ample lighting around the property, including on the front porch and parking spaces.
Tenants residing in a secure home with robust safety features may be eligible for discounts on their contents insurance, which can justify a slight increase in rent to boost your rental yield.
12. Go green
Embracing sustainable upgrades can further increase your property's value and appeal. With more tenants seeking eco-friendly living, features such as solar panels can be a strong drawcard.
Not only do solar panels help tenants reduce electricity costs and live more sustainably, but they also provide landlords with an opportunity to charge slightly higher rent and improve long-term rental yields. Additionally, solar installations can add significant value to the property when it is time to sell.
13. Ensure compliance with current regulations
A fundamental responsibility of a landlord is to remain current with all relevant rental laws and regulations within their state. These laws change regularly, and failing to comply with these changes can be costly. Maintaining good practice and tending to the upkeep of your rental property results in long-term tenancies and greater interest from potential renters.
14. Assess your outgoings
Keeping track of your outgoings is an important part of managing your finances as a landlord. It’s also a good way to find opportunities to cut costs and improve your rental yield.
15. Minimise vacancy
Extended vacancy periods can significantly reduce your rental yield, so proactive planning is essential. Begin by communicating with current tenants well in advance of their lease expiry to ascertain their future plans.
This gives you ample time to market the property and secure new tenants, ensuring a seamless transition and minimising income loss. In some cases, slightly adjusting the rental price may help fill vacancies faster and prevent prolonged downtime.
16. Regularly review the rental market
It’s important to stay informed about the rental market in order to maintain or increase rental yield. Factors such as a new school or medical centre being built near your property could dramatically increase rent prices. One of the best ways to keep your rent sustainable is to know how it compares to the rest of the market and to ensure that it is competitive with comparable properties. You can do a gross yield calculation and compare it to the rental yields in your suburb. Multiply the average rental yield of comparable properties by the estimated value of your property and you will get an approximate figure of the annual rent you should be getting.
17. Hire a professional property manager
Finally, an LJ Hooker Property Manager can prove to be a huge asset in ensuring increased rental returns. They can serve as a significant source of knowledge and insights for managing your investment property, as well as for attracting the right tenants.
From advising what changes need to be made to outlining how to go about these changes, property managers are vital to maximising returns. Not only would an LJ Hooker Property Manager be happy to discuss value-adding features with investors, but they also possess the knowledge to support their recommendations.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
