Top 10 Simple Ideas To Create Big Rental Returns

Top 10 Simple Ideas To Create Big Rental Returns

Every investor who plans to purchase a property for rental purposes has a goal: to generate cash flow from rents and increase the value of their investments over time.

Here are our top ten ideas on how you can do some simple renovations to add maximum value to your investment.

Any of these renovation ideas can be done by yourself or a handyman, saving you from additional expenses.

1. Add an ensuite to two bedrooms in a 3-bedroom house

If you own a 3 bedroom property such as terrace houses and old apartment blocks with only 1 bathroom, adding an ensuite to one of the bedrooms can increase your rental yields by $100 or more per week. Property with an ensuite is always in demand.

The cost of the renovation should be between $5000 and $8000. An increase in rental yield will be immediately available with this investment paying for itself in less than 12 months, not including any increases in rents during this period.

2. Change the kitchen

If your current kitchen is not modern or of low quality, replacing it with a new one will help to increase the value of your property significantly and add rental yields quickly. A quality kitchen costs between $6000 and $10000 and will immediately add an extra $50 – $200 per week or more to existing yields of homes.  Bunnings is a great source of low-cost kitchens and will be significantly cheaper than engaging a cabinet maker.  

3. Install new carpet and repaint the interior of the house.

A good quality carpet for a 3 – 4 bedroom house costs about $1500 – $3000 and will pay for itself within about 6 months depending on increases in rental yields.

New carpet will also make your property look modern and well-maintained, increasing its value. Painting the interior is the least cost-effective way to increase rental yields but still costs only about $1500 and pays for itself in less than 9 months.

4. Add a pergola or open pavilion to your backyard

This is the most expensive renovation on our list, costing between $5000 and $15000. However, it will quickly add another $100 – $200 per week or more to rental yields and increase your property’s resale value significantly.

5. Install a new fence with gates at the front of your house

A standard 6-panel wooden fence costs about $3000, with a wrought iron one costing only a little more. A new fence will increase the value of your property and help to separate tenants’ outdoor activities from those in your backyard.

6. Install a new entry door that will increase security and add value to your property

A good quality, secure front door costs about $1000.

7. Fix or replace broken tiles in the bathroom/kitchen areas of your house

This cost-effective renovation involves changing old cracked tiles with new ones, the modern fresh feel will immediately add $50 or more to weekly rentals.

8. Add a laundry/utility room to your house

Property with a utility area is almost always in demand and this renovation will increase the value of your home by 20% or more. Creating an internal laundry area also means that tenants save on additional costs associated with washing at the laundromat.

9.  Install Air Conditioning/Heating

Depending on where your investment is located,  Add air conditioning and/or heating to your property. Property with excellent insulation and efficient heating systems is always in demand during the winter or summer months, particularly thanks to COVID, tenants that now have greater flexible work arrangements and will appreciate the comfort. 

10. Double Up Your Potential Income

If you have an old garage or shed, convert it into a studio apartment and rent it out separately, if allowed by the council. This is the most profitable renovation on our list. Property with additional units can easily add $150-$300 a week to your tenants’ rents and also increase the value of your property significantly.

Final word: Although this article has listed only the top 10 ideas for renovating your investment property, there are many other small renovation projects you can do to increase

10 Best Brisbane Suburbs For Property Investing

10 Best Brisbane Suburbs For Property Investing

If you’re looking for a rental property in Brisbane, then it’s important to know which suburbs are performing well. This list of the Top Ten Performing Suburbs is based on data from 2021 and will help you decide where to invest your money.

Being aware of how different areas are performing can be an asset when making decisions about real estate.

Morningside

The suburb of Morningside has seen the strongest growth in terms of median rental price as well as a strong increase in population. It’s also one of the most sought-after suburbs to live in, which means it’s very popular with renters and owners alike.

Doolandella

This Suburb is another leading performer in Brisbane’s property rental market. It had a strong growth year-on-year, and the median price for rentals has gone up 40%. If you’re looking to rent or buy here, then now may be your chance as this suburb is going fast!

Milton

This suburb had an extremely strong performance this year, with the median rent increasing by over 15%. It also has a very high population growth rate, which is one of the things that attract renters to it.

Kangaroo Point

One of the most sought-after suburbs for rentals, this neighborhood saw a significant rise in median rent which was close to 11% year-over-year.

East Brisbane

East Brisbane’s current economic performance is steady and it saw an increased number of renters in this area as well as a substantial increase in rental prices. 

Bulimba

Bulimba | 10 Best Brisbane Suburbs For Property Investing | Locate Property

With a median rental price of $800 per week, Bulimba is one of Brisbane’s leading suburbs, and for good reason. It saw strong population growth and increased demand for renters which resulted in the median rent increasing by 13% year on year.

Hamilton

Hamilton is another suburb that had a  strong year in terms of rental performance with the median rent increasing by over 11%. It also saw a significant increase in population.

Wooloowin

Wooloowin is one of Brisbane’s most sought-after suburbs for renters. It had an increase of 11% in median rent and a population growth rate that was close to 18%.

Northgate

Northgate | 10 Best Brisbane Suburbs For Property Investing | Locate Property

\Northgate is a very popular suburb among renters, with plenty of demand for properties and the median rent increasing by close to 11%. The population also increased substantially year-over-year.

Seven Hills

Seven Hills was one of the neighborhoods that saw an increase in median rent prices, and it is also a neighborhood where there has been significant growth.

What Exactly Is A Property Cycle?

What Exactly Is A Property Cycle?

Most people are familiar with the term Property Cycle, but not many know exactly what it means. Property cycles have a long history, and it is important to understand them if you plan on investing in the market. Property prices are cyclical and will always follow an up & down patterns over time. Property cycles normally last about 10 years but this can differ depending on a range of factors.

Property cycles are controlled by two competing factors:

  • Property demand (wanting, needing, and affordability of property)
  • Property supply (what is available to purchase in the market)

If Demand exceeds Property Supply, property prices will generally go up. If the property supply exceeds property demand, then property prices will generally go down whether that be for sale and/or rent.

But what causes the prices to fluctuate?

We have consistent growth in population and we are of the few countries that have been recession-free for some time now. But this won’t continue forever.

Some of the other factors that may affect the property cycle are:

  • Unemployment (amount of people looking for work)
  • The economy and currency markets (how the government manages its debt & interest rates)
  • Property affordability (what can you get for your money)  – Property Supply & Property Demand.

As people start to buy property, like at the time of writing this article, the value of a property starts to rise. This is the effect of limited supply with increasing demand.

We have COVID to thank for the current upward surge we are experiencing right now.

At the same time, Developers, Builders, and Home Owners will start to increase stock to the market to capitalise on this sudden increase, which in time will lead to an oversupply, which in turn results in a slump in property prices and rent reductions.

What Are The Costs of Property Investing?

What Are The Costs of Property Investing?

Whilst investing in property is a popular and successful way to build wealth for you and your family, it’s a smart decision to be prepared for any potential surprises that may arise as a result of that investment. If not managed correctly accrued expenses can build quickly.

Whilst you are working out which upfront and ongoing costs will apply to your investment, talking to a property-specific accountant about what might be tax-deductible is always a good idea before signing on the dotted line. 

Some of these items may be:

  • Purchase costs
  • Loan establishment fees
  • Mortgage insurance
  • Purchase of whitegoods or appliances
  • Utility connections
  • Stamp duty
  • Conveyancing and legal fees
  • Interest on the loan
  • Building and landlord insurance
  • Strata fees
  • Land tax
  • Council Rates
  • All property management fees
  • Property maintenance costs
  • Accountancy fees

It’s important to do your research. Talk to the Current or past Property Management firm and get copies of the Rates Notices, Body Corporate and understand the local area where you are investing. A little research now could save you thousands down the road.

Top 10 Suburb Features To Look For When Investing In Property

Top 10 Suburb Features To Look For When Investing In Property

Picking the right suburb for your investment, can be the difference between thousands of dollars in profit. Check out our Top 10 Suburb Features to look out for when you’re investing in property.

1). Character Suburbs

Big Trees, wide streets. Heritage neighbourhood and Period architecture. Real Estate “character” suburbs usually increases in value more rapidly than the newer “clinical” suburbs that are developed, often in outer rim locations.

These locations offer something different and unique to the traditional ‘4 walls & a roof’.

2). Close to Public Transport

Public transport is essential for both locals and investors alike. Public Transport is also one of the first indicators of population growth in an area, so it’s essential that your suburb has easy access to the bus, train and other form of transport. Especially in this COVID climate, where we see more and more flexible work from home arrangements.

3). Close to quality sort after Schools

The better the school, the higher the demand.

Real estate prices are driven by the excellent education you can get in an area. This is why Real Estate agents emphasise this when listing a property for sale or rent. In addition to the demand of quality schools driving up residential real estate prices, it also illustrates increased population growth as more families move into an area where the good schools are located.

4). Low Crime Rate

Real estate prices are often driven by the crime rate. If a suburb has a high crime rate, then investors and homebuyers will be less likely to invest in that area. Since Real Estate is all about location, it’s important you pick one where your tenants can feel safe.

5). Close Proximity to the CBD

Real Estate prices often climb the highest if they are located within a 10 km radius of the CBD. Real Estate agents keep this in mind when listing a property for rent or sale. This is why Real Estate agents focus on the proximity to the CBD, as they know it’s one of the biggest factors that will increase property prices.

6). Community Features & Amenities

Community Features & Amenities | Top 10 Suburb Features To Look For When Investing In Property | Locate Property

Proximity to community features such as quality coffee shops, bars, shopping centers will help drive the demand of the neighbourhood. Keep an eye on the activity of new and exciting options opening in that area. “The Buzz” or “Hype” for an area will attract new money, new buyers and is a great indication for future population growth.

7). Proximity To Major Infrastructure

It’s important to be close to, but not “next” to, transport hubs, key freeways/motorways, major medical facilities, and hospitals.

8). Gentrification

Keep a look out for areas on the brink of gentrification, or at least those in the process of improving their infrastructure. Getting the balance and timing right is key, so spend some time in the area and do your research. Don’t be afraid to invest in a good street location with the knowledge that some simple, low-key renovations strategies could amplify the properties value.

9) Public Parks, Pools & Play Areas

Public Parks, Pools & Play Areas | Top 10 Suburb Features To Look For When Investing In Property | Locate Property

Let’s face it, the allotments are getting smaller and smaller, and providing good facilities for the kids to run a muck can be a godsend on the weekend. This is quite a heavily sort after feature when buyers come through the open homes, so investigate just how close these facilities are to the investment.

10) The “IT” Suburbs.

Activity builds activity.

You often see plenty of splitter lots, renovations, investments, and developers taking an interest in a suburb if the suburb is now talked about around town. Find the bargain in this location. Worse house, best street type situation, and you’ll always be onto a winner.

Two Ways to Structure an Investment Property

Two Ways to Structure an Investment Property

Option 1: Positive Cash Flow Property

Structuring An Investment Property | Locate Property

Most Real Estate investors ideally try and target this kind type of structure for their investment property. Especially with the interest rates being at an all-time low. A historic low in fact. The idea is to achieve more rent from the property than all of the expenses to hold and operate that investment.

The great thing about a Positive Cashflow Property is that rents can cover expenses, management fees, property taxes, and insurance premiums-leaving you with extra income out of pocket. IE. Positive Cashflow

A Real Estate Investor can have the following when they invest in this type of structure:  1) Tax Benefits 2) Long Term Capital Gains 3) Excess Rental Income 4) Potential Appreciation. WHen this strategy is done right, this will allow for more properties to be added into one’s portfolio in a shorter amount of time.

Option 2: Negative Cash Flow Property

This is the traditional Real Estate Structure or the one that you hear the most when agents or talk about buying Property. This is also referred to as Negative Gearing. These days, most Real Estate Investors do not have this structure when they first start out in Real Estate Investing, but rather prefer to target a positive cash flow property instead due to the low-interest rates.

A Negative Cash Flow Property is when your income does not meet your expenses. In other words, the rent doesn’t cover all the bills/costs.

Positive and Negative Gearing What are they and which one should you aim  for? — Wealth Efficiency

This structure can have additional tax benefits such as the depreciation of the Real Estate Property and is popular amongst investors that are making the most of capital gains. Sydney Properties for example are more likely to be Negative Geared vs a Brisbane Property etc.

The investors in this structure are generally Real Estate Developers who will spend significant amounts of money to improve the Real estate market value. For a negative cash flow investor, their goal is not necessarily to produce a positive cash flow property, but rather it is to obtain a Real estate asset that will appreciate in value.  This Real Estate Investor structure their Real Estate investing for appreciation and gains down the line instead.

In order to do this type of Real Estate Investment correctly, thus protecting your downside risk, you need to be smart about the Real Estate Market that you are investing in.  This strategy is very Real Estate Market dependent, not all Real Estate Markets perform well in these times.

The structure that you choose will depend on your personal set of circumstances in the Real Estate Market, your Real Estate Goals, Real Estate Investment Education, and Real Estate Investment Experience.

Please seek Independent property-specific advice from a trusted professional before investing in property. The Property Market isn’t always up and your personal position dictates your ability to invest now just now but to be held in the event circumstances change.