Whether you’re looking to upsize, travel or combat the cost of living, there are plenty of reasons to rent out your home. In fact, renting your property can be a great way to earn a bit of extra cash. But it’s not as simple as finding tenants, signing a lease and handing them the keys. So, if you’re keen to maximise your rental yield, it’s important to make sure you spend some time preparing your home for rent and getting to know the rental process.
Ready to learn more about the rental process? Here are 10 tips to help you create a standout rental property.
1. Determine your rental goals and strategy
First things first, you’ll need to start by defining your goals, which will dictate your rental strategy. For example, are you looking for short-term gains or a long-term investment? Based on these goals, you’ll be better positioned to decide how to set up your rental property.
If you’re looking to maximise your return over the short term, you might want to set your home up as short-stay accommodation, like an Airbnb, or even a holiday rental. That way, you can take advantage of significant returns over holiday periods if your home is located in a high-demand tourist area. Alternatively, long-term goals are typically better suited to long-term rentals that provide consistent rental income over time.
2. Complete a professional market analysis
Before you get into the finer details of renting out your home, it’s important to make sure you have a deep understanding of the rental market in your local area. While it helps to do your own research by looking at market insight reports and other information, it can be worth consulting a local real estate agent who’s familiar with the suburb and surrounding areas.
They should be able to provide insights into rental trends and whether your area experiences demand cycles for rentals. If your suburb goes through periods of high and low rental demand, a local real estate agent will be able to help you time your listing effectively to ensure your home is rented quickly.
The insights uncovered during your market analysis should also drive your pricing strategy. Ultimately, you’ll want to set a rental price that maximises occupancy while staying competitive. A price slightly below the market average may attract long-term, reliable tenants. However, if you’ve been working with a local agent that you’re considering for a rental property manager, they should be able to help you set a competitive rental price for your property.
3. Boost your property’s appeal to maximise rental income
Before your home hits the market, it’s important to prepare your property for rent. You can enhance your property’s appeal by completing minor upgrades, like freshening it up with a lick of neutral paint, modern fixtures or simple landscaping to make it look complete. You might also want to consider investing in security features, like installing locks, security lighting or an alarm system. These types of safety features boost tenant confidence and may justify a higher rent.
4. Understand the tax and financial implications
Landlords should be aware of the tax implications that come with owning an investment property, like declaring rental income and claiming allowable deductions. This is often where investment property strategies, like positive and negative gearing, come into play. To learn more, read our article on the difference between positive and negative gearing.
Tax can be a complex concept to navigate, so it often pays to work with a tax advisor. They’ll be able to help you maximise your deductions and avoid any costly mistakes.
5. Ensure legal compliance to protect your investment
As a landlord, your responsibilities don’t end when you hand over the keys to your investment property. It’s up to you to guarantee the safety of your home and meet state and territory government regulations. Familiarise yourself with fire alarm, pool fencing and lock requirements. Non-compliance can lead to significant fines or tenant disputes. It’s also important to understand the state-specific rules for entering the property for inspections, repairs or emergencies. That said, if your property is being professionally managed, the letting agent should be across the legalities.
Don’t forget to invest in specific landlord insurance to cover property damage, tenant default and potential legal fees.
6. Professional property management: Is it worth it?
When it comes to the management of your rental, you can either take it on as a self-managed rental or engage a professional property management company. If you decide to go the self-managed route, you’ll need to take care of everything yourself, including tenant screening, maintenance requests and rent collection directly.
With a property management company, they’ll take care of the heavy lifting for you. Although, it’ll usually set you back 5-10% of your rental income. That said, you might be able to engage a management company that takes care of specific tasks, helping you to save on management fees.
There are pros and cons to both management approaches, so it’s up to you to decide what works best based on your circumstances. Keen to learn more about how to rent your house privately? Check out our article on self-managing your rental property.
7. Create a standout rental listing
Now it’s time to get your property out there. If you’re working with a property manager, they’ll take care of this for you. Regardless of who’s taking care of the listing, it’s essential to make sure it highlights the property’s unique features, including proximity to transportation, schools, parks or cafes.
It’s important to make sure your home looks attractive to potential tenants, so consider hiring a photographer to capture the property in its best light, ensuring the listing stands out online.
When it comes to the content of the property listing, be sure to use descriptive, enticing language that appeals to your ideal tenant, including all the amenities and lifestyle advantages.
8. Establish a clear tenant screening process
As the applications start rolling in, you or your property manager will begin the screening process. This typically involves completing background checks to verify tenant information, including their employment and rental history. You might even want to consider contacting previous landlords or property managers to confirm the tenant’s rental history and reliability.
In some instances, your tenant might require a guarantor. If this is the case, be sure to confirm the guarantor’s stability and willingness to cover costs if needed.
9. Develop an ongoing property maintenance plan
Just because your tenants have moved into your rental doesn’t mean your responsibilities stop there. You’ll need to stay on top of ongoing maintenance and routine inspections. With this in mind, it often helps to create a seasonal maintenance schedule that covers heating and cooling systems, plumbing and landscaping to help prevent costly issues.
Routine inspections should be performed quarterly or semi-annual to catch minor repairs early and maintain property condition.
When it comes to rentals, repairs often pop up when you least expect it, so it’s also worth setting aside a portion of rental income to cover these costs. By staying on top of unexpected repairs and periodic upgrades, you’ll be able to keep the property competitive.
10. Consider future rental market adjustments
The rental market is constantly changing, so it’s important to review the rent you’re charging annually. Compare current rental prices in your area each year to decide if a rent increase is appropriate.
If you’re taking a long-term approach to your investment property, be sure to stay up-to-date on local infrastructure projects, zoning changes and economic factors that could impact the value of your property.
For landlords, a loyal tenant who cares for your property like it’s their own is priceless. Consider offering small incentives for long-term tenants, like minor upgrades or a frozen rent rate, to reduce vacancy risk and keep them in your property for longer.
Renting your home can be a significant undertaking, but with the right guidance and support, it can be a great way to boost your income. Do you have questions about turning your home into a rental? Get in touch with your local Aussie Broker for a quick chat.