What should you look for when you want to make sure that your rental property investment will attract tenants? Is it worth demolishing an existing flat to rebuild a new one that’s closer to the city? When it comes to investing in a residential property to rent, location is everything, and more. Here are five crucial factors that can help you increase your ROI (return on investment) for rentals.
What kind of amenities are present in the area? Before starting your property investment project, see if the neighbourhood has movie theatres, shopping centres, restaurants, parks, cafes, gyms, and other recreational spots that will suit and satisfy your tenants’ hobbies, interests, and lifestyle. The more diverse the perks are, the greater your chances of attracting renters from a wider range of demographics.
Furthermore, your tenants may be a family with children, or a couple planning to have kids in the future, so they will need a home that is close to a reputable school. The quality of the school in the area doesn’t only influence how potential renters perceive your property; it can also affect your property investment value.
2. Proximity to Career Opportunities
A place with a booming job market can provide career growth and success for your future tenants, which will make your property more appealing. Aside from the time and the amount of fuel money they can save when their workplace is nearby, your renters will have the security of having a wide array of options when they are seeking to change or find jobs that can give them greater satisfaction.
3. Safety and Security
Having an address where you feel secure and protected is important to many renters. Check the area’s crime statistics before deciding to build a property investment. For accuracy, you can visit the police station or do some research in the public library.
Aside from low crime rates, a safe neighborhood should also have easy access to a hospital for their medical needs and emergencies. Another consideration is the frequency of natural disasters in the area. Calamity-prone locations don’t only turn off potential renters, they can also eat up your income due to large insurance expenses.
4. Prices and Costs
Image: Money Morning Australia
It’s not enough to only know the average price of a rental property investment in the area to survive the competition. If the average amount can’t cover your taxes and expenses, you need to look elsewhere. The sum of your taxes may also vary and fluctuate, so you have to know how much you will be spending for property tax to properly calculate the profit you can make out of the rent you are charging your tenants.
5. Number of Vacancies
Image: State Farm
The number of rental listings in the area can affect your property investment. A suspiciously high rate of vacancy may be a sign of a seasonal cycle, or a location that has changed for the worse. If it is the former, you need to assess if you can handle the seasonal shift in the long run. Vacancy rates also follow the law of supply and demand; the higher the amount of vacancy, the lower you will have to set the rental charge to gain tenants. On the other hand, when there are only a few rental spaces available, you can tweak the price to a higher amount.
Majority of these factors place your renters’ needs and satisfaction first. The happier they will be, the more you can expect your ROI to increase. See the blend of benefits you can offer as a landlord so you can attract and keep your renters. The bottom line: when in doubt, think like your tenants.
When you are ready to build a rental property iBuildNew is here to support you in your decision. If you want to knock down and rebuild, or build a new home on vacant land, make sure you head to ibuildnew.com.au to compare house designs from our member builder. Alternatively, you can call one of our fantastic consultants on 1800 184 284 who will do some of the leg work for you.
If building is not for you, iBuildNew have access to exclusive fixed price investment properties, making the process simple and straight forward. For more information make sure you call our Agency Principal, Rob Puzzolo on 0438 888 885.
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