Are you one of the 23 million Australians who own an investment property?

If yes, are you making the most out of rental property? The whole aim of an investment property is to give you returns. We bring you simple tips to get your property working for you, in more ways than one!

How to maximize returns on an investment property

Buy it right

Don’t just buy an investment property anywhere. Research the market well and choose an area with high capital growth. Also keep in mind the following factors:

  1. Proximity to schools, daycare and public transportation.
  2. Rental yield of similar properties in the areas.
  3. Vacancy rate in the area. Higher vacancy rate may indicate that the area is not very popular with tenants or buyers and may not be a good investment idea.
  4. Talk to the local authorities about developmental plans for the area as they could significantly affect the future of your property.
  5. Keep in mind the old adage and don’t put all your eggs in one basket – invest in equity to diversify the risk as property prices can fluctuate.

Choose a property that is suitable for a couple, singles or even a family. This increases your market for tenants as well as buyers.

Keep in touch with the market

If your property is 15-20 years old, of course it calls for a major overhaul to keep it up to the expectations of the current users. A less desirable property will attract fewer tenants who would offer lower rents.

To avoid this, revisit your property, fittings and fixtures every 2-3 years to see if things are in line with the market trends.

It is a good idea to hire a property manager for the upkeep and maintenance of the property. The fee for a property manager is tax deductible. However, if you choose to manage your property yourself, do not forget to take out landlord’s insurance to protect yourself from the tenants acting awry.

Renovate and fix

An offshoot from the above, if your property is not very old but you see signs of damage such as taps dripping, seepage and paint wearing off, fix it now to restore its appeal!

However, if your property is more than 15-20 years old, it will need some work to keep it trendy and tenant friendly. Make some common sense modifications to modernise the home or seek help from a professional renovator, depending on your budget. Remember:

  1. Only renovate if it adds to the value of your property.
  2. Only spend on what is required, as you would not be living in the house.
  3. If possible, get the insulation fixed and windows changed to save on heating costs.
  4. Simply renovating the kitchen or adding a bathroom or an outdoor entertainment area can make a big difference.

Read our blog on home renovations for more information.

Make it tenant worthy/Enhance the ‘looks’ and ‘worth’ for potential buyers

You don’t have to spend thousands to make your property appealing. Making some practical additions can win the hearts of your potential tenants or buyers:

  1. Keep the décor chic by going for neutral shades for your upholstery and linen.
  2. Make the living room warm with a bright rug and some artwork. Freshly cut flowers would obviously add to the charm.
  3. Don’t forget to mow the lawn and maintain your plants. A small seating area outdoors with nice cushions and potted plants can be a big plus point.
  4. Ensure the house is bright and airy by keeping windows and blinds open during home inspections, unless there is a stain to hide (maybe opening half a curtain could help).
  5. Don’t fall for old tricks such as baking a cake to make the house smell good; a mild room freshener is good enough.

Tax returns

Earning rent or capital growth is not the only way to earn returns on your investment property. Claiming costs against taxable income can save you many precious dollars.

  1. Get a depreciation schedule made by a building surveyor to claim your depreciation costs. While deductions are allowed on fittings as fixtures as plants, depreciation at a rate of 2.5% to 4% can be claimed for capital works (undertaken after the year 1987).
  1. If you are planning to sell the property, you can get 50% rebate on capital gains tax by holding the asset for more than 12 months.
  1. Prepaying your tax can also get you tax deductions. Especially if you think you are going to fall in a lower tax bracket in the subsequent year, prepay your interest now to claim deductions at a higher rate.

Investing in a property can build your wealth significantly if you choose the right property. HashChing simplifies your life by simplifying your home loan and helps you own your home sooner. Check out our current deals for investor loans and our verified partner mortgage broker will help you in getting you a negotiated home loan deal at no cost to you.


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