Ideas to Maximise your Rent Returns

Written by Paul Kounnas | Wednesday, 16 November 2011

Whenever the rental vacancy rate drops below a benchmark of around 3% the rents cycle swings in favour of the property owner.

Nationwide the vacancy rate is now way below that level with some markets almost at crisis point, showing rates of 1.5%.

This remarkable situation has created an opportunity for owners who are now able to make improvements that will not only increase the value of their property but increase the rents, giving both long and short term gains.

And with the building ...

industry relatively quiet there is no shortage of tradesmen ready, willing and able.

But what to do? Where to start?
What improvements will give the best return? Sure, you could go all out and add another bedroom – a surefire way to increase the rental return. But that’s a high cost that will take a while to amortise.

The clever approach is to look at ways to cost effectively increase the desirability and liveability of your property.

A new benchtop in the kitchen, perhaps some splashbacks and cupboard doors, is a good way to start.

Less than $500 will get you a pretty impressive BBQ for an outdoor entertaining area and a verandah extension or even a new deck is not expensive if you approach it in the right way.

Even the bathroom can be given a whole new look for less than $1500 with a vanity and shower. In all of these things the trick is not to shop where you would for your own home, but to shop smart at factory outlets, seconds stores and even via eBay online stores.

Throughout the process, from planning to shopping and installations, don’t lose sight of the fact that you are aiming to make the place desirable.

When you are done, talk to your agent about marketing. Good photos (not a few happy snaps), well thought out copy and the right approach will paint a picture of your rental property that may in itself justify adding another $50 a week to the rent.

Your other consideration with your improvements and your marketing is the target market – aim for young professionals in an upper demographic.

Rich Opportunities Awaiting Investors

Written by Paul Kounnas | Wednesday, 09 November 2011

“A perfect storm” is how some knowledgeable investors are describing the current property market as it goes through a cyclical phase of correction and stabilisation.

I have watched the industry’s highs and lows for many years and recognise that times such as these can provide excellent opportunities for the astute investor.

With prices and interest rates at an affordable level and rental vacancy rates almost at crisis point, the market entry costs are affordable, there are ...

plenty of tenants and all of the experts are predicting rents will continue to rise yearly, possibly for as long as 10 years.

Unfortunately, a lot of people who are interested in buying investment properties don’t act as quickly as they should. They keep putting it off, using the excuse they are looking for the perfect property, or that they are waiting for the market to bottom, and then they regret it.

If you have ever heard anyone say – “I should have bought that back then” – well right now is BACK THEN.

Australia has a national housing shortfall in the order of a quarter of a million properties and that won’t be made up overnight.

The bottom line is that this housing shortage means the rental market will continue to show strong returns for smart investors.

Importantly, there are many motivated vendors who have to sell and in a quiet buyers market that is a rare set of circumstances.

It’s not a case of jumping in to buy the first affordable property that comes along.

Anyone wanting quality, long-term tenants need to buy in the right area and to select exactly the right type of property.

This is where the expertise of our staff comes in. We sit down with our clients, examine the market, look at the demographics of particular areas and the rental returns expected and then help them shortlist the most affordable and desirable properties.

Beware Auctions

Written by Paul Kounnas | Wednesday, 02 November 2011

TV’s Auction programs have a lot to answer for, almost giving the auction process romance and excitement which is a far cry from the truth.

Newspapers too mislead the public with stories about the number of auctions and private sales over a weekend, failing to indicate that the private sales are only those reported and that the numbers are a long way from accurate.

In fact, the Herald Sun on September 17 reported that currently just 18% of Melbourne’s properties for sale are booked to go under the hammer.

There’s ...

a whole raft of reasons why private sales are the most popular way to go and cost is right up there amongst the leaders along with the amount of time a property put to auction is locked in with the one agent.

Committing to selling at auction is committing to outlaying around $5500, and possibly upwards, for the marketing campaign. This is money you have to pay whether your property sells or not.

Buyers’ Agent and author Patrick Bright loves auctions simply because his job is to help purchasers save money.

“I attend many auctions and bid for properties on behalf of my clients. At majority of auctions where we were successful we had money left on the table – that is, we spent less than our authorised limits,” he said.

Nobel Prize Winner for Economics, the late William Vickery, developed a far better alternative to the auction, private sale negotiation using what he termed the Buyers’ Price Declaration.

With the Buyers’ Price Declaration, no competing party is privy to another party’s offer, meaning that each buyer must offer his or her highest price without being influenced by what somebody else may have offered.

Ask your agent about negotiation with a Buyers’ Price Declaration. If he or she still insists on auction, insist upon a price guarantee or look for another agent.

All the marketing and negotiation experts agree that in order to get the best price you must start high. Auctions are the opposite, they start low and it’s for this reason that very few real estate agents sell their own homes at auction.

Investing in the Current Market

Written by Paul Kounnas | Wednesday, 12 October 2011

The combination of years of strong capital growth and the negativity and uncertainty about the world economic turmoil have finally put our property market in a slump.

Property markets are generally driven by the country’s economic fundamentals and market sentiment. Australia’s fundamentals are strong, which means for the long term, property should remain strong but in the short term, market performance will be largely influenced by market sentiment.

Some investors will do well in the current market. In ...

times of market change there are always some investors who do well, while the rest of us become paralysed with indecision and inaction,and sit on the sidelines.

The type of investment strategy that will always be a winner in any market is buying a well located property and adding value to it. Choosing a property with renovation potential or one with development potential gives you the opportunity to add value and improve its capital growth.

If you don’t have any experience with property developments you will need the help and advice of someone who does.

But when it comes to renovations most people think they can do as good a job as anyone. Here are a few tips you may want to follow anyway:

1. Overcapitalizing – do not spend more than you need to, the surrounding houses can influence your resale value.

2. Quality of renovation – the renovation work should be in keeping with the existing building style.

3. Quality of fittings – the use of expensive fixtures and fittings does not automatically mean you will be able to sell for a higher price. What is far more important is quality workmanship and functionality.

4. Current lifestyle – embrace the needs of modern living and offer large functional living areas that allow the indoor living area to naturally flow to the outdoor entertainment area.

5. Plan your renovation carefully – get professional advice and use good tradespeople, not only will they do a better job, but they will also save you time and money.