In a recent statement Nigel Jeffries, head of Trade Me Property, noted that investors – particularly in Auckland – are pursuing better rental yields in the face of surging house prices. This brings up an interesting question: How do you maximise profits, attract tenants and fill vacancies all at the same time?
More and more people across the country choose to build their wealth through residential property investment – but it can be a challenge when you are new to the property ladder. Anyone who has managed a rental for any length of time knows that rentals can be financially rewarding – it's just a matter of getting the most from your property.
Here are some tips that could help your rental on the road to financial success.
Get great advice
It's extremely important to get expert investment advice before you commit to a rental property. Think about your investment strategy – are you aiming for long term capital gain or short term yield? High house prices can undermine rental yields, but might offer opportunities for great growth in capital gains. House price growth in New Zealand is showing no sign of abating, so having a clear set of investment goals is important.
Authorised Financial Advisers like us at Goodlife can help you formulate realistic goals about what you want to achieve with your investment, advise you on the risks and benefits of rental investment based on your unique situation and reduce the risk of overcapitalising on a property. With this advice in your back pocket, you will be better equipped to take on the investment market.
Set the right rent
Once you have you strategy sorted, you can start to think about the property. With house prices rising, figuring out what level of rent to charge can be tricky. Setting the right prices can attract more tenants and fill vacancies quickly, which is good for the long term health of your investment.
Maximising profits is the general end goal, but you should also look closely at market conditions when setting the weekly rental rate. Do your research – investigate the level of demand in certain areas. This could cover a number of factors, from the location to size and features, but is a useful starting point. Properties that are maintained well generally warrant a higher rent price and are more attractive to prospective tenants – and the less you spend on maintenance, the better!
Aside from consulting local real estate agents, the Real Estate Institute of New Zealand is a good source of rental information and regularly releases pricing statistics. Keep an eye on advertisers, like Trade Me, that put useful data each month. These are great resources for determining the investment potential of a region or city.
Here's to your financial independence!
Daniel Carney
Authorised Financial Adviser / Investment Property Expert
Contact us now!
0508 GOODLIFE
info@goodlifeadvice.co.nz