Despite the cyclical nature of the property market, buying a Perth investment property remains one of the most popular investment strategies around.
When purchasing an investment property, Return on Investment (ROI) is one of the most important factors to consider. Calculating ROI is a simple and effective way of predicting whether your investment property will help or hinder you financially. Whether it’s increasing rental yield or maximising your tax savings, here are just some of the ways to improve the returns on your Perth investment property.
Know your investment strategy
The first question you should be asking yourself when it comes to your investment strategy is how long you plan to hold onto your property for. The time period of your investment plays a huge role in how you will make returns on your investment property. If you are looking at a long-term investment where you buy and hold your property for an extended period of time whilst it increases in value, it’s important to select an investment property with high potential for capital growth. It can be difficult to predict trends in the property market; however, it’s usually a safe bet to buy an investment property in an area with upcoming developments and projects, planned population density increases, and easy (or improving) access to public transport.
Alternatively, you can opt to treat your investment property as a short-term project, which means buying a fixer-upper and renovating it with the objective to sell it soon after. When adopting this strategy, make sure to keep a record of your renovation costs to ensure you can claim depreciation on any capital improvements made.
Improve rental yield through the right renovations
Rental yield refers to your investment property’s rental income as a percentage of the property’s value. There are various ways to increase the rental yield of your investment property, and one of the most popular strategies is to make renovations that increase the appeal of your property to target tenants.
If you are opting for this strategy, it’s important to consider what potential tenants are looking for and what is in demand in your local area. For example, is it a student area or a family area? If you are looking to appeal to students, keep in mind that students may benefit from additional areas such as a study. Alternatively, families will benefit more from renovations that increase the overall functionality of the rental.
For modern renters, in particular, installing appliances such as dishwashers, air conditioning and (for apartment lovers) dryers and washing machines are a surefire way of keeping your investment property competitive.
Maximise tax deductions
Another way of maximising the ROI of your investment property is to make sure you’re savvy with all the tax deductions you may be eligible for. As a property investor, you may be able to claim costs associated with repairs, interest on your home loan, strata fees, and depreciation (to name a few) as tax deductions. By knowing your entitlements come tax time, you can minimise your overall expenses and increase your yearly returns.
Hire a property manager
Lastly, hiring an experienced property manager is essential to maximising the return on your investment property, as a property management team can assist you with everything from marketing your property well to keeping your rental rates competitive. Something as simple as hiring a professional property manager to market your property for its online listing can make all the difference in the world. This can lead to more potential tenants attending your rental viewings, which will in turn improve the likelihood of achieving (or even increasing) your desired rental returns due to increased competition.
When it comes to your property investment, all decisions are important decisions. Speaking to an experienced Perth property management team is a great way to make sure you are doing all you can to maximise the return on your investment property. For more information about our property management services or to find out about available rental properties, contact us on 9314 9888 or send us an email at [email protected].