Getting the best rental return for an area can take a little bit of work on your part as a landlord.
Unless you're very lucky, getting the best rental return on your property is certainly not about buying a property, doing nothing to it, and jacking up the rent every six or twelve months according to the market price.
If you did something like that, you'd only be doing yourself out of good money!
To truly get the best return from your property in any area, it needs to be well maintained, and preferably at least moderately up-to-date in its decor.
Guidelines for maintaining the best rental return
Remember that around 10% of your rental return each year should be set aside for repairs and maintenance. Over time, this should add up to enough to complete the jobs above in the right timeframe.
The fact is, the best rental return will come from tenants who like living in the home you are providing for them. The market rent for a newly renovated property will always be higher than the market rent for a property which is run-down, battered and just plain out of date.
Let's put this in perspective
Over the course of 20 years you can expect to spend approximately $30,000-$40,000 to carry out the maintenance and decorating that I am talking about in the checklist above.
$30,000 (as a loan) costs approximately $5000p/a or just under $50 per week to maintain. So if you were to borrow that kind of money from the bank once every 20 years to perform renovations on your property, you would need to have had your rent go up by at least that in the 20 years you had owned the property for it to be worthwhile.
Now, in 20 years, the average investor would expect the rental return on a similar property to go up by at least twice that amount, and probably to at least double.
A property that has remained completely unrenovated for the same amount of time or longer can - in some instances - see a rental increase (after a full renovation) by between 30-50% on the rent that was being charged just before the renovation.
So, at the minimum, you would be receiving $100 extra per week for your $50 per week extra outlay (if you hadn't saved the 10% for maintenance that I suggested). That, over the following 20 years (x $5000/pa) would mean at least $100,000 extra in your pocket, and probably considerably more!
What's more, you are more likely to get tenants who will want to stay in your property longer, and look after it better, than if you were the kind of landlord who leaves everything to fall apart.
This is because tenants who see a landlord who cares enough to make improvements to a rental property over time are more happy to pay extra rent for the reward of having a nicer place to live in.
Achieving the best rental return for your property does involve spending money regularly to get it. But the rewards you will reap for your extra investment will be much, much higher than happy long-term tenants!