Are you thinking about building an investment property or in the process of building an investment property?
After renting out hundreds of properties here at Rent Choice, we’ve learned that a few smart calls in the planning phase can make a big difference when it comes time to finding tenants. In this article, you’ll discover exactly what aspects to consider when building an investment property to ensure you have tenants banging down the door.
Who’s renting where and how much
We all know that in the property business, location is extremely important, but simply looking at the area sales and rental data should only be the tip of your research iceberg.
How many, if any?
First on your research list should be an in-depth look at rental supply and the makeup of that supply in your proposed suburb. Just keeping track of how many rentals are on the market over time will tell an informative story, with higher supply translating to higher competition and lower prices. If the area has more owner occupied properties with a lower rental supply, prices will be higher. Looking at realestate.com.au and rent.com.au for the number of properties listed in a suburb can provide great clues.
You should also become an authority in the areas I have listed below, not just for your target suburb, but for surrounding suburbs too.
- What are the different price brackets
- Supply in each price bracket
- Age of the properties
- State of the properties
- Proximity to public transport, schools, parks, shops
You will then have a fantastic snapshot of your target area and surrounding suburbs, which will go a long way toward informing whether you should build your investment property in that location.
It’s What’s On The Inside
Now that you have a much better idea of where to build, let’s focus on the emotional aspect of the decision; the inside of the house itself.
When researching your target suburb and the surrounding suburbs, keep a separate spreadsheet column dedicated to what we’ll loosely term as ‘extras’. Extras refer to amenities such as air-conditioning, dishwasher, security screens, walk-in robes etc.
Research the answer to questions like; what extras are most common in your suburb? What extras do people expect? Is there an opportunity to provide an extra that may help your property stand out in your price bracket? The number of bedrooms and the square meterage are going to get people looking, but it’s the extras that will get ink on the dotted line!
As an example, if you are looking to stand out in a competitive Perth suburb, here are some of the extras that I have seen excite potential tenants;
- Double vanities
- 900 mm appliances
- Theatres with doors to enclose as a multi-purpose room
- Outdoor entertaining area
- Something that provides the ‘wow’ factor!
Lay It All Out – Floor Plan & Finishes
Don’t just make sure you’ve included all the modern extras that tenants are looking for, check the floor plan/lay out of the property. Make sure you are keeping up with trends. For example, the formal lounge and dining areas are rarely needed whereas an outdoor alfresco area would be expected. Refrain from adding bright feature walls and fun wallpaper to distract from cheap finishes. Unfortunately, this is not going to help when it comes to time to lease the property.
Shift Into Neutral – Colour Scheme
When it comes to colour scheme, keep it neutral. Not only is white as popular as ever, neutral tones allow potential tenants to better picture their own furniture and belongings. So keep your colour noise down to a minimum and let tenants easily see themselves in your space.
Shout It From The Rooftops – Start Your Marketing Early!
Another simple yet valuable tip to get tenants in and paying rent into your freshly built investment property is to start marketing BEFORE the property is completed. The ideal position is to have the property advertised as early as possible, decreasing costly vacancy time from the get go.
Many investors automatically think that a property must be completely finished before any marketing starts, but this is just not true. If the backyard landscaping isn’t done or the window treatments aren’t on yet, it doesn’t matter! Not only do people love new homes, people understand that these things will be completed in time for them to move in. The meat and potatoes of the property will get people interested including location, size, layout and extras. Incomplete final touches will not put people off!
What Happens After Tenants Move In?
Once the house is finished and a tenant moves in, there are unique requirements of new homes that need to be managed and looked after.
1. Order Council Bins
Yep, gotta have bins.
2. Builder Maintenance Period
After a build is completed, there is a standard Builder Maintenance Period of around four to six months as part of the warranty of the property. During this time, the builder will fix any initial issues with the property, from loose door handles right through to blocked drains and roof leaks. Ensure tenants keep a log of these “teething issues”, and all these items will be addressed under warranty.
MAKE SURE: If there are any issues, make sure that the builder is contacted and not any 3rd party contractors who may void builder warranties.
3. Water Exemption Period
When new gardens are installed, the Water Corporation will provide a water exemption certificate, allowing a period of time for lawns and plants to be watered daily, which is outside of the standard watering days. With this exemption, you will avoid a fine and it is important the end date is noted so that the reticulation can be changed over to the correct watering days at this point. The water bill during the establishment of the new lawn is much higher than a regular bill, so owners need to be made aware of an expectation to contribute to this.
So remember, when building and investment property, remember our Rent Choice Tips.
- Who’s Renting Where & How Much – Do your research
- It’s What’s On The Inside – Extras, Floor Plan, Finishes and Colour Scheme
- Shout It From The Rooftops – Start Marketing Early
- What Happens After Tenants Move In? – Management & Exemption Periods
Thank you for reading and if you are thinking about, or in the process of, building an investment property, call us at here at Rent Choice for a rental experts help to ensure you build a hot rental property – 9435 3915 or send me an email direct firstname.lastname@example.org.