How to increase your rental yield without overcapitalising

Gross yield is the annual rent divided by the property’s value. Net yield takes off the costs of holding it. Both can be improved, and the best strategies lift the rent and the value at the same time.

1. Make sure the rent is right

The simplest gain is often a property that’s quietly under-rented. Review the rent against current comparable evidence, not last year’s figure. In Queensland, rent can only increase once every 12 months per property, so the timing of each review is important.

2. Time your leases

Rental demand changes through the year. Where possible, set lease expiries for the stronger leasing periods in your area. Fewer vacant weeks is a yield improvement in itself.

3. Present the property properly

Professional photos, a clean, well-maintained property and quick responses to enquiries attract more applicants. More applicants means a better tenant at the right rent.

4. Add function, not finishes

The improvements that lift rent most are usually functional. Examples include converting an underused second living area into a bedroom, adding a second bathroom or ensuite, adding air conditioning or improving storage and parking. Expensive finishes rarely pay for themselves in rent.

One of our clients turned a second living space into a fifth bedroom. Their rent went up $110 a week, and the lift in value helped them buy a second property.

5. Sequence the work

Do the work before the lease goes to market, not part way through a tenancy. In our Mitchelton case study, a $100,000 renovation was timed to finish before leasing. The property was appraised at $600 a week and leased at $850.

Avoid overcapitalising

Before any improvement, compare the cost against the expected lift in rent and value. If the numbers don’t work, don’t do it. Our cashflow calculator shows what a higher rent could mean for your cashflow over 10 years.