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Jan 11, 2023
Should you increase the rent for your tenants in 2023?
Perth experienced excellent rental value growth in 2022 of around 9.1 per cent. This was thanks to vacancy rates sitting at record lows. If you are a landlord/investor and you have had tenants in your property for some time, you may be wondering if it’s possible to increase the rent you charge your tenants in 2023. A few factors will influence your decision and there are some things to keep in mind before you go ahead with a rent increase. Answer the following questions then contact your property manager for some more specific information: Has your tenants’ rental agreement expired? In Western Australia, rent can only be increased during the fixed term of a rental agreement if the fine print stipulates the amount of the increase or the method of calculating the increase. It won’t be possible to increase the rent if your tenants are still under an agreement with you and there is no clause about changing the price they pay. However, once the contract has expired, you will be able to review and increase the rent. Speak to your property manager about the status of your rental agreement/s so you can start planning a change. When did you last raise the rent? As shared by commercewa.com.au, “Where a tenancy is periodic (no predetermined finish date) rent increases can occur at six-monthly intervals (but no sooner).” If your tenants started paying more rent less than six months ago, you will have to wait before you can make another adjustment. Have you given the tenant notice in writing? Collaborate with your property manager to share a Notice to Tenant of Rent Increase (Form 10) and give your tenant 60 days’ notice about the change. The form should include details of the amount of the increase and the day it will take effect. Is the increase ‘reasonable’? Your tenant may have grounds to claim the rent increase is unreasonable if the change is drastic. Work with your property manager to define what is reasonable before you try to raise the rent. How much are other investors charging for properties in your area? Knowing current market conditions will help you decide how much you can raise the rent by. Again, your property manager is the best source of information. They can tell you what homes of a similar size and condition are leasing for in the streets around your investment property. What kind of relationship do you have with your tenants? Sometimes a bird in the hand is better than two in the bush. If your tenants have been reliable and have cared for the property like it is their own, don’t raise the rent in a way that could result in them moving out. When you raise the rent, you do risk losing your tenant. As a result, you will need to cover the cost of finding new ones, which may offset any financial gains. If a change is unavoidable, it all comes down to communication and reasonable increases, which your property manager can help with. On the other hand, if you don’t feel your tenants are holding up their side of the ‘bargain’, raising the rent can be a strategy to encourage them to move on. As mentioned above, tread carefully so you don’t get pushback and claims of unreasonable behaviour. At the end of the day, your investment property is a strategy to grow your wealth. If it has been a while since you last increased the rent and your mortgage has increased due to higher interest rates, a rent increase may be the right move for you. It is not always an easy decision to make so contact D Residential for personalised advice today.
Dec 16, 2022
Perth Property Roundup for 2022
2022 was an interesting year for property prices, particularly in Perth. We started the year with the ‘long lock-in’, with closed borders and many people anxious to see their families. However, despite the strict rules, COVID saw many people relocate to Perth or come home because of the relative safety and freedom the state offered. This resulted in property prices bucking the national trend in many postcodes. What happened to Perth property prices in 2022? On the east coast, average property prices took a tumble over the last twelve months. In the west, we have had much better results, with CoreLogic recently reporting that Perth house prices are yet to see a reversal in the same way as their eastern counterparts. To break down some recent numbers: Average drops for Perth were far less significant than for other capital cities (e.g. Perth experienced a 0.4 per cent drop for the September quarter, as compared to a 6.1 per cent drop in Sydney) Perth dwellings increased in YOY value by 4.1 per cent Perth homes spend an average of 20 days on the market, which is low in comparison to other capital cities Perth’s median rent price held steady during 2022, remaining at around $500 per week. REIWA CEO Cath Hart attributed Perth’s strong property market performance to the following: WA’s strong economy and finances Perth remaining the most affordable capital city in Australia No indicators that house prices will fall drastically any time soon. According to the REIWA, Perth’s best performers at the end of 2022 were Bentley (up 3.1 per cent to $500,000), Subiaco (up 2.1 per cent to $1,675,000), Bayswater (up 2.1 per cent to $720,000), Dawesville (up 2.0 per cent to $520,000) and Falcon (up 1.9 per cent to $453,500). Some of the Perth suburbs where we manage properties also delivered excellent results for investors in 2022. These include: Leederville – up 16.8% Mount Hawthorn – up 22.5% Mount Lawley – up 9.4% Glendalough – up 16.5% Joondanna – up 0.7% These figures reflect YOY increases, compared to November 2021. When it comes to rental properties, vacancy is sitting at a record lows of under one per cent. This means investors and those who are planning to invest can have confidence about generating strong yield from their properties. The forecast for 2023 With interest rates rising and some people set to experience mortgage stress in 2023, the fate of the Perth property market is difficult to predict. However, the general forecast is that the Perth market will continue to hold strong, partially thanks to positive interstate and overseas migration. One forecaster wrote recently in The Property Tribune that “a rise in house prices of 4% in 2024/25 is expected to see the median house price reach $679,000 in June 2025.” With the job market expected to remain robust, lower than usual levels of stock on the market and Perth being priced as one of the most competitive markets in the country, the outlook for property is a positive forecast over the next twelve months. Planning to invest? While there is an indication of a positive future for homebuyers and investors in Perth, if you do plan to invest you need a clear strategy as well as good support. An investment journey can go sour if you don’t have the right tenants and if the property falls into disrepair – so contact D Residential to help you achieve the best results tailored to you. Need a property manager in 2023? Contact D Residential today.
Nov 4, 2022
Is now the right time to invest in Perth?
What a difference a couple of years makes. There is no denying the Perth property market has been a rollercoaster the past few decades but demand for rental properties continues to grow. With the current unpredictability of national economic conditions, many investors are wondering if now is a good time to purchase property in Perth. Here are some of the reasons why we believe it definitely is: Post-pandemic population growth While prices in the eastern states have fallen, Perth seems to be shifting in a different direction post-pandemic. As reported by Yahoo! Finance, this is partly because COVID-19 had a positive effect on Perth’s population growth, with many former residents returning home from overseas and Australians from other states choosing to relocate to WA when lockdowns were at their peak. According to the Y! Finance article, “Perth experienced the highest positive net migration percentage trend of any capital city over the past two-and-a-half years, surging from 37 per cent in January 2020 to a high of 149 per cent in August 2022. Perth also accounted for a fifth of inbound moving enquiries for capital cities in August 2022, and remained on an upward trajectory.” The population of greater Perth currently stands at 2,093,000. This is forecast to grow to 2.9 million by 2031. This larger population will need somewhere to live. If you have the capacity to buy a Perth investment property, you have the potential to reap positive rewards. Steady prices Perth’s property market has been relatively stable despite several interest rate rises, especially when compared to other capital cities. For example, Sydney house prices dropped by 1.3 per cent in October 2022. Overall, Sydney home values are down by 10.2 per cent since January. In Perth, the property price change in October was only 0.2 per cent. If you look at annual figures, Perth property prices have actually risen by 4 per cent. While certain pockets in Perth are dropping slightly, they tend to be at the higher end of the price spectrum. There are still growth areas, particularly in postcodes that offer ‘lifestyle’ appeal and give buyers value for money. According to BrokerNews, new listings in Perth are down by 7.1% and choice remains limited for buyers. This will help prices to hold strong. Rental demand When you buy in Perth as an investor, you get more for your money than in other capital cities. You also have the opportunity to generate decent rental yield, which will help cover the cost of your investment. In Perth right now, the median rent price sits at $500 per week. As reported in the Property Tribune, the Real Estate Institute of Western Australia (REIWA) is actually calling for more property investors to help provide housing. Rental vacancy is currently sitting at just 0.4 per cent, which means anyone buying a Perth investment property has the potential to generate excellent financial returns and choose quality tenants with great incomes. Favourable conditions Finally, the recent Federal Budget didn’t announce any new taxes or capital gains penalties for property investors. While incentives were focused on helping beginner and lower-income buyers to enter the market, the lack of change around investing means you can do your forecasting with confidence for the time being. Don’t forget about your strategy Investing with the help of a supportive mortgage broker and real estate agent is an excellent idea but you also need to take care of the property while you own it. For help ensuring your Perth investment property maintains its value and doesn’t take up too much of your time, speak to D Residential today. We’re a proactive property management agency in Perth. Contact us to find out more.
Sep 22, 2022
How interest rate rises create opportunities for WA investors
Yes, rising interest rates can mean opportunities for Perth property investors. After near-unprecedented lows, rates in Australia have jumped several times in a row, going from a cash rate of 0.10% to 2.35% in September, with more rises forecast to follow. The cost of borrowing money is rising and banks and lenders have changed their variable interest rates accordingly. This is forecast to swing the property pendulum in Perth to a buyer’s market but the change can mean good news for investors on a number of levels. Take a look at the silver lining that comes from interest rate rises and some tips to help you stay ahead financially. A buyer’s market When the property cycle favours buyers, there are more homes on the market and fewer people who have the budget to pay a premium for them. For Perth property investors, this presents the opportunity to make a strategic purchase. The goal of an investment property is to see it rise in value, usually over the long term. If a unit or home can be purchased at a competitive price, there is more potential to earn strong returns. As Perth Now recently reported, Perth’s property market is currently defying the odds with house prices up 0.07 per cent in August. While it’s hard to predict the future, this gives an indication that the city is still an excellent place to invest. Anyone who has been in the property market for a long time will tell you to ‘zig when others are zagging’. When it’s a buyers market, it is because people are nervous or holding back and choosing not to invest in property. This gives the people who do go ahead the benefit of less competition and more investment properties to choose from. There is also more flexibility to negotiate when it comes to contracts and settlement terms. Stronger rental returns As mentioned, when interest rates force the market to slow down, fewer people invest in homes. The result of this is fewer investment properties on the market. This comes down to the basic economic equation of supply and demand; the fewer homes available for rent, the more landlords can charge for them (within reason of course). In August, Perth rental vacancy rates sat at 0.8%. As explained on REIWA.com, typically, a vacancy rate between 2.5 and 3.5 per cent represents a balanced market. The benefit to landlords in a tight rental market is good rental yield, meaning the cost of holding an investment property will be lower. Rental yields have increased by close to three per cent in Perth recently. If you already own an investment property and haven’t had a discussion with your property manager about adjusting the rent you charge, now is the time to do so. Before you invest in property in Perth, work with the right advisors When interest rates increase, savvy investors rely on the support of a few different professionals. Firstly, a tax accountant can ensure you claim the maximum deductions as a property investor. This won’t impact the money you spend on your investment property over the course of the year but it can ensure you pay less tax when the end of the financial year rolls around. The next person is your mortgage broker. Contact them to check if you are paying too high an interest rate and see what you can do about locking in a lower or fixed amount. This can give you more financial breathing room. Remember, a change in interest rates doesn’t mean you can’t invest. Speak to your broker about your timing and budget; you may find you are placed to take advantage of a buyer’s market and make a purchase. Finally, your Perth property manager is in your corner to help you identify Perth investment opportunities, take excellent care of the properties in your portfolio and show you how to maximise rental yield. Need a Perth property manager with their finger on the pulse? Speak to D Residential today.
Jan 27, 2022
That sweet spot – how to choose the location for your next investment
When choosing our own home, it’s easy to be swayed by emotional decisions such as living close to friends, family and our workplaces, let alone falling in love with the lifestyle created by the home. None of these apply when purchasing your investment, which opens up a lot more scope to choose wisely (head over heart, people!). However, when there is more choice, often there can be some overwhelm. So, I want this blog to guide you through the process so you find a property investment that will maximise your return. Firstly, review the vacancy rates. It’s a good time to be a property owner in Perth (although I’ve said that for a while, the market doesn’t seem to be slowing down!), but it’s important to check where vacancy rates are low which means your property will not be empty for long between tenants. Also, a location with high vacancy rates will be harder to sell in the future. Consider your future tenants who will, like you, be imagining how their lifestyle will look in your property. Make sure there is access to schools (and ideally, good schools with high ranking), shopping centres, hospitals and gyms – the modern conveniences that many of us like to be within a walk or short drive of. Be aware of any future infrastructure or planned development projects which will eventually increase rental value and property value if you were to sell. Things to avoid, like I said, is to keep your heart in check and don’t let your own emotions get involved! Don’t buy a location that suits you or a property that is simply aesthetically appealing to your eye. In fact, take someone trusted with you to home opens who will keep you accountable to your investment goals before you commit, or point out things you might not have considered. Also, focus on the surrounds of the property – keep your eyes out for neighbours (good or bad, they have the potential to make a big difference to your tenant’s happiness!) and the general aesthetics of the street. Also, avoid suburbs with large existing rental pools as you’ll be competing with a lot of other landlords for the same group of renters, which can drop rental value. Beyond your own research, should you be using a local property manager once you have chosen your desired investment location? Well, yes and no! It’s much easier for local property managers to attend home opens on your behalf and of course, they have knowledge of the area which is valuable. However, new technology and programs used by good property managers means we can easily service areas outside of our immediate suburbs. Potential tenants rarely go to a property manager or real estate agent’s office to research their next abode, we know they’re more likely to visit websites such as realestate.com.au, reiwa.com.au and domain.com.au to scour their options. And once you have your investment and a good tenant, advanced property management software allows us to manage properties via an online portal anytime, from anywhere. So, instead of a local property manager – focus on finding the right property manager! One with great references (ideally from someone you know), one you have a great rapport with because you’ll be dealing with them frequently and one who is equally driven to help you achieve your property portfolio dreams. There are some excellent property managers out there, and if I sound like the right match for you, contact me on 0402 888 550 to discuss your options. I believe location stands as one of the most crucial considerations before buying a property and I can’t wait to help you find the perfect place for your investment.
Apr 21, 2021
How to make the most of Perth’s property market boom
With so many other countries battling high COVID-19 cases, I’ve never felt luckier to live in our isolated city. Perth beaches, warm weather and smaller population have always made me happy to call it my hometown but now we have added reason to feel appreciative. It seems I’m not the only one feeling this way with people flooding home from living abroad (and even interstate), which means our real estate market is booming. For those selling their investment properties, it has been an amazing time. Personally, I sold an investment property at first home open at asking price when 12 months ago, we had no bites at all. How the market has changed! However, the flipside to this has been our rental market has reached crisis levels. The sale of many investments means tenants have been moved out of their rentals or have been asked to pay higher rent to match the very competitive market rates. Ouch! Can you believe the vacancy rate has dropped to below one percent?! If you’re renting, you may feel anxious about what is happening and if you’re an investor, perhaps you’re wondering how to make the most of a booming market while keeping a good relationship with a great tenant. So here are my tips for you to consider as you navigate this tricky time… Maintain a good relationship with your property manager Renters: Now more than ever, you need an industry expert on your team as they will vouch for you when it comes to providing references, they’ll be ahead of the pack of what’s coming onto the market and able to offer advice on appropriate rental prices. Investors: Maintain open communication with your property manager and tenant because at the end of the day, your tenant pays the mortgage and you need to negotiate terms that benefit both parties. Just because the market is hot doesn’t guarantee you a great tenant – so if you have a good one, look after them! Always remember, you might own the property but it is their home. Readjust your financial goals Renters: While prices are high, it might be a good time for renters to consider purchasing your first home to skip the rental market madness and create some security for where you live. Interest rates remain at record lows, so despite property prices being slightly higher there’s some relief on the other side! Buckle down and safe for that deposit… Investors: Maybe it’s time to reconsider your portfolios. The COVID crisis will pass and I think it’s key to receive some good advice on where to from here. Again, a property manager with years of experience will set you up for success long term. It’s a very exciting time to be in the Perth property market and seeing the confidence buyers are displaying, particularly first home buyers and first-time investors. It’s a great position to be in for a property manager to present our clients with an array of applications to choose from, particularly with multiple offers above asking price. If you need assistance with your property or renting the right place, I’d love to help you. Contact me on 0402 888 550 to discuss further.