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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.
Dec 1, 2022
Five top tips on preparing your investment for a new tenant
Whether you have a new investment property or a lease coming to an end, preparing your property to look fresh and enticing for your new tenant is critical for setting up a positive tenant/owner relationship. At D Residential Property Management, we manage the below updates for our clients and their investment properties in Perth, and often these updates increase the value of their rental properties. We also make the transition from one tenant to the next completely seamless. Check the basics Go through the property with a fine-tooth comb and ensure everything works. Check every light fitting (fresh globes are a nice touch), turn on and off each tap, test any appliances and flush the toilets. As we come into Perth’s summer with record temperatures and heat waves promised (see you at the beach!), check the air-conditioning and overhead fans function perfectly. Safe and sound Next check is the doors and windows because your new tenant should feel secure in their home. Ensure each lock works, windows both open and shut with ease, and security systems still function well. Quick refresh If your previous tenant lived in your investment property for a long time, consider refreshing its appearance in some simple ways. A neutral coat of paint for the walls, polishing floorboards, and new light fixtures or curtains/blinds can brighten an older home beautifully. If anything looks tired, now is the perfect time to update your investment. Invest in a professional clean It’s a lot more expensive than a regular clean, but good property managers recommend investing in a deep clean in between tenants. It goes beyond a vacuum and mop – these cleans are an all-day affair, including ovens, range hoods, kitchen cupboards (including above them where grease collects), sugar soap scrub for the walls, where the fridge was… and that’s just the kitchen. Providing this for your client will ideally encourage them to keep it to this high standard, too. Choose a good property manager Make your property investment experience infinitely easier with the help of a good property management company like D Residential Group in Perth. All the above tasks can be handled by us, plus tenant screening and future tasks such as maintenance, inspections, and administration. Contact us to discuss how we can help you further.
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.
Oct 19, 2022
What do you know about rental yield?
Owning an investment property is an excellent way to build your financial security. For example, average house prices in Perth have risen by more than 10 per cent in some suburbs over the last twelve months. While the property market always follows a natural ebb and flow, it’s clear this strategy makes sense if you are able to invest for the long term. Investing offers a lot of potential for strong financial returns but there are important factors to consider before you commit to making a purchase. One of these factors is rental yield, which can influence the financial commitments you make as part of your investment journey. Take a look at what rental yield means and why it is important. The investment property ‘expense gap’ When you buy an investment property, unless you are lucky enough to pay cash for it, you can’t avoid taking out or adding to your mortgage. For simplicity’s sake, let’s say you own an investment property worth $600,000, you owe $500,000 on the mortgage and you have repayments of around $2,500 per month. To help cover the cost of the loan, you will probably need a tenant to lease the home and pay rent. The money they pay (let’s say it is $400 per week) will go towards some, but likely not all of your loan repayment costs. So you will still have a gap to pay to cover the cost of the mortgage. In addition to this, you have what is referred to as your ‘holding expenses’. These include: The cost of insurance The cost of a property manager Strata fees Council fees Water rates if applicable Maintenance and repair costs As explained by Lendi, your rental yield refers to the “profit you generate each year from your investments as a percentage of its value.” Obviously, the higher your rental yield, the less you have to pay in outgoing expenses. This gives you the flexibility of more cash in your pocket or the ability to make higher repayments so you can close the loan off sooner. To calculate your ‘gross rental yield’, for a $600,000 property with tenants paying $400 per week in rent: You purchased a property for $600,000. The weekly rent on your property is $400. Multiply this figure by 52. 400 x 52 = 20,800 (annual rental income) Gross rental yield = (annual rental income/property value) x100 Gross rental yield= (20,800 / 600,000) x 100 Gross rental yield= 3.46% You also need to use expenses to calculate your ‘net yield’. For example the annual cost of holding your rental property may add up to $3,000 once everything is factored in: Net rental yield = [(Annual rental income – annual expenses) / total property cost] x 100 Net rental yield = [(20,800 – 3000) / 600,000] x 100 Net rental yield = 2.96% Perth average rental yields A particular suburb may seem like a great place to invest in or a home may be appealing to you as an investment property but you’ll need to check the average and potential rental yield as part of your due diligence. For example, Subiaco is a highly sought-after suburb in Perth but recent figures show the average rental yield at 2.6 per cent for houses and 4.6 per cent for apartments. In Scarborough and Willagee, the rental house yield is 3.9 per cent and in Highgate, it is 3.0 per cent. Generally speaking, a rental yield higher than 3 per cent is considered ‘good’ but the higher the percentage, the better because it will minimise your holding costs. With all this being said, rental yields do change over time. If a new rail line opens in a suburb or if a new business hub or hospital is established, the rental yield can quickly change. This is why you need to do some research before you buy. Get advice from your Perth property manager As you can see, buying an investment property requires careful calculation. If you’re thinking about purchasing an investment property, get in touch with a property manager who can assist you in estimating the rental yield and ensure you can afford the associated costs of owning a home. Your property manager will ensure you charge the right price for your investment property and that it is taken care of in a way that reduces holding costs. They can also share advice about whether incoming infrastructure is likely to have an impact on the future rental price of the property. Finally, don’t forget to ask about depreciation and what you can claim as a tax deduction to reduce the overall cost of owning an investment home. Need a reliable, professional Perth property manager? Contact D Residential today.
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.
Sep 7, 2022
Five ways a property manager’s services pay for themselves
If you are planning to invest in property in Perth, you have a lot of decisions to make. One major decision is whether to manage the property yourself or enlist the services of a property manager. Some people look at the fees associated with hiring a property manager and hesitate because they may not realise how a property manager can help save them thousands of dollars (and even more). If you’re on the fence between managing your investment unit/home yourself or enlisting the services of a Perth property manager to do it for you, here are five reasons why having the support of a professional will pay for itself. #1 Property managers minimise vacancy You need tenants to offset the cost of your investment loan. When your tenants leave, your property can sit empty. The longer the property sits empty, the more you are shelling out on mortgage repayments — and unfortunately this can lead to financial stress. Your property manager knows the best strategies for attracting good tenants, matching them with your property and quickly onboarding them. They will help you maximise returns by minimising the time your property sits empty. If your property manager reduces vacancy by two or three weeks, they are already on their way to paying for themselves. #2 Property managers stop small issues from becoming large ones A property professional can spot details you might miss. For example, a small mark on a wall or ceiling could be caused by a leak that is going unnoticed. A large gum tree in the garden has the potential to drop a branch and cause major damage. By conducting regular and thorough inspections, your property manager can ensure you prevent little things from becoming big issues. It could mean the difference between a $1000 bill from the arborist versus tens of thousands of dollars worth of damage to your investment. Proactive property managers pay for themselves by preventing large maintenance and repair expenses. #3 Property managers handle enquiries so you can go about your day The point of an investment property is to grow your long-term wealth, not waste your time. Like the majority of tasks, managing a property requires more attention than you may initially anticipate. If you have a full-time job, you are unlikely to have the headspace or the hours to stop what you are doing so you can speak to your tenants and take care of their concerns. Outsource an expert who is more efficient and knowledgeable so you can focus on making your own living. Spend your day making money… not making phone calls to your tenants. #4 A Perth property manager will keep you away from the Tribunal Managing a property also comes with a set of legal responsibilities. There are so many regulations, and the rules are ever-changing. It can feel like a full-time job to keep track of them all and if you fail to fulfil your obligations your tenants may take action against you so they can claim compensation. A trip to the tribunal to sort out a rental property issue costs so much in terms of time, stress and money. A skilled and experienced Perth property manager will do everything in their power to ensure this never happens. A visit to the tribunal can set you back by tens of thousands of dollars. Invest in an experienced property manager to remove the risk of this happening. #5 Property managers will help you improve the value of your investment Property managers live and breathe investment property, and they consider more than the day-to-day management. A quality Perth property manager understands how important this investment is for your long-term financial stability and will support you on your journey. The real benefit of their service is their proactive approach to help you maintain the value of your property and improve it over time. If your property manager can increase the value of your investment by just a few per cent, they have paid for themselves. And an extra reason… Your property is an investment and there are expenses involved with owning it, from paying council rates and strata fees to paying for fresh paint and carpets every few years. Because of these expenses, there are opportunities for tax deductions. Your property manager will help you track your costs so you can share detailed reports with your accountant and claim what you are entitled to at tax time. Are property managers worth it? Unless you have a lot of free time and hands-on experience in the industry (and often even if you do), the answer is yes. For a very small fee, your property manager will ensure your investment is taken care of by reliable tenants, and help keep it in good condition so you maximise your returns and improve your wealth over time. Need a reliable, professional Perth property manager? Contact D Residential today.
Aug 3, 2022
Are you new around here? Tips for first-time landlords
Firstly, if you’ve just become a new landlord – congratulations on climbing the property ladder! It can be an enjoyable and profitable experience, especially with the right support around you. With rental availability at an all-time low in Perth, it has never been a better time to be in property investment. While it’s exciting, it can also be overwhelming with the amount of administration property management in Perth involves! So, here are some of Diana’s best tips to ease you into landlord life and enjoy the great financial reward that comes with it. Economics over emotions I think the first thing to acknowledge is how different the approach is with your investment property versus your home. When you buy your home, often you fall in love with it and make decisions around renovating or decorating purely based on what you like. An investment property involves leaving your emotions and likes/dislikes at the front door mat – do not let them inside! Every decision you make with a property investment needs to be made rationally and with your financial goals in mind. If you’re struggling to make these calls, there are wonderful property management services in Perth you can engage. Carefully select your tenant It might seem like tenants will knock down your door with the current rental crisis (and they probably will), but selecting the right tenant is so important. A great tenant comes from thorough screening which includes employment checks, previous rental references and national tenancy database checks. Yes, it is a lot of work and why engaging a property manager with time and experience to screen tenants is a smart move. Maintain high standards in your property Ok, we know we said to approach things differently with your investment, but when it comes to maintenance, hold yourself to the same standards you would in your own home. Maintenance fees are inevitable (although unlike with your own home, many are tax deductible!) and fixing things in a timely manner will keep your carefully selected tenant happy. It’s much more expensive to keep changing dissatisfied tenants than paying for a plumber or electrician in for a quick visit. And always remember – it’s your investment, but it’s their home. Invest in a property manager who cares Make the experience a whole lot more fun and far less daunting by engaging a property manager who understands all the ins and outs of Perth property management, and cares about your property and financial goals as much as you do! Diana creates a seamless experience for her clients by ensuring the property is in great shape and managing a mutually beneficial relationship with your tenants. Mount Hawthorn property management is where Diana’s expertise lies, but her properties extend far and wide across Perth. To have a chat about how Diana can assist you with your property, call her on 0402 888 550.