How to Maximise Investment Returns on Your Property in Moreton Bay
Investment properties can be a rewarding venture, but understanding how well they perform annually is important to achieve long-term success. Whether you’re already a landlord in Moreton Bay or considering purchasing a property, knowing how to evaluate and make the most from your investment is important. In this blog, we’ll explore how to calculate your returns, optimise rental income, and ensure your property continues to grow in value.
Calculating Your Investment Returns
When assessing the performance of your investment property, the two most critical factors to consider are your rental yield and return on investment (ROI). While rental yield gives you a snapshot of your property’s income relative to its value, ROI takes a broader view, including rental income, expenses, and property value appreciation.
To calculate your rental yield, use this formula:
Rental Yield (%) = Annual Rental Income/Property Value × 100
For example, if you’re earning $500 per week in rent, your annual income is $26,000. If your property is worth $650,000, your rental yield is:
26,000650,000100 = 4%
A rental yield between 4% and 5% is typical for properties in Moreton Bay, though this can vary depending on the suburb. It’s important to keep an eye on market trends and review your rental yield regularly to ensure it remains competitive.
You should also note that “the higher the yield percentage, the better your return on investment will be (loans.com.au, 2023).
However, ROI considers more than just rental yield. You must also factor in property expenses such as maintenance, insurance, and property management fees. Subtract these costs from your rental income, and add any increase in your property’s value over the year for a comprehensive view of your annual returns.
Optimising Your Returns: It’s More Than Rent Increases
One common misconception is that increasing rent is the fastest way to increase your returns. While rent hikes can help, they need to be done strategically. For example, raising the rent by $10 per week may seem like a win, but if your tenant vacates and the property sits empty for just one week, that $10 increase is quickly cancelled out.
That’s why rent increases should always reflect current market conditions. We at Iconic Realty Group ensure that any rent adjustments are gradual and are aligned with market developments.
Take a close look at your rental income, the property’s value, and the current vacancy rates to assess how much your rate of return on investment will be. This approach ensures you’re making informed choices that will generate maximum income while keeping your property occupied.
Streamlining Your Expenses
Optimising returns isn’t just about boosting income. It’s also about managing your property expenses effectively. By keeping costs low, you can increase your property’s profitability without needing to rely solely on rental income.
At Iconic Realty Group, we take a proactive approach to expense management. From coordinating with reliable local trades to streamlining tax reporting, we strive to minimise unnecessary costs while maintaining the value of your property.
Additionally, if the Moreton Bay market is growing, implementing small rent increases every 12 months can help you stay competitive. This ensures your rental income keeps pace with the local market without putting unnecessary strain on your tenants, allowing you to maintain strong tenant relationships while still benefiting from a rising market.
Reassess Your Property’s Performance
If you’ve been managing your property for several years, now might be the perfect time to reassess your returns. Are you charging market rent, or have you fallen behind? Are your expenses creeping up, cutting into your profit margin?
We offer free market appraisals to help you take stock of your property’s current performance. Through analysing market data and comparing your property to similar ones in Moreton Bay, we’ll help you determine whether you’re getting the most out of your investment. Our team utilises her background in accounting to provide a hands-off financial management approach, ensuring your property is in safe hands.
Take a Step Further
Understanding the annual returns on your investment property requires careful attention to both income and expenses. By calculating your rental yield, optimising rent increases, and keeping a close eye on your costs, you can ensure your property continues to generate strong returns.
Contact us to get a free market appraisal for your property and see how we can help you make the most of your investment.