The residential rental property market can be a challenging way to make a profit. Rental yields are low, meaning that a lot of property investors resort to negative gearing in the hope that capital prices will increase, and they will make a net profit considering total returns over many years.
A solid cash flow is the foundation of any investment, so the number one factor you should consider when weighing up your residential investment property is rental yields. Specifically, how to maximize them. This should be through a high yield, and a high occupancy; both are required for strong rental investment performance.
In some instances, investors suffer from low occupancy rates due to low rental demands and high competition. This could mean trading off significantly lower rents for increased occupancy. Once a property has a solid history of occupancy, rents can slowly increase back to market rate and above
Many investors resort to paying significant property management fees to ensure strong occupancy and good yield. In Sunshine Coast and Canberra, property management fees are quoted in the range of 8-12% of the rental yield. The short-term rental market can provide additional yield such that property management fees can become a thing of the past.
How does paying 0% for a property management fee sound? You would be able to get guaranteed market rental yield for your property for a set period of time (6 month contract) whilst B&B Hospitality managed everything on a short term rental contracts and leasing.
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