One of the key property success challenges property investors everywhere face is how to increase their income from their properties. Every investor is aiming for more rent. So, if you could get up to 70% more from your investment, you would do it, right?
Property Investment Adviser, Matt Ivers, from Vision Property & Finance has helped thousands of people achieve their property goals in almost two decades in the industry. He’s seen every phase of the property cycle and says that no matter where the cycle is headed property investors can win. However, this may need a change in an investor’s strategy and mindset.
Change Your Investment Strategy to 2X Your Returns
“Typically, investors may buy a property that is ‘negatively geared’, meaning they outlay and lose money until the value of the property increases by more than the loss incurred. Happily, given time and property values increasing, their property eventually does increase in value and the strategy usually pays off. “
But, there is a better way says Ivers – a way that means you don’t have to wait for the property to go up in value to start getting ahead.
“That way is buying properties that give you two rents. Typically these style properties will give you a far higher yield. In fact, most of these properties make you money from day one.”
“For example, if you have $590,000 budget and a bought a 1 bedroom apartment in Homebush NSW you would receive approximately $450 a week rent. In comparison, if you bought a Dual Occupancy home in Loganlea QLD you would receive approximately $690 a week in rent and you would have $30,000 in change as well.”
So what are the long term benefits?
Matt says that the immediate benefits of the positive cash flow are just the start. This style of property investment can really help you hit your retirement goals quicker.
“It’s just simple maths. Most double rent properties yield the owner over 6.5% compared to the average property say at 3.5%. So, when you have a $1 million property portfolio from a double rent portfolio you will receive $65,000 a year compared to just $35,000 from a normal portfolio. That’s a $30,000 difference per annum!”
As Ivers points out, investors get much more “bang for their buck,” making the choice to pursue a dual occupancy investment an easy one.
So why aren’t more people doing it?
Matt says double rent properties just aren’t that common. They could include houses with granny flats, dual occupancy properties and dual key apartments.
“Houses with granny flats are becoming more common but they are still rare. So, the trick here is to find the right property that is suitable to have a great granny flat built.”
“Ideally you need to make sure they are not interfering with the existing house which reduces the primary rent.”
Next, investors need to decide what to build there. Matt says this is where most people start to hit problems.
“There is a huge choice and you need to navigate builders and councils and this can become overwhelming if you don’t have a lot of time or it’s not what you do for a living. In the end i,t becomes a little bit hard and the project gets dropped-off the to-do list.”
“These are great properties,” says Ivers. “They are usually purpose-built from scratch to achieve double rent. They are often restricted to certain areas, so you need to investigate which council areas allow them and if that area delivers higher yielding rents. If so you are on a winner!”
Dual Key Apartments
This type of property is not yet very common, says Ivers, but may hold very good opportunities for investors in the future.
“These are also great properties for achieving well-above average rents. They aren’t common and also often have stricter lending conditions, so make sure you do your research before you dive in. You want to make sure it won’t impact your future borrowing and purchasing plans. “
If you're an investor and are looking for a better way to increase your property portfolio’s income, double rent properties may be right for you.
If you would like to know more please contact Vision Property & Finance and find out if this style of investment is right for you. Phone 1800 004 663.