15. When researching, look for strong rental yields of 6% and above
A tell-tale sign of growing area is gentrification. Businesses are moving into the area, the population is growing and an infusion of both public and private money is being poured into the region.
Also, look for a strong council that has a tight grip on growth in the region combined with a strong vision for its future.
Look for areas that have seen growth of at least 1% to 2% over and above the last five-year average.
A quick way to calculate yield:
Weekly rent x 52 weeks, divide it by the property purchase price and multiply by 100.
A property worth $400,000 with a $400 weekly rent has a 5.2% yield.
$400 x 52/$400,000 x 100= 5.2%
If the rent is below $400 weekly, your yield is less than 5%
Don’t forget that you can follow some strategies to boost your yields without waiting on the market.
You can, for example:
- Buy at a discount
- Refinance to pay down your mortgage
- Add a granny flat to create an additional revenue stream
- Renovate