House prices have continued to soar throughout 2014. What has been lost in the reporting is that prices in the Sydney rental market are softening. As a landlord it’s crucial that you’re aware of the current market conditions. The great enemy for all landlords is vacancy. A vacant property produces zero income.
Some landlords mistakenly believe that a rent increase is their right on the expiration of the lease. However, any rental increase should be in line with market forces to avoid your tenant deciding to depart for a cheaper property down the road.
If you’re looking to purchase an investment property, it’s also important to recognise that the sale value and the rental value are completely disconnected and unrelated. Incoming investors are staring down the barrel at booming sale prices with declining rents. Negative gearing is a favoured investment strategy for many investors entering the market.
If the yield is too low on the property, it means an eventual profit is even more elusive.
There is still good buying to be had in the market, but value is harder to find for investors.