Inner Melbourne is the heart of Australia’s fastest-growing city and a bustling, vibrant area with a young and transient population. That means strong demand for rental units, so it's very popular with landlords.
However as always when it comes to property investing, it’s important to ensure you understand the market before buying, and to manage your property well afterwards to maximise your returns.
With years of experience in Melbourne’s CBD and inner suburbs, Galldon Real Estate leasing consultant Andrea Lisanti says there are two key demographics when it comes to the area’s tenants.
“Students make up a big proportion of the market here,’’ says Andrea. “Those attending RMIT or University of Melbourne are more drawn to the northern end of the city, while those studying at other universities are looking to live close to public transport.’’
And with the huge number of businesses based in Melbourne's CBD, the other key source of demand for rental apartments is young professionals.
"Of course, they also enjoy the restaurants and nightlife, but the main reason young professionals want to live in the CBD is to be close to their workplace," says Andrea.
When it comes to buying, letting and managing rental units in Melbourne’s CBD and inner suburbs, Galldon’s team of experts have decades of experience between them and are on top of all the latest trends in the market.
“We can advise you on which streets, precincts and buildings are most popular with different kinds of tenants, and on other considerations such as body corporate fees, levies and any potential planning issues that may affect your long-term returns as a landlord,’’ says Andrea.
Andrea’s top tip for narrowing down your search for the best locations for rental units in inner Melbourne: “Of course proximity to public transport is a very important factor,’’ he says. “But don’t overlook the pull of parks. Apartments near green spaces are always more attractive to tenants.’’
Buying old or new
For landlords, inner Melbourne offers an interesting mix of old and new buildings, each of which have their own advantages.
"Older buildings have character, and older stock can be cheaper and generally offers good sizes compared to new apartments, which tend to be very small,’’ says Andrea.
“So one great option as an investor for the rental market is to buy old and renovate. But of course while you might spend less money up front on the purchase, don’t forget to allow for that expense of improvements.
“You should investigate the condition of the building before buying, and be sure to include mod cons such as air conditioning and new white goods - washer, dryer, dishwasher - in your renovation budget.’’
While many tenants are attracted to the charm of older buildings, Andrea says in his experience students generally prefer newer apartments.
"Many tenants in that market aren’t really looking for character,’’ he says. “They just want to live on the 40th floor with all the facilities, like a gym, pool and barbecue area.’’
Keeping up appearances
No matter the age of your rental apartment, Andrea says skimping on maintenance is a common mistake that eventually costs landlords more than it saves in the long term.
Attending to repairs early prevents them from escalating. And a well-presented unit is always easier to let and makes for happier tenants who stay longer with fewer complaints."Keeping a rental property well-maintained is essential and it’s something you should budget for,” says Andrea.
Regular small updates, whether that's painting or installing new carpet and blinds, can really boost your chances of securing a tenant sooner.
“And when something needs repairing or replacing, don’t simply go for the cheapest option as you’ll just have to shell out for the same thing again when it inevitably wears out sooner.”
Stay under cover
Andrea always recommends taking out landlord’s insurance to protect yourself from unexpected bills for damage, whether accidental or malicious, and loss of income for example due to unpaid rent.
“A lot of landlords feel it's not worth the money,” says Andrea. “But that few hundred dollars a year can save you tens of thousands in a situation where say a tenant absconds after damaging your property.”
For those thinking of becoming DIY landlords, Andrea recommends thinking again.
"I would strongly suggest landlords use a property manager," says Andrea.
“There’s a lot more work involved in managing a rental unit than many people realise. Showing the property to tenants, managing bonds and lease agreements, arranging tradies for quotes and repairs, collecting rents and carrying out inspections - for a small fee let a professional take care of it for you.’’
If you’re looking for expert advice on buying, letting or managing a rental unit in Melbourne, contact the Galldon team online or call them on 03 9670 3330 or email