Individual room lets could increase rental yields by up to 27%

Data released by Australia’s largest share accommodation site show landlords could increase rental yields in Melbourne by up to 27% through letting individual rooms.

Flatmates.com.au made the findings by comparing average room prices^ with CoreLogic RP Data’s average rental prices for June 2015*.

Managing Director of Flatmates.com.au, Mr Thomas Clement said the numbers revealed a great opportunity for landlords to increase their rental returns in an otherwise flat market.

“Rental returns have, on average, only grown between 1-2% in the past year at best, while some areas experienced a drop in yields.” Mr Clement said.

“Alternatively, if we look at a two bedroom property in Melbourne and what each individual room was being rented for the six months we can see a 15% higher yield in the combined rent versus a traditional unit rental.”

“The figures also showed the combined room rents for a three bedroom home in Melbourne would yield a 27% increase on a standard home rental.”

While he admits the results will vary from property to property, Mr Clement said it is something landlords shouldn’t ignore.

“Renting an investment property out by room may not be practical for everyone, but in many cases the higher yields could outweigh the extra effort.”

“Based on the averages, a three bedroom home rented by rooms in Melbourne could bring in around $6500 extra per annum than a traditional home rental.”

Flatmates.com.au compared room prices for a two bedroom property with unit rental returns and three bedroom properties with home rental returns to achieve the results.