10 ways to maximize your investment property return
While we know that the ideal property investment is one that will achieve capital growth over time, its cash flow which sustains your portfolio until that time.
Of course rental returns help pay the mortgage repayments as well as other costs such as insurance, council rates and maintenance, but the key is to sustain that all-important rental income and maximise your returns while minimising the risk of extended vacancies when you’ll have to fund those costs out of your own back pocket.
Some information below may assist you in maximizing your investment return:
- Looking its best
Before you even advertise the property for rent, you should get plenty of internal and external photos taken, but only when it’s looking its very best, which can be achieved by:
- Repainting the interior and/or exterior if required
- Cleaning out gutters
- Pruning shrubs and trees
- Mowing the lawns
- Re-mulching garden beds
- Repair responsiveness
Just as you keep your car in good condition, so you should your investment properties – especially since it’s worth a lot more money than your car!
One way to keep worthy tenants is to ensure you attend to any genuine repairs as soon as they’re reported.
Regular maintenance of your property makes it a more attractive home to current and prospective tenants, it will also safeguard its long-term capital value.
- Appliance appeal
Once considered luxury items, things like dishwashers and air conditioners are now perceived as everyday essentials. Installing quality light fittings and window furnishings, as well as the extra comforts we look for in a property, such as ceiling fans, security doors & screens, wardrobes will keep your tenants, and your bank account, happy in the long term.
- Don’t forget the outside
It’s vitally important to remember that first impressions count and usually that is from the outside of your rental property when tenants first arrive for an inspection.
Although your tenants are ultimately responsible for the gardens while living in the property, when it comes to the lawn and things like overhanging tree branch, it’s a good idea to address any small problems before they become potentially dangerous ones.
For large yards with plenty of shrubs we recommend having them trimmed back at least once a year, not only will this will keep your property in good shape, but also it’s a great way to encourage your tenants to stay longer. Because let’s face it, one of the reasons tenant rent is because they want the easier lifestyle!
- Value adding
Small refurbishments and improvements can be a profitable way to boost your rental yield and long-term tenant prospects.
The key, however, is to avoid over-capitalising and focus on aesthetic improvements, such as a fresh coat of paint, that will also increase the capital value of your asset.
The following lists have been asked by tenants on regular basis, which may consider reasonable and will add value to your property in the long term:
- Ceiling fans
- Air-conditioners ( lounge & main bedroom)
- General pest control ( cockroaches, internal ants & spiders)
- Gutter cleaning
- The law and you
It’s a fact that there is a raft of legislation that governs the ownership of rental properties. What that means is it can cost you a lot of time and money if you fail to comply with the requirements outlined in your state’s residential tenancy legislation, which is where having a professional property manager can help reduce these risks. Failing to adhere to safety laws around things like smoke alarms and pool fences not only attracts hefty fines, it could also mean your property sits vacant while you take the necessary steps to address any breaches.
- Understand your market
When something causes an imbalance in the supply/demand matrix across different rental markets, you’ll often see vacancy rates creep up into the three or four per cent plus range, or tighten considerably, depending which way the scales go.
You must know what’s happening in your market in order to meet rental price expectations.
While you don’t want to undersell your rental property, you don’t want to alienate potential tenants by asking an excessive price either and it sits vacant for an extend period of time.
- Reasonable rent
This isn’t just about pricing according to market expectation when relisting your property, it’s also about carefully considering any potential rent reviews.
Investors have the legal right to reasonably increase the weekly rent on your asset in line with inflation and other factors, but sometimes you need to weigh up whether an extra $5 or so per week is worth possibly losing good tenants over.
However, it’s equally important to ensure your property’s rent remains in-line with the market.
- A question of pets
As a property investor you want to minimise any potential damage to your investment, so it’s understandable that many landlords stipulate a “no pets” policy when marketing their asset.
However, when you consider that around 70 per cent of all Australian households own a pet of some kind, you can see how discriminating against our four legged friends could significantly reduce your potential tenant pool.
- Communication is key
Engaging a professional property manager as the middle person between yourself and your tenants can greatly improve communication, and outcomes, between all parties.
Effective communication is essential to ensure any concerns are addressed before they escalate into a potential tribunal appearance or a tenant decides to move on to greener pastures and you’re left with an empty investment property.
When it comes to choose the right property management company, “size does matter”-more and more investors have found that the smaller/boutique style property management firms are more satisfactory in terms of delivering their services.
While fees & charges are one of the important factors, you should really look at what services they actually provide, and choose the one that suits your style as a property investor/owner.
Property management is a “people business”, your property manager needs to have the ability to build a long term report with you, & your tenants, and have the confidence in delivering service in a professional manner.