Professionals Nowra If you have an investment property, you want to maximise your rental return. You may need to become more proactive to do so, but your conscientiousness will pay dividends. Property management experts Leasi recommend their seven top tips to maximise your rental return.
- Renovate
When you buy an older property, it may need some renovations. Do whatever renovations you need to do to attract better tenants who will be willing to pay a higher rate. Some of the most important renovations include:
- Improving your streetscape by tidying up the yard; mending fences; painting the exterior; and fixing anything that looks worn. Also consider hiring a pressure washing service to clean your driveway and roof. A house that looks sparkling from the street will attract a higher rent.
- Paint or wash the interior walls and replace worn blinds and curtains. Renters will appreciate a clean interior and a clean interior will attract better tenants.
- If you’re painting, choose light, neutral colours. Light colours make any room appear larger. Neutral colours don’t offend anyone. Loud colours may put potential tenants off.
These are some of the basic things you should do. Tenants will also pay more for a sparkling kitchen and bathroom. You needn’t pay for expensive renovations, though. You can paint kitchen and bathroom doors and make repairs to the cabinets if needed.
Also take a look at your backyard, deck or patio. People are looking for an indoor/outdoor lifestyle today. Even if you have a small balcony, make it look inviting. Outdoor furniture isn’t expensive, but can make any outdoor area look more inviting.
- Clean the house or apartment between tenants
Even if a tenant leaves a house or apartment looking clean, you should hire a house cleaning service to get into the nooks and crannies they may have overlooked. It’s also a good idea to clean your carpets, curtains and furnishings (if the property comes furnished). A good cleaning will remove lingering odours and make the house look more inviting.
- Maintain your rental property
Any property will require occasional repairs and maintenance. You can expect a tenant to do their own house cleaning, but when something goes wrong, they expect you to take care of it quickly. You will keep tenants longer and attract higher rents if you handle repairs quickly. If it’s an emergency repair, get a qualified tradesperson to the site as quickly as possible. Your tenants will appreciate the fact that you are concerned about their comfort and welfare.
Also remember that you can deduct the cost of repairs from your taxes. While it won’t cover the full cost of repairs, you will pay lower taxes and save some of the money you’ve spent on repairs.
- Stay on top of rental rates
Your tenants will sign a lease that includes the rental rate. If it’s a long lease, you may have to include a clause to cover rental increases. When a tenant moves out, find out what similar properties are renting for in your area. If rents have increased, you should raise your rent.
An exception to the rule may be a tenant who has maintained your property and always paid on time. You may want to negotiate with them when their lease expires. While you may get a slightly lower rent, you will benefit from having a long term tenant who takes care of your property.
- Consider the terms of your lease
Some areas are in high demand and rents rise regularly to keep up with demand. In such an area, you don’t want to be tied down to a long lease. A six month or one year lease will give you the opportunity to keep up with rents in your area.
Other areas have more properties for rent and rents don’t rise quickly. You can attract long term tenants by offering a longer lease. One or two years will attract tenants who intend to stay put and still give you the opportunity to renegotiate if a rental increase is justified.
- Maximise your occupancy rate
When a lease comes close to its expiry date, find out if the tenant wants to renegotiate their lease. If they want to move out, start advertising your property before they vacate. If you wait until the current tenants move out, you will miss out on rent until you find a new tenant. That could take a month or several months, depending on demand in your area.
- Consider hiring a property manager
You may be able to manage your property if you live nearby and know your market well. Even in the best case scenario, though, you may not be able to handle all the problems that arise. Do you have a network of tradespersons you can rely on? What will you do if an emergency arises when you’re at work? What if a tenant is in arrears on their rent?
Property managers are there to handle every situation. A good property manager will:
- Find and do background checks on prospective tenants
- Know what a fair rental rate is in the area
- Minimise vacancies
- Regularly inspect the property
- Handle repairs and emergencies in a timely manner
- Know what to do when a tenant doesn’t pay their rent on time
- Sensitively handle disputes with tenants
- Give you regular updates and submit monthly reports
A good property manager has experience dealing with all kinds of tenants. You may not. If a tenant doesn’t pay their rent, you may need to issue a notice to pay or vacate the premises. If they refuse to move or damage your property, you may have to go before a tribunal.
Property managers know what to do in any given situation. Their commission and fees can save you thousands of dollars in the long run. You can do what you do best and leave your investment property in their capable hands.
By Ash Frenken