As a property investor it’s your job to maximize the return of your assets.
One way to do this is to maximize your rent.
Here’s a list of 10 ways to do this
that I’ve learned over the years gaining experience:
1. Refresh
Rents need to increase to keep up
with inflation if your rent is tracking backwards it’s because of increasing
supply out pacing demand in your area or most probably lack of investment.
This is a vicious cycle because as
your property deteriorates so do the references of your tenants and the trouble
really starts.
Cosmetic touches lift rent and
equity at the same time.
Paint, carpets, blinds and light
fixtures can really transform your property and give you a great boost to cash
flow as well as some depreciation benefits too.
2. Longer leases
I don’t like 6-month leases because
it could mean two letting fees and two periods of vacancy each year.
Instead I like commitment from my
tenant and longer leases such as 12-month leases means less interruption to my
cash flow.
3. Minimize vacancies
Professional photos advertising your
property, feature property status putting them on page 1 of the most dominant
portals and showing your property 3 times a week at tenant friendly times
(times when employed people can make it to the inspection) will be a good
start.
4. Set a rent at 95% of market
This one is a little bit counter
intuitive but it means you will have much better enquiry and therefore a range
of tenants to choose from.
It lets you pick the best qualified
and they will more than likely stay longer.
If you have only one application did
you pick the tenant or did the tenant pick you?
5. Include garden maintenance
This can really solve two problems.
The neglect of the outdoors of your
property (remember street appeal counts) and a higher market rent with a tax
deductible expense.
6. Consider Pets
I own lots of Pet friendly
accommodation because these tenants get discriminated against and are willing
to pay 10-15% more to keep their four legged family member.
7. Mod cons
Tenants love them and they can
really add value so try and get as many of these in your property.
Things like a dishwasher, air
conditioning, built in robes, remote garage access, plenty of storage, security
features, outdoor entertaining area like balconies or courtyards, fully fenced
properties, two separate living spaces (adults and children’s) and off street
parking.
8. A good tenant
Rental properties can be like Rental
Cars in the fact they get driven hard.
A good tenant is worth their weight
in gold keep them appreciate them and consider rewarding them.
It really is half the battle.
9. Proactive Property Management
A proactive manager notices a water
leak in the bathroom vanity and gets it fixed.
A reactive property manager notices
the vanity is water damaged and the door no longer closes and a replacement
vanity is ordered.
The difference of being ahead of the
curve or behind is huge.
10. Some Don’ts
- Furnish – very niche, very transient tenants more vacancy and more maintenance
- Short term lets – more vacancy, more costs
- Rental guarantees – the cost is priced in and you pay for it.
- Price the rent for what you need to pay mortgage – the market decides the appropriate rental – not you
- Get involved – keep at arm’s length – use a professional property manager
- Self-manage- it’s harder than you think! Good Property managers make you money
- Let your leases expire at quiet times of the year like around Xmas time
- Be the smartest person in the room – take feedback and advice from your trusted team of advisers
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