As a property investor it’s your job to maximise the return of your assets.
One way to do this is to maximise your rent.
Here’s a list of 10 ways to do this that I’ve learned over my 20+ years in property management which has now allowed me to oversee the team that manages properties for clients through our property management department at Metropole:
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. Minimise 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.
56% of Australians have pets and 25% are considering getting one in the future – do you really want to exclude that many people?
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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