Top 3 ways to maximise your rental returns
January 16, 2014 / Written by Rich Harvey
One of the best ways to maximise your property investment in Australia is to invest in ways to increase your rental income.
This can be done by ensuring your rental property is consistently occupied, using smart business strategies and finding ways to make your investment worthy of premium rental rates.
Focus on occupancy
Positive cashflow properties call for tenants, so it only makes sense to ensure your home is occupied at all times. Disruptions in tenancy can not only cost you money, they can cause stress and consume time.
With this in mind, once you find a quality tenant, it pays to hold on to them.
It's also helpful to have a plan in place in the event that a lease is not renewed. If you wait until the property is vacant before seeking new tenants, you could be looking at an investment property sitting empty for quite some time.
Communication with current tenants as to their future plans is essential to gain a better idea of if and when you should begin marketing to new renters.
Investing in the services of a professional property management firm is one option available to you, as these organisations can focus on keeping current tenants happy while also being responsible for attracting new ones.
Review your rent
It's a smart business practice to regularly review the amount of rent you charge and determine if it's in line with the current market. For instance, you may have taken on tenants at a time when vacancy rates in the region were quite high, meaning competition among renters was less fierce and rents were lower.
However, this may have changed in the interim, and high demand from renters could provide you with an opportunity to revise your rent rates.
You should use comparable properties in the same area as a way to determine what rental rate makes sense. Also be sure to give current tenants plenty of notice regarding any changes in rent.
After all, a high-quality, long-term tenant can be more valuable than one that pays more rent.
Even more important, there are strict laws regarding the raising of rent. You're not allowed to just increase rent whenever you feel like it, and unless your lease specifically says otherwise, you cannot do so until the fixed term of a tenancy agreement is up.
There are also rules in place regarding how often you can increase rent, so be sure to research the regulations in your area before making a decision.
Keep condition in mind
Tenants will likely be unwilling to pay higher rent to live in a shabby home, so it pays to make sure your investment property is in good condition. This doesn't mean you have to buy luxury mansions in order to maximise your rental returns, it simply means that a clean, structurally sound property will be more likely to fetch higher rent.
Additionally, responding to tenant complaints regarding things like repairs and appliance replacements is a good way to keep the property in excellent condition while also making renters happy.
There are various renovations and upgrades that can increase an investment property's value, but perhaps none are more important than the location of the property itself.
A smaller, older home located in a popular neighbourhood that offers proximity to sought after amenities can provide more profit than a new, spacious property in a less favoured part of town. This is especially true when it comes to proximity to common necessities, such as schools and supermarkets.
Renters are willing to pay more if the community surrounding them offers what they seek.