The number one goal of property investors is to get the most from their investment. To maximise rental return takes market nous and a healthy dose of strategic foresight, but the role of landlord needn’t be a complicated one—particularly if you take care of the three P’s: People, Presentation and Price.
Possibly the most important decision any landlord will make relates to people—your property manager and your tenants. Get it right and your investment will be on a solid footing with the potential to climb; get it wrong and the stress and expense could have you regretting your decision to become a landlord.
An effective property manager does more than just collect your rent. They’ll proactively protect your asset by undertaking regular inspections to ensure the tenant is keeping the property in good condition, identifying maintenance issues and ensuring compliance with the relevant legislation. They’ll keep you up to date with all developments, liaising with tenants and tradespeople efficiently on your behalf.
When choosing a property manager, look closely at the level of service you’ll receive for your management fee.
Competitive management fees are important, but don’t be swayed by heavily discounted rates—it often means your property manager is splitting his or her attention across a portfolio that could include as many as 200 other clients.
The second part of the people equation is tenants. Here again, a great property manager can save you untold angst by carefully managing the selection process to find the right tenants for your property and verifying their suitability through rigorous rental history checks. Quality, long-term tenants are the gold standard and are key to maximise rental return.
Rental properties can start looking tired pretty quickly. Sometimes in the rush to move the next set of tenants in, the opportunity to make small, cost-effective improvements is missed. That can be a costly oversight in the long term because updated, well-maintained properties always command the highest rent and therefore helps maximise rental return.
The most important rooms in the house when it comes to improvements are the kitchen and bathroom. Outdated décor, appliances that are ready to fall apart and shabby carpets can end up costing you money in lost rental increases and lower quality tenants.
Quick and easy updates include:
- A fresh coat of paint
- New blinds or curtains
- Replacing worn carpet with tiles or better yet, polished floor boards
- Updated, energy efficient lighting
- A thorough tidy up of outdoor spaces—gardens trimmed and all rubbish removed.
The best quality tenants look for all of the above plus:
- Ample storage space
- A dishwasher
- Good security
- Cooling and heating.
Here again a good property manager will provide knowledgeable advice that helps you increase the property’s appeal without overcapitalising.
Getting the rental price for your property right is critical—ask for too much and you could lose significant income as a result of the property sitting vacant for long periods.
Ask for too little and you will have underestimated your own asset.
Regular appraisals and annual rental reviews give landlords confidence that the rental potential of their property is keeping pace with the market, and more specifically, the neighbourhood in which the property is located.
A second consideration is the timing (and terms) of the lease. Wherever possible, structure leases so that they end in January or February which is the high point for rental searches. That way, you minimise vacancies and have a larger pool of prospective tenants to choose from.
Follow these three corner stones of investment ownership if you are looking to maximise rental return with minimal outlay.
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