5 ways to bulletproof your rental income
Owning an investment property can be a rewarding experience financially when managed correctly. Below are 5 ways that you can ensure that your cash flow remains strong and consistent rental income is achieved from your investment properties.
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Decrease vacancy
You won’t have a rental income in if no one is occupying the property and paying you rent. Be sure you are doing everything to help minimise the amount of time the property is vacant. Enlisting the help of a property manager is a good way to ensure your property is priced correctly and marketed strongly. Professional photos are a must for creating a good first impression. Be sure to emphasise the positive attributes that the property and the local area present for the potential tenants in the text of the advert also. Even the smallest of details can influence a property searcher.
When your property is coming up for a vacate, ensure that you allow time before the current tenants move out to advertise and run open homes so you can sign up a new lease with new tenants who can move in as soon as the current tenants have gone. Having a good relationship with the outgoing tenants will help with getting access for inspections, so don’t be bitter because they have decided to vacate, no matter what the circumstances.
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Minimise turnover
When renting out your investment property, look for tenants that are willing to sign longer leases. Aim for 12months at the minimum. Having to re-advertise and change over tenants every 6 months can be challenging and not only costs you in rental income, but in time as well. Also tenants that will be in there for longer periods of time generally will take more care and respect with the property as they will be the ones living there.
If you end up with some excellent tenants who pay on time and look after your property, try and keep them in your property by renewing their lease for as long as possible. In some instances, offering incentives for them to stay can prove to be worth it in order to hang onto excellent tenants.
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Insurance
After working long and hard to secure a good investment property, one thing you will need to do is protect that investment from any possible damage and the costly repairs involved to fix them. For the initial cost of a few hundred dollars per annum you can be covered for damage to you building, contents, rental defaults and tenant damage.
It is important to note however that not all policies are the same and it is imperative that you do your research as to what your property should be covered for, including natural disasters. Even if the chances are low, it is a risk to not get coverage for acts of nature such as floods, storms and fire etc. Ensure you read all the fine print and ask plenty of questions in order to understand exactly what your policy will and won’t pay out for.
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Raise rent strategically
Staying abreast of the market trends and similar rental properties in the area will allow you to make educated decisions when it comes to rental increases. You want to ensure that you are not letting additional rental income go by being hesitant to raise rents as the market does for the fear of pushing tenants away. Whilst you might be worried the tenants will see it as unfair and move out, if you have increased your rent in line with the market movement, they will find the vast majority of other properties have also increased their rent.
The best way to go about raising the rent is to increase it slightly at regular intervals, say once a year, so that tenants don’t feel overwhelmed by the full force of a large increase after 2 or 3 years. Give your tenants as much notice as possible (at least the required 60 days’ written notice) and explain to them why the rent is being raised. If you are raising them fairly and legally then you are unlikely to have any issues.
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Cost-effective renovations/additions
Making small updates to your investment property can improve the desirability of your property and attract more rent. If your property is looking a bit tired and worn out, then it might be time for a fresh lick of paint and perhaps some new carpet/flooring to lift its value on the market with other properties around the area.
A property manager will have a good understanding of what improvements you should make in order to maximise the return on your investment and often have good relationships with tradespeople to get you a good price for reliable work. You want to ensure that the money you outlay for the updates will be returned over time with an increase in rent and/or lower vacancy as a result of the improvements.
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If you have any questions or would like any further information on investing or managing an investment property, please contact us and one of our property management professionals will be more than happy to help.
