How to: Reduce costs and increase income on your investment property
For property investors that want to turn their negatively geared properties into positively geared ones, two things need to happen. First, you need to reduce the costs associated with owning your investment property and secondly, increase the income you receive from it.
Below are some tips to help you head towards a cash flow positive investment property.
Ways to reduce your expenses:
1. Refinance your home loan for a better interest rate
With recent record low interest rates being offered by many banks and lending institutions, now is a great time to see if you can improve your loan situation. A great way to go about this is to talk to a licensed mortgage broker. They can compare a range of loan products from a variety of lenders to find the right rate and structure to suit your situation.
This simple and free review of your loan could potentially save you hundreds, or thousands of dollars each year.
2. Reassess your loan structure – interest only home loans
If you are currently paying an interest and principal home loan, a simple way to reduce your expenses is to switch to interest only payments.
Be sure to do your research and consult your accountant or financial adviser before making any changes.
3. Tenant paid water usage
Whilst it is the norm for the landlord to cover the water bills and the tenant to cover electricity, gas and other costs of living, it is becoming more common for the tenant to pay the water usage as well.
Doing this is a great way to lower your expenses by as much as a couple of hundred dollars a year.
4. Fees & other charges
Do a complete revision of any additional costs associated with your investment property and see if you can negotiate a better price. Think about maintenance costs, trades and services.
Ways to increase your income:
1. Review your properties rental value
The first and most obvious thing you should do is ensure that you are receiving rent appropriate to the market rental value of your property. If you are unsure of what that value should be, speak to your property manager. They will be able to do a full assessment of comparable properties in the area to ensure your property is priced correctly.
It is a fine balance between keeping good tenants and receiving the right price, but ensuring that your rent is in line with the current market is very important.
2. Property improvements
Improving the condition of your property will lead to an improved rental value.
Look at aspects of the property that you or the tenants (don’t be afraid to ask them for feedback) feel are lacking and fix them up. It could be small updates such as a coat of paint, updated fittings, fixtures, lights and handles or larger items such as new flooring and window coverings to complete bathroom or kitchen renovations.
Be sure to do your research and consult your property manager to assess any improvements you make and money you spend in the short term will achieve the desired result in increased rental value in the long term.
3. Additional features
Look at how additions to the property could increase its rental value. Features like air conditioning , ceiling fans or dishwashers are quick and easy ways to improve the quality of living in your property for the tenants and will result in higher rental value.
At the end of the day, if you have a good property manager and financial adviser on your side, then getting the most out of your investment property shouldn’t be too much trouble. A little bit of research, some finance savvy and time can go a long way!
To learn about how Mint360property can assist you with your property goals, contact us.
