Your rental property is one of your most significant assets. But is it your most lucrative? Here are a few ways to ensure you're maximising your investment property rental income, so that it is working for, and not against, you.
Get an updated rental appraisal
In today’s rapidly changing real estate climate, it can be difficult to work out the right rental price. Set it too high and you risk tenants overlooking your property, leaving you with a much dreaded vacant rental. Set it too low and you risk losing out on a potentially hefty sum. Either way, it’s money down the drain.
Setting the right rental price upfront is imperative, especially when you consider new rental reforms that stipulate you can only increase rent once each year. Seeking out the price experts, which often takes the form of a local real estate agent specialising in property management, offers you many advantages.
Property managers possess real-time data about:
- Your area’s socio-demographics
- Rental demand, including vacancy rates
- Recently leased properties
- Current market conditions
It’s their job to collate and analyse all of this information, and then help you set the right rental price. This will attract reliable long term tenants - the real key to increase rental income.
Consider making some minor home modifications
When it comes to getting a higher weekly rental price, it’s amazing what a small spruce up of your property can do, especially to attract a better calibre tenant. These needn’t cost you a lot of money, but if you’re concerned about over capitalising, you can always seek input from a local property manager. Some spruce up suggestions:
Cleaning
When doing a deep clean, pay particular attention to the kitchen and bathrooms. These are the first areas potential tenants look at, and make snap judgments. Things such as grouting, window sills, shower recesses etc. Consider replacing old toilet seats, vanities, tapware and door hardware with something more modern.
Small fixes
Attend to issues such as leaking taps, wall cracks, a broken doorbell or mailbox and so on. A fresh coat of paint is also an inexpensive, but impressive way to update your property.
All of these measures firmly stamp a seal of quality upon your house or unit, as well as setting the standard for how it should be maintained. It should then attract tenants who are committed to keeping it that way.
Secure long term tenancy
The Holy Grail for a landlord is a long term tenant who looks after your investment as if it were their own. It affords you a stable source of revenue, saving you the costs associated with a vacant property and tenant turnover.
There are a variety of ways to secure tenants who are not only a good fit for your property, but who are happy to stay for the long term. These include setting the right rental price, and presenting your home appropriately as detailed above. But there are numerous others too, and our article How to find reliable long term tenants offers up a few more.
Consider using a property management service
We all know time is money. And managing a rental property requires quite a lot. It begins with advertising your property and adequately screening applicants. You then need to be available to liaise with tenants to collect rent, organise inspections, and deal with maintenance issues. If something goes wrong, you also need to have the time and skills to mediate disputes.
Many landlords find the time it takes to do all of these things properly severely eats into their rental income profit margin. That’s why they choose to use a property management service. Even though there is a fee involved, it is usually much less than what it would cost you in time and effort to oversee the management process yourself, not to mention less stress. The added bonus is that property management fees are tax deductible.
Extra tip: if you choose to use a property manager, interview a selection and compare what each offers when it comes to services, as what is and isn’t provided varies immensely.
Make sure you do regular property inspections
Another good way to maximise your investment property rental income is to keep on top of maintenance issues. Regular inspections allow you to spot small problems and fix them, before they turn into larger, more expensive ones. Routine inspections should be conducted once every 6 months
Keep up to date with legalities
Failing to keep abreast of rental law changes can be very costly. The consequences could be a conviction, fine and associated legal fees. A good property manager is worth their weight in gold here, as a large part of their job is to keep up to date with changes in the industry. They can then quickly alert you to them, so you can make adjustments if need be.
Know exactly what you can claim on your tax
As a landlord, there are a wide range of costs you can claim on your tax to increase rental income. Things such as:
- Property management fees
- Advertising
- Investment loan interest
- Insurance
- Council and water rates
- Travel expenses associated with property inspections
- Asset depreciation (for example, whitegoods)
- Tax depreciation schedule from our allied organisation WeClaim
Just be sure to keep the right receipts and a thorough record or log as required. You can find out more about what you can and can’t claim at the ATO website.
These are just a selection of ways to ensure you’re getting the most out of your investment property rental income. But if you’d like a few more, please let us know as we’d be happy to share our expertise gleaned from years in the property management space.
