The whole point of buying an investment property is to make it work for you, bringing you a return in terms of both rental income, and capital growth. Baxton Property Management, which manages more than $1Billion in properties for professional investors, and for mums and dads looking for an income, offers some tips on how to make sure it does.
There’s no return on empty premises
Every day that your investment property stands empty, or each week that passes while you wait for it to be ready to rent out, is costing you dearly in lost returns on your investment. Empty premises are empty promises. You know the property promises a return, but without a rent-paying tenant, that promise is as empty as the premises are.
If you have just bought a rental property, try to speed up the cosmetic improvements or renovation programme, to reduce adding lost income to the costs involved in the renovation or touch up. If you have been renting out the property, but the tenant has vacated the premises, make sure to do what it takes to find a new, and suitable, tenant.
Find out what the local vacancy rate is and work out a plan with that in mind. The size of the pool of tenants looking for rentals will determine the amount of advertising spend, as well as affect the amount of rent you can charge, and what sort of terms you should apply to renting it out.
In a boom period when rentals are in high demand, it should be fairly easy to charge a reasonable rental for the premises, and be very selective with regard to tenants. When times are tough, and there are a large number of vacant rental spaces, you might consider renting your premises on a daily basis, in order to avoid another day of no return and risk not meeting your budget.
Keeping your property in market shape
Don’t wait for something to go wrong. Make sure your property is properly maintained at all times, so that you don’t start a downward slide in the value of your investment and the quality of tenant it will attract. Be sure to have a capital expenditure budget to cover costs of big projects like refurbishing the kitchen or bathroom, and the smaller items like painting, gutters, carpets and blinds. Putting aside 5% of your annual rental income is a good place to start.
Keeping your property in market shape (and relevant to that market) is a major part of making your business plan work. If you did the required research before purchasing the property, you will have chosen it carefully with a particular market in mind. You will have bought close to the university if you saw the advantages of renting to students, but not if you wanted to rent it out to a family. In that case you would have bought a different sort of house in an area near schools, work and shops. Make sure your property is in the right condition to attract the tenants you are looking for.
Keep good tenants happy
A good tenant in your property, is worth a hundred elsewhere. If your tenant pays rent on time, keeps the property clean and in good order, and is pleasant to deal with, that tenant is definitely worth his or her weight in monthly income. Trying to squeeze an extra few dollars out of such a tenant might be counterproductive, if you are not as lucky with the next one. You could end up losing a lot more than the extra bit you tried to get the good tenant to pay.
Consider using a property management company
If you haven’t already contracted a property management company, it’s worth considering doing so. Property managers, like Baxton Property Management, are experienced at maintaining and administrating properties, as well as selecting and keeping tenants.
Visit the Baxton website to find out more about the services it offers, and how it can contribute to helping you make your investment property work for you.
Written and syndicated by
– Baxton Media.
#1 – Australia’s Property Management Specialists