When you have decided to buy a property as an investment and realise a return through rental, you should ideally be looking for a ‘set-and-forget' type of deal. A true set-and-forget is a property that involves minimal out-of-pocket expenses and healthy capital growth over the long term, with the least amount of aggravation.
Such properties are generally to be found in a great and desirable neighbourhood, are in a sound condition requiring little to no renovation, with a floorplan that is appealing to the tenant you wish to attract. The alternative is to find a fixer-upper and upgrade it to a standard that will similarly attract the right tenant.
The perfect scenario is to buy a property that already has tenants with whom you can negotiate a new rental fee, especially if they are currently paying below current market rates. This has cost- and time-saving benefits derived from not needing to market the property to new tenants.
Once you chosen an investment property, it’s important to frequently assess the value of your investment, bearing in mind that maintaining the quality of the property is often in the hands of the renters. This means you need to be fully informed of the neighbourhood property values, what is on offer, and whether or not you are prepared to invest more money into bringing the property up to par, especially if you want to increase your rental income.
We’ve put together a list of the ‘best of six’ categories that may make you think differently about how to approach a rental property acquisition, or improve on your existing rental portfolio.
Six inspiring ways to increase your rental property value:
- Can you add an additional room? More rooms equal increased rent.
- Can you change the flow or floorplan to a more contemporary open plan design? Open plan homes have great entertainment value, particularly for families that enjoy interacting.
- Can you increase the size, or refit, the bathroom or kitchen without needing to move plumbing, to create the illusion of more space?
- Upgrade appliances to energy-efficient versions.
- Replace old vinyl, carpets or broken flooring with artificial - or if you can afford real timber - or wood flooring, which is popular in homes due to the aesthetically pleasing look and easy-to-clean virtues.
- Is the property pet-friendly, which opens its marketability to a wider tenant pool who will likely be looking for longer-term rentals.
Six strategies to realise ongoing value
- Take an active role in the leasing process even if using a property management agency.
- Where possible insist on at least a three-month notification period, which will avoid a vacancy threat.
- Keep tabs on market rental market trends, including area demand, supply, and vacancy rates.
- Be open to different types of tenant applications - even if you don’t want pets on the property, the ideal tenant may be a responsible cat or dog owner.
- Be flexible in the lease agreement. Some tenants may be prepared to pay a premium for a shorter lease term.
- Consider the future outlook of the rental market and any city planning that may impact on the desirability of the property.
Why you should always consider using an experienced property manager:
- You can distance yourself emotionally from the tenants and their personal problems, complaints, and issues.
- They ensure your property will obtain the highest possible rental.
- They work to minimise vacancies.
- Will find, screen, and select tenants according to your wishes and requirements.
- Will collect the rental and issue statements and invoices.
- Will routinely handle property inspections and submit condition reports.
Although property management comes with paying an agent or agency a percentage of your gross rental income, it will save you valuable hours of stress and provide you with peace-of-mind provided you have briefed these agents on your requirements. It is important to ensure that you are very clear on what those are, but that you remain flexible to all reasonable offers and conditions.
