Getting the most out of your investment property
Is your rental property performing to its full potential? Here are some simple steps you can take to ensure you are getting the maximum possible return from your property investment.
No matter what your situation, property investing is about generating wealth. Although the rewards are typically realised over the long-term, the question is what can you do now to put more cash in your pocket? The good news is there are many things you can control to help improve the cash flow on your properties.
Here are three simple ways to ensure your investment is performing at its best:
Increase the rent
It sounds rudimentary, but you’d be surprised how many landlords are reluctant to do so because they have a fantastic long-term tenant or empathise with the plight of their tenants. Although this is understandable, the fact of the matter is that owning an investment property is like owning a business; you’re in to make a profit. So if your property is not achieving market rent, this is the first area to focus on.
If your rent is already fair and reasonable for your property’s current state and the market, look at ways in which to make the property more attractive as even a fresh coat of paint can make all the difference. Also consider installing a dishwasher or air-conditioning, these mod-cons may allow you to charge an extra $10-$25 per week in rent. However, you want to be sure that the “payback period” of investing in these items is not too long.
Decrease the vacancy rate / increase the occupancy rate
With current demand, most investors probably have little concern with vacancy issues. If your property is sitting vacant in the current market then you need to reassess the rent you are asking. Sometimes lowering your rent to a more competitive rate, even though it puts less in your pocket per week, over the longer term, it pays off in less vacancy time where you are receiving no rent at all.
Maximise your deductions
One of the most critical aspects of improving your cash flow that is often overlooked is maximising deductible expenses. Deductions you can claim immediately include advertising for tenants, bank charges, body corporate fees, council rates, land tax, insurance, legal costs, repairs, and cleaning. There are also deductions you can claim over a longer period which include borrowing expenses, declining value of depreciating assets and capital works. It is well worth the small expense to obtain a Tax Depreciation Schedule which outlines the depreciation allowances that you are entitled to on your property and submit this with your tax return.