HOW TO GET THE MOST OUT OF YOUR RENTAL PROPERTY
The decision to invest in rental property is a great way to generate extra income, if done correctly. By utilising the following tips, you can ensure that you optimise your return on the investment.
1)Treat Your Property Like a Business Managing your rental property is most likely not your primary job, but it is still a business and a source of extra income. To ensure that you achieve the best returns possible, it is crucial to observe strict financial planning and budgeting, act professionally in all dealings with tenants and potential tenants, ensure that you adhere to a consistent maintenance and repair program and make sure that you are legislatively compliant, including up to date comprehensive insurance.
2) Create an Appealing Online Advert You may decide to give your property to an agency to advertise online, or you may list it yourself. Either way, it is imperative that your property ‘shows’ well online. Ensure that you have high-quality pictures of your property and that you highlight all the features. You may include any tenants’ requirements or anything unusual about the property – remember there are hundreds, if not thousands of listings online, so try to find something unique about your property to differentiate it from the rest!
3) Consider Hiring a Property Manager Depending on how close you live to your investment property, the amount of time that you can devote to the property, or financial constraints, will all factor into whether you hire a property manager or not. If you decide to hire a property manager, follow a similar procedure to finding a tenant: do your homework and screen a few managers before appointing anyone. Hiring a property manager should ultimately give you peace of mind that your property is being managed well financially, legislatively and should be well maintained. If you are not getting this from your property manager, you need to look elsewhere.
4) Price Your Rental Correctly Do enough research to get to the correct price for your property. In the current information era, property data is freely available and incorrectly priced properties will not be considered. You must understand the expenditure of the property to know what you will need to cover direct expenses (including mortgage costs). Ideally, you would conduct these calculations before buying the property for investment purposes.
5) Screen Your Tenants Properly As you most likely will rely on the rental income to cover the expenses that the property generates, you give yourself the best chance possible of placing a tenant in your property that will pay you on time and in full. The best way of doing this is by conducting a rigorous screening process that will include references from past landlords, bank statements and confirmation of employment, amongst other checks. Be clear with your standards here, and do not make too many allowances if someone does not meet your rental criteria – remember, you are trying to reduce the odds of having a non-paying tenant in your property!
6) Sign a Lease Agreement Put the terms of your rental arrangement in writing and make sure that both parties have signed it. Property management companies should have up to date legal agreements that comply with all the local laws, but if you do not use a property manager, ensure that your rental agreement covers all the required legalities.
7) Enforce the Terms of Your Lease It is crucial to enforce the terms contained within your lease. Too many allowances may lead to your tenant taking advantage of your leniency. An important rule to follow is including penalties for late payment – be it a fee interest charged. It is vital to be very clear from the outset that their rental is due in full by the beginning of the month.
8) Keep Good Tenants If you place tenants in the property and they genuinely enjoy staying there, they look after the property well and pay you in full and on time, then you should incentivize them to stay on. Even if this means forgoing an annual increase, the cost of placing the wrong tenant in your property is a lot more expensive than the additional rental you want to charge your existing good tenants.
If you keep these eight points in mind, you will be well on your way to getting the most out of your investment.