Whether you’re a landlord because you want someone else to pay off your mortgage, or you’re just a keen property investor, you want to be sure that you’re making a return on your investment. Here are a few things that you can to do maximise that return.
Replace and renovate
A rental is an investment, and it can take time to see any return on that. If you want to improve your investment, and hopefully the return, it’s a good idea to look after your property, and fix and replace things as they age. Consider:
- repainting every few years
- replacing the carpet when it gets worn
- updating light switches, and other small parts of the property that can make a huge difference.
Apart from replacing the carpet throughout your property, it should not cost you too much to renovate and replace things in your property. If anything, the costs incurred will increase the value of your property and will justify an increase in rent.
Change things up
Property trends come and go, but open spaces and properties that do not cause claustrophobia are always going to be in high demand. If your property feels small and confined, consider knocking out some walls and creating that open-plan kitchen and living area you’ve always dreamed of.
Keep in mind that you’re almost definitely going to have to get a builder to do this, and it might not always be achievable purely because of how the property was built.
Keep an eye on inflation
We’re pretty lucky for the moment, with only a 1.1% inflation rate in the New Zealand economy. Even with such a low rate, it’s worth looking at inflation when you’re:
- deciding on the price of rent for a new tenancy or,
- evaluating a current one.
If you keep rent at the same rate without ever evaluating it, you’re going to start losing out because of inflation. It might not seem like much, but it can stack up, and that is all return on your investment that you’re missing out on.
Consider your time investment
Once set up, a good rental property will provide a steady stream of income with relatively little labour and time invested from you. Of course, it will require your input from time to time, but it should leave you with time to focus on other investments and projects.
If you’re thinking about purchasing another property to rent, consider what sort of time and financial investment you’re going to have to put into it to get it running. The more you have to invest in a rental property, the longer it’s going to take to earn that investment back. If you want to speed up that process and make it less costly, pick properties that aren’t going to need so much initial or regular time on your part.
Pick great tenants
If you plan to sell your property in the future, or even if you just intend to keep renting it out, you’re going to need to make sure that your tenants are looking after your property. It doesn’t matter how much time and money you spend improving your property if your tenants aren’t respecting it. Make sure that you:
- scan tenants well before they move in
- perform regular inspections so that you know your property is being looked after
Conducting background checks and credit checks on your tenants is also important. You can use Doublecheck to conduct your own free background checks.
For other advice on how to attract the best tenants click here.
Be prepared to be a little bit flexible with the rent that you charge. If you’re having trouble getting prospective tenants, consider dropping the rent a little bit. Earning a slightly lower than expected rate of rent is better than no rent at all, and that can give you the chance to start improving the property to justify a higher rate of rent.
On the flip side, if you believe that your property is worth more rent than you’re currently getting, consider increasing it. Just make sure not to make any outrageous changes, and provide your tenants with a written warning at least 60 working days in advance.
Hiring a property manager can be a great investment, especially if you’re new to being a landlord. However, property managers are not necessary and if you have the experience and knowledge, you should consider managing your property yourself.
This will cut out all of the costs associated with a property manager, and with resources like Proper, even first-time landlords can give it a go. Proper is an App that helps you to manage your properties through your phone. Inspections, maintenance, communicating with tenants, and all of the other tasks that owning a rental entails – Everything is achievable with Proper.
It can take time for you to begin seeing a decent return on your rental properties. But, with some hard work, patience, and consideration of the tips above – you will get there.
Featured photo by Joshua Ness on Unsplash