Increasing the income of our rental property can make your investment easier to afford. Increasing the rental income of your investment property can make your property easier to afford with less money coming out of your pocket (or with positively geared properties, more money into your pocket). Maximising cash flow is a vital part of investing and growing your portfolio. An extra $20 a week for example adds up to over $1000 a year which can assist in paying down the loan, covering unexpected maintenance costs or towards your next property purchase.
Here are my top tips to increase your rental return.
1) Replace Appliances
Ovens, dishwashers and other appliance replacements or additions (such as air conditioning) are really appealing to tenants and can save them money on water, gas and electricity bills as well. These appliance investments with the additional rent could be paid off within a year, they also save you money by making your property more appealing and more competitive with surrounding properties so not only do you get a rent increase, you also get your property rented faster, therefore there is less lost rent each year with vacancies. Depreciation of the new purchases are an added benefit.
2) Updating the Property
Cosmetic upgrades to floors, window furnishings, walls and even resurfacing bathrooms do not need to be expensive. They add value to the property, increase the rent and help your property rent faster. Ongoing maintenance costs are also minimised. Think about street appeal, a simple landscape overhaul can make a huge impact on the value or your property as well as they type and number of tenants attracted to it.
Most property owners know the difference new paint can make to tired, aged interior and exteriors.
3) Adding Storage Space
All tenants need storage space so try adding cupboards, wardrobes or lockable outside storage like a garage or a shed. With so many cost effective storage options available these can cheaply and easily increase rental value and the property’s appeal.
4) Short Term Leases
If you have the right type of property in the right area, this is a great strategy for both a property that has been vacant or to increase rental returns, think creatively and offer your property as a short term executive stay or as a holiday rental.
5) Allow Pets
As long as you properly allow for damages in the rental contract (such as the tenants responsibility to fix damages, clean and deodorise carpets etc) tenants will pay more rent for a property that allows pets than one that doesn’t. They also tend to stay in one place for longer because a pet friendly property is very difficult to find in most areas. In my many years of Managing Rental Properties I have yet to come across any long term damage caused by pets in a rental property. It comes down to tenant selection, a good agent and regular inspections. This is a great strategy especially if not many rental properties in your area allow pets.
6) Use a Professional Property Manager
Using a property manager will ensure your investment is managed properly and they will know the area and types of tenants your type of property will attract.
It is also worth discussing with your property manager their ideas for maximising your rent and what the expected rental increase could be given the current state of the market and property location.
There are plenty of other tips to increase the rental income of your investment property, some more expensive than others such as full bathroom or kitchen makeovers, creating additional rooms, solar panels or fully furnishing. It is best to go with a strategy that is cost effective for your particular property and can also give the added bonus of increasing your property’s value as well.
Whilst these are just some tips to increase your rental return, always be practical, don’t put something into a property you wouldn’t live with at home, so don’t lay the cheap ugly blue and brown carpet, don’t buy the hideous curtains just because they are on special at Spotlight, you won’t do yourself any favours in the long run. Generally aim for modern, easy care, good quality middle of the range priced upgrades.