Increasing your rental property income could mean more money in your pocket
Your investment property is a valuable asset. So you might want to look at ways to maximise your returns.
There are two main ways to lift your returns. You can increase rent or lower your expenses. Both are worth a look.
A good starting point is to review the rent you’re charging. Compare it to the current market average in your area to see if the rent is reasonable or if you’re below market.
If you use a property manager, ask about reviewing the rent. Bear in mind each state has different rules for how often rent can be raised. You also need to give tenants plenty of notice . Check the tenancy agreement to be sure any rent increase doesn’t breach the lease terms.
Small rent increases may be easier for a tenant to manage than large one-off increases. Think about the health of the local rental market before any rent rise. It may also take time to secure a new tenant If vacancy rates are high.
Making improvements is another way to lift a property’s rent potential. These are not always cheap. But some minor renovations could boost your return .
Even a simple freshen up can give a bathroom a new lease of life. A fresh coat of paint, adding a new vanity unit and installing modern tap fittings or an eco-friendly showerhead could be a budget-friendly way to modernise an outdated bathroom.
Tenants sometimes value a carport or garage. It may also increase the property’s floor space and potential storage area, and adds value to the property.
Older properties can benefit from having floorboards polished or by adding a floating floor. These types of flooring may also be easier to clean, potentially lowering your maintenance costs.
Everyone can use extra storage. There are some low-cost options to add wardrobes or cupboard space that could increase your property’s tenant appeal and rental value.
Agent’s fees for managing rental properties vary widely. You could expect to pay a commission of between 7-10% of your rent. The reward could be a significant uplift in returns if you have the time and energy to manage the property yourself. The downside is you won’t get the benefit of a property manager’s expertise.
A property manager understands the legal requirements of tenanting a property. They also have contacts for local tradespeople and the time to check tenants’ references or follow up tenants who are behind with their rent. Taking a DIY approach may mean having to manage these tasks yourself .
Property management is just one expense you may be able to review. Taking the time to see if you’re getting a good deal on other services including insurance could also help cut costs to boost returns.
Taking steps to review the rent and costs associated with your investment could hold the key to improved cash flow and higher returns.