So you have just bought an investment property…congratulations but believe it or not, that was the easy part! Making it a profitable return will largely depend upon what YOU do next.
This is a considerable financial outlay…so now, on with the job of finding that gilt edged tenant that will move in, pay the rent, ideally stay for an extended period of time and treat the house as if it is their own.
If you want a high-quality tenant then you need to incentivise them that your property offers better value for money than the next.
Whether it be a first-time venture or adding to a current portfolio it is important to remember the key word is investment and unlike the share market there are opportunities you can seize to physically improve your yield return.
So, let’s examine what things may be available to ensure the maximum return from your investment.
1. Pet Friendly
See January blog on benefits of accepting suitable pets in properties.
2. Provide modern technology
Consider: internet connection, extra power points, outdoor power points, pay TV availability, TV aerial ports.
3. Install Heat Pump/ Reverse Cycle Air Conditioner!!
This is just about number one on the tenants “hit parade.”
4. Value add
Security screens, curtains and drapes, quality blinds (not cheap plastic verticals), new appliances…not your twenty-year-old fridge and washer.
5. Parking
Build a carport or garage if space is available.
6. Storage options
Tenants need storage! ie built in wardrobes, storage shed, pantry, linen closets.
7. Install solar panels and insulation.
Check government rebates and tax benefits.
8. Painting inside/outside
No better improvement than having a freshly painted house, particularly internally. Exposed cracks and discoloured walls are a terrific deterrent to quality prospects.
9. New Flooring
Floors are where the prospects eyes go just after looking at the walls. Quality tenants rarely accept threadbare carpets, worn floorboards or torn lino.
10. Gardens & Landscaping
This is a real personal favourite especially if the property has superbly presented gardens…I am sensing a future blog on this. In short including a gardener is an expense that can be incorporated into the asking price, removes onus upon tenant, preserves the value…which can be considerable and encourages time poor professionals.
11. DIY
If you are a bit handy on the tools, don’t mind interruptions to your life, are prepared to reference check prospects, and comfortable navigating tenancy legislation then saving money on fees is always an option.
Some agencies offer “Letting Only” services whereby they do the leg work of finding the tenant and give the property back to the owner to manage.
12. Regular market reviews
This is a balancing act when doing lease renewals…don’t hit quality tenants with full market increases at the expense of losing them. It is a costly and time consuming exercise replacing good tenants.
At the same time, you need to keep pace with the market rate so the property doesn’t fall too far behind as this affects the yield return and diminishes your investment performance.
13. Long leases not short term
Too many vacancy periods with short term leases, whereby the overall return is reduced and expenses diminish any perceived extra income.
The secondary benefit to adding improvements is that more often enhancing features of your property will add to the overall capital value as well.
