Maximising Your Rental Returns
FACT – Do you know that we pay your tenant’s rent if they don’t?
People become landlords for a variety of different reasons and due to different circumstances, but one thing that they all have in common is the need or desire for their properties to produce a maximised rental return. As everyone knows, property investment is one of the best ways to earn a passive income. If handled properly with the right property management, you can earn a highly desired cash flow. But this may not be the case if your property management prefers to provide a high quantity over quality service, and it may cause you to lose more than you gain more from your property. To avoid these mistakes here are three tips you should always consider so you can maximise your rental returns.
There are certain times of the year here in Townsville that we call the “peak leasing period”. This mostly occurs during the months of January, February, June, and July. It’s when the search for a rental is in high demand within the market, creating a competitive atmosphere. The peak period is caused by many different factors, most commonly – defence postings, 6-12 month lease end dates, and families moving due to work commitments. With such a high demand in rentals for potential tenants, it’s a sign that landlords will get the opportunity to maximise and increase their rental return during these periods. When this time of the year comes, it’s a good sign for landlords as their rental return may get higher.
We’ll tell you our secret! If your tenant is coming up to their renewal or you are about to rent out your property, you would want to look at ending the lease within the peak leasing period. So the next renewal or vacancy will decrease any vacancy loss and increase the rental income. Remember, there are no rules around the length of lease, so you can choose a shorter or a longer lease. The main aim is to maximise your returns in the future.
Reducing your vacancy period
Good property managers understand the substantial impact vacancies can have on any landlord and their rental property. However, an agency with the right processes and systems can reduce vacancy time in many ways. One option is to ensure your tenants are happy and want to renew their lease with reasonable market increases. Tenants won’t vacate if they don’t need to and prefer to live in the property long-term most of the time. Vacating is very stressful and expensive for tenants, so it’s always the last option they consider. I’ve had a lot of owners come to me and ask, “Why do our tenants vacate every now and then?” There are many reasons for why this happens, but a lot of the time it comes down to poor communication from their previous property managers. We all know communication is the key to having a great relationship with both tenants and landlords. If communication isn’t given enough importance, it could potentially cause problems during the tenancy and a property vacancy is one of those problems. It’s important to remember, if you as a landlord are not receiving the expected amount of communication from a property manager, then you should be questioning the level of communication your tenant is receiving as well, and how they are feeling. Communication is key.
Now that we’ve explained when to rent and what to avoid, let’s discuss rental income.
Increasing your rental return with the lowest vacancy period
It’s very important to focus on maximising your returns and renting your investment property at the best possible price. We choose the best price for your investment by researching data and statistics about the property, the area, and the current rental market. This data includes the similar rentals in the same neighbourhood and suburb as your property, any special features that differentiate your property, and a reflection of feedback from prospective tenants regarding price.
Feedback is really important. Feedback provides an opportunity to find out what prospective tenants think about your property and possibly why your property hasn’t been rented yet. There are a number of possible reasons for properties not renting. The price may be too high and there is maintenance to be done, for example holes in walls, leaking taps, garden maintenance. Or the property may need some potential improvements such as new carpet, an internal repaint, or air conditioning installation to add value. There may even be times that potential tenants may not see the value in your property, however, this feedback can profit you in due time. There will always be negative and positive comments, but it is important to take all comments on board to improve your investment, your rental return and reduce the vacancy period.
Every week, vacancies cost you 2% of your annual income so it’s really important to be reactive with your price and your property manager. Don’t be afraid to speak out and let them know what you think is best for your property. Remember, a good property manager will help you increase your annual income and not decrease it, while also providing professional advice, which will benefit your investment, capital growth, and rental yield. If your current property manager isn’t doing these things, give Coral Sea Property Management a call on 07 4724 1723 and change to a real estate company that does!