Before you can create a strategy to maximize your property investment returns, you need to understand how it’s currently performing. Are you generating the right rental income, are you claiming all the right tax deductions, what’s the condition of your property, is there an opportunity to improve rental yield through renovations and have you protected your asset?
Here are 5 ways to help you review your property’s current performance, to ensure the foundations are in place to create a high performing strategy.
Are you charging the right rent?
Are you getting the right rent? This is fundamental to the success of your investment and it’s important to review this each year.
Your property manager will provide you with the best indication of what your rental income should be and also advise you on when you should be increasing the rent and by how much. Remember, you want to make sure that the rent you are asking for is competitive in the market so that you attract good tenants while also getting a strong rental return.
It’s also important to do your own research of the market, to get an understanding of how much similar properties are renting for in your area. When looking at comparable properties look for the same suburb, the same sized house/unit in a similar condition with similar amenities and land size. If you find you’re under charging talk to your property manager to see what they think as they live and breathe the local market and perhaps look to increase your rent or look to adjust it once the current lease has ended.
What is the condition of your investment?
Not surprisingly the condition of your investment can have a big impact on the quality of the tenants you attract, how much rent you can charge and whether your tenants are keen to resign the lease.
Before knocking down any walls, consider what potential tenants are looking for and what is in demand in your local area. For example, if you’re targeting students, perhaps creating a study area would be appealing with some additional built in storage. If you’re targeting family renters, perhaps consider small renovations that increase the overall functionality of the property.
Updating old appliances such as dishwashers, installing air conditioning units, fresh blinds and curtains can all add to the appeal of the property. We cover this off in more detail in the next chapter.
Investment Loan review
The lending market is highly competitive and new products and packages are constantly being released. Talk to your home loan consultant to see if you can reduce the interest or fees you are paying. Compare this to competitive home loan rates and see if they are better and ask your lender if they can at least match the interest rate of the other lenders. If they can’t perhaps consider moving your business. But keep in mind any loan switching and set up fees as these can be quite hefty.
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Are you claiming all your expenses?
A key bonus of owning an investment is the ability to claim your expenses, so making sure you’re claiming all of them should a be a priority for both you and your accountant.
Basic information to provide to your accountant
Your accountant requires some basic information such as the address, the number of days during the tax year that the property was available for rent, and how many days it was rented, plus a summary of anything you’ve sold or bought for the property through the year. You’ll also need to provide a comprehensive list of all the expenses related to the property and the income you’ve earned from the property over the year.
Are you insured?
Insurance on rental property’s goes beyond insuring the building against fire or natural disaster. Landlord insurance is an important part of helping protect your investment portfolio. If you don’t have this already, it is definitely worth exploring.