When it comes to
managing your investment property to ensure you get the best possible returns,
nothing beats getting the best tips from people that have done it before you.
So here are seven
tips on how to best manage your investment property;
Keep Your Property In
Excellent Condition
There are many
benefits to keeping your property in top notch condition including attracting
high quality tenants, reducing unexpected maintenance, setting a high standard
in the entry condition report and the ability to maximise the rental return.
That doesn’t
necessarily mean that large renovations are needed, rather regular pre-emptive maintenance
and incremental feature updates are the best way to balance the cost against
the equity and rental return.
Keeping your
property in excellent condition also sets the standard for your tenants and by keeping
up appearances with a fresh coat of paint as required, attending to any
necessary repairs or even installing an air conditioner or dishwasher to
attract more tenants, you will reap the rewards with a top rental price.
Additionally, you
are more likely to attract a tenant who pays their rent on time and treats the
property with the same respect as they would their own home.
Manage Your
Properties Like a Business
When it comes to
managing your investment properties, you should think like the owner of a
business, because that’s essentially what you are!
Use a professional
property management tool like RealRenta.com, take an active interest in all
aspects of property management. Invest in decent replacement parts and check
the references of repairers to ensure that property maintenance is completed to
a high standard.
Like any other
business you need to insure the investment property and have landlord insurance
for when things do go wrong. Having effective systems in place can save you a
lot of money and time down the track.
Keep Records
If you had hundreds
of thousands of dollars invested in the stock market it would be common sense
to check its value every now and again, the same is true for the market value
of your investment properties, organise an independent valuation every 12 - 24
months. These are excellent records to keep and will be a guide to stop you
from over capitalising on improvements by pacing them with the accrual of
equity and land value.
Don’t Get Emotionally Involved
It’s easy to take
it personally and react emotionally when it comes to one of the biggest
investments you will ever have. However you need to understand it is a business
and things that you don’t like such as tenants missing a rental payment or not
looking after the property are inevitably going to happen. Keeping a cool head
and maintaining a professional approach will always result in a faster and
better outcome for you. Furthermore if you have the insurance, tools and
processes behind you then any issues that arise should be manageable. A communication
platform such as RealRenta.com logs all communication between tenants and landlords
and can be invaluable if disputes arise.
Keep an Arms Length
When managing your
own investment property, it is good to have a healthy relationship with your
tenants, but getting too cosy with your tenants can actually cause a world of
pain for landlords. Firstly, there’s more chance of tenants taking advantage of
your personal relationship and making requests you don’t feel you can refuse or
asking for extensions for rental payments. This is why having a property
management tool is a must to facilitate professional communication.
Secondly, if you
stretch the friendship and pop around to visit too frequently, the tenants
might end up accusing you of breaching their legal right to quiet enjoyment of
the rental property. Again, this is where the benefits of a property management
tool to establish a professional relationship like RealRenta.com, is
invaluable.
Stay On Top Of Rent
Reviews
To maximise the
return on your investment it is essential to keep on top of where the rental
market is heading.
Conducting annual
rent reviews will ensure you always achieve the best possible price and
therefore returns on your asset. Often, by increasing your rent in line with
the market, you can decrease the divide between rising monthly mortgage
repayments and the contribution your tenant makes each month.
But you can’t get too
greedy as it can have the opposite effect and alienate a good tenant, who might
decide to move out. For this reason, you need to weigh up whether gaining a bit
more in the short term could see you lose out in the long term because your
property is overpriced and remains vacant for longer.
Having your
property vacant even for a week can eliminate any profits you may have got from
rent increases. It is always better to have a good long term tenant than risk
having your property vacant and you may not find the next tenants are as good.
Have Good Help!
All licenced
property managers utilise property management software to manage their tasks so
it makes sense that self-managed owners should use a similar system. A good
business owner recognises that they can’t do it all themselves.
Employing the right
processes and using the right tools to help will be a great benefit in the long
term. As previously mentioned a tool like RealRenta.com will collect the rent,
do invoices and receipts, send rent reminders and breach notices automatically,
handle maintenance issues and has a communications platform to log all
communications with the tenants. Best of all, it is all done within the
parameters of the laws pertaining to rentals and in a professional manner.
By using a good
property management tool like RealRenta.com and paying a small, tax deductible
fee for the services, you will ultimately free up your own invaluable time to
do what matters most – finding more lucrative rental properties to add to your
portfolio.
Jason Gwerder
Friday, 29 January 2016
