Your rental property is an important investment that should be treated like any other profit generating business. Property investors should be thinking about how they can increase their rental yield in any way possible. This requires thinking about practical aspects of the asset itself (the property) as well as other factors that may influence profitability, ranging from how the property is managed to what kind of tenants you are renting out to. Below we look at a variety of ways you can increase profit and improve ROI.
Landlords should aspire to find a long term tenant in order to minimise vacancies and turnovers. To find the right tenant, you need to understand what kind of demographics your property appeals to and cater to the wants and needs of those individuals. For example, allowing pets can boost revenue as pet owners are often willing to pay more to find pet-friendly rentals.
If you have a tenant moving out, you should begin advertising for a new one immediately to minimise the period of vacancy. If you’re struggling to find a tenant, reconsider the price you’re asking for as it may be having an impact. Remember that you should be trying to provide the best value by offering something different compared to other properties, whether that’s a better price, appealing policies or an extra service.
Turnover costs money in multiple ways – advertising costs, the cost of maintenance and the lack of revenue from the vacancy itself. Ensure your customer service is efficient and that your tenants are treated with respect and professionalism so they want to stick around. Treat all their concerns as valid and ensure any important matters, such as repairs, are dealt with urgently and to their satisfaction.
Assess whether your property manager performs in a manner that fosters a good tenant/landlord relationship by asking them for feedback from tenants, letting them know their opinion is valued and that they can contact you directly if there are any issues.
Be Dilligent With Late Fees
Showing kindness and respect to tenants doesn’t mean you should be a pushover when it comes to rent collection and late fees. Once again, you need to treat your rental as a business and the collection of rent is your essential source of profit. Tenants must understand that they signed into a contract to pay rent recurringly and that there are consequences for failing to meet these terms.
Add Additional Revenue Streams
You can create other revenue streams with additional services such as landscaping services or house cleaning which can be offered to tenants when they are signing the lease. In many cases, they may be happy to pay extra to avoid the responsibilities of housekeeping. This also ensures that the property is well-maintained.
Increase Rent Strategically
Increasing rent for your rental property is something that can easily go wrong if not handled properly. Landlords must know the value of their property relative to competition. This requires researching similar rentals in the area and determining whether you can increase your revenue a small amount each year (1 to 3 per cent) whilst still remaining competitive.
Consider other tactics you may be able to use to increase rent. For example, you could introduce an offset to new costs which cover utilities and amenities the tenant wants like an air conditioner. Ask them what would make them more comfortable and select items that will justify a rent increase whilst also increasing the market value of the home.
Barnett Real Estate Can Help!
Managing a rental property and finding ways to maximise your yield takes time, knowledge and effort. At Barnett Real Estate, we can help property investors in Geelong take care of these matters and offer quality real estate ROI advice. With our expert property management, you can ensure your investment is performing optimally and is in the best possible hands.
If you’d like a rental appraisal, get in touch with our team today or fill out our rental appraisal form.