EXPERIENCED PROPERTY INVESTOR GUIDE
How to maximise returns from your property investment
As an experienced property investor, your focus is undoubtedly on driving the greatest returns from your investment in order to achieve your longer-term financial goals.
This guide has been created in conjunction with our most experienced team of property managers to help give you proven insights into how to maximise your returns and drive greater results from your property investment. We look at how to conduct a property investment performance review, tips on how to add value and increase your rental returns, how to retain good tenants, what to look for in a high performing property manager and loads more.
We hope you find it useful.
CONDUCTING A PROPERTY INVESTMENT PERFORMANCE REVIEW
Before you can look to drive greater returns from your investment you need to understand how your current portfolio is performing. In order to do this, set aside half a day or more each year to assess your property and its performance.
This ritual can help identify opportunities to both save money and to make more money.
When reviewing your property’s performance consider the following points.
Property investment review criteria
- Are you charging market competitive rent? Look at similar properties online and talk to your property manager
- Has the property’s value increased since your last review? Do you have any additional equity in the property that you could use for other investments?
- Are you on the most competitive home loan rate? Can you get a better deal?
- Are you on the right insurance policy, is the premium competitive, could you consolidate polices for better value?
- Do you have ongoing issues with the property? Would it be better to off load the property and invest elsewhere?
- Do you have the best investment team supporting you? Are they providing proactive service and advice you require?
- Are you maximising your taxable expenses? Organise to meet with your accountant to ensure your claiming all possible expenses
- Do you need to make proactive repairs to your property? You or your property manager should inspect your property regularly so you can identify and address any potential maintenance issues
- Does your rental yield align to your investment goals? If not, what changes can you make to help you achieve them?
For more insights read our 9 Ways to Review your Investment Performance article.
HOW TO ADD VALUE AND INCREASE RENTAL RETURNS
One of the key benefits of investing in property is you have the ability to make changes, that if done correctly and without over capitalisation, can help add rental appeal and long-term value to your asset.
Here is a look at some changes that can impact your investment property’s rental appeal and its potential long-term value. Keep in mind if you are making bigger changes, talk to your local McGrath Sales Agent and find out what buyers are willing to pay more for in the area.
Whilst you may not be looking to sell at the moment, planning ahead and having a property that will appeal to buyers down the track without over capitalising, makes good investment sense.
12 changes that can impact your investment property’s rental appeal and value
- Paint the walls
- Tidy up the garden
- Fix the flooring
- Update the kitchen
- Refresh the bathroom
- Add some extra features such as blinds or shutters
- Add built in’s and storage
- Add a parking space
- Create or enhance the outdoor living space
- Adding security to the property
- Keep it well maintained
- Improvements to the apartment building
Before you start planning to make any changes, it’s a good idea to talk to your local property manager to understand your target market and what appeals to them.
Having this insight can help guide you on what improvements could have the biggest impact on the quality of tenants you attract, the rent you can charge and the long-term value of your investment property.
HOW A HIGH PERFORMING PROPERTY MANAGER CAN ADD VALUE
Property managers today are highly skilled professionals that play an integral role in the success of a property investment.
A high performing property manager will help their clients across a number of key areas including the following.
For more information read our 8 Ways Property Managers Add Value to a Property Investment article.
Setting the right market rent
Property managers are skilled at assessing individual properties, its features and location and reviewing comparable rental properties to determine a market competitive rent.
They are also aware of what local renters want and importantly what they are prepared to pay more for. Having these insights is very valuable for an investor.
To find out more about adding value to your investment, download our How to Maximise your Property Investment Guide including a chapter on 10 ways to add value to your investment.
Skilled at reaching the greatest number of potential tenants
Skilled at screening tenants to find the right one
Retaining good tenants by addressing day to day demands
Nothing will zap your profits faster than vacancies, so having someone managing tenant concerns and addressing maintenance issues on your behalf in a timely manner, can help ensure tenants are happy and vacancies are limited. Plus, property managers have a team of maintenance specialists who can be mobilised quickly and economically into action, to fix any maintenance issues.
For more information read our Practical Ways to Attract and Retain Good Tenants article.
Help ensure you have accurate financial records
To ensure you are maximising the tax effectiveness of your property, you need to ensure your financial records are in order.
Property managers can be a huge help here and can provide you with a fully itemised statement each month, along with a comprehensive rental statement at the conclusion of each financial year for you to give to your accountant.
Conduct regular inspections to ensure your property is being looked after
Managing rent, including setting, adjusting and collecting
Property managers with their tried and tested systems are highly efficient at working to ensure rent is collected on time. They also have strong rental arrears procedures that they are skilled at implementing should a tenant fall behind. Having an independent property manager look after this can help save landlords a lot of stress and a lot of time.
For information on what rent to charge read our How Much is my Property Worth to Rent article.
Knowing specific local landlord-tenant laws
Landlords have a legal obligation to comply with the regulations set out in their relevant Landlord-Tenant Law. This documents interactions, rights and obligations of both landlords and tenants. In addition, landlords are obliged to comply with local state and regional legislations and not doing so can have serious implications for the property owner.
Property managers stay up to date with the changes and can help keep their landlords informed.
Plus, their fees are normally tax deductible
In most cases property management fees are tax deductible. So, in reality landlords are able to access all of the benefits offered by property managers and then offset their costs against their tax. Of course, talk to your accountant about your property and specific tax situation.
To find your local McGrath Property Manager and understand how they can help you add value to your investment and keep you on track to achieve your investment goals, click here.
HOW TO GET GOOD TENANTS TO RENEW THEIR LEASE
Stable tenants who look after your property and pay their rent on time are incredibly valuable to an investor and undoubtedly a key priority for you. By retaining good tenants, you don’t need to spend money on advertising for new ones, nor worry about how a vacancy may impact your investment loan obligations.
But what can you do to keep your tenants happy?
Open lines of communication and clear expectations
Setting realistic expectations and time frames to address issues as they arise during a tenancy is critical. If tenants understand how quickly maintenance issues will be addressed, when to expect an email response from the property manager, how often the property will be inspected etc, it paves the way for a smoother relationship.
Address any issues as per the agreed timelines
If issues arise during the tenancy ensuring you or property manager act within the agreed timeframe helps instil trust between you and your tenant.
Conduct regular inspections
By conducting regular inspections (approx 2-4 per year) it not only enables you to keep an eye on the property so you can proactively address any issues, it also provides opportunities for the tenants to communicate openly with or your property manager - helping to create a stronger working relationship.
Consider allowing pets
If your property allows pets, offering this as an option for tenants can be very popular. Tenants are often keen to sign longer leases and pay slightly more rent if they are able to have their furry friends with them. Of course, ensure both you and your tenants sign a pet policy and check with your body corporate to ensure pets are permitted before offering this.
Only make small rental increases
If you are looking to increase the rent, it’s advisable to only make small increases and to ensure you understand the legislation in your State or Territory with respect to how often this can be done and the notice periods required.
Be a bit flexible
Maintaining a degree of flexibility with good tenants can help keep them happy. From time to time, requests are made by tenants, such as small alterations to the property that will not impact the value of the property or may increase the value of the property. Being prepared to be flexible when these requests can help with tenant retention.
Offer them an incentive to renew their lease
If you have great tenants, consider offering them an incentive to stay. Popular incentives include offering a gardener, adding appliances such as a dishwasher etc. Talk to your property manager about what might work here for your tenants.
Ask them to renew their lease
If you’re happy with your tenants, let them know and before the lease ends ask them if they’d like to sign another lease. To make it more appealing, perhaps offer an incentive for them to re-sign.
EVALUATING YOUR CURRENT PROPERTY MANAGER'S PERFORMANCE
Given the significant role your property manager plays, ensuring you partner with a high performing one is important. But how can you assess your current property manager to determine if they are the best one for you and your investment?
- Is your current property manager fulfilling their responsibilities? For example, are they collecting rent on time, conducting regular inspections and providing you with reports, managing maintenance issues and conducting rental reviews?
- Do you have consistent unaddressed issues with your tenants? This could indicate your property manager is not performing as expected
- Is your property manager addressing any maintenance issues as per your instructions? Do they make proactive maintenance suggestions? Ensuring your property is well maintained and compliant with health and safety regulations is critically important both from a legal perspective but also can help save you money in the long run
- Do you often receive late rent payments? Cash flow is important as it impacts your loan repayment. Consistent late rent payments may indicate that your property manager is not enforcing the rental arrears procedures
- Is your property sitting vacant for months on end, with no prospects of finding a tenant? A seasoned PM will understanding what the local days on market are, whether the asking rent is in line with the market and ways to refresh the way the property looks both digitally and in person.
- Does your property manager inspect your property regularly and provide you with reports? Do they keep you informed on your tenants, their intentions to stay/move and updates on repairs and maintenance?
- What is your relationship like - does your current Property Manager understand how you like to be communicated and how often? Good Property Managers understand this to make sure they are building the best working relationship with their clients
- Is their fee structure transparent or are you hit with hidden fees?
- Do they provide you with the necessary documentation for your tax reporting purposes?
- Do they or their team have depth of property management experience in your local area?
- Do they proactively keep you informed of legislative changes and how they impact you?
- Do they offer a full range of services including rent payment management, maintenance, marketing, tenant screening, rental appraisals and inspections? If not, you might be missing out on better quality tenants and higher rent
WHAT QUALITIES SHOULD YOU LOOK FOR IN A HIGH PERFORMING PROPERTY MANAGER?
Finding the right property manager is important for your investment’s success but what qualities should you look for? Here are the key qualities that we believe define a high performing property manager.
- Have excellent communication skills
- Are highly efficient and organised
- Are trained and educated with a focus on continual education
- Have in-depth knowledge about the local rental market
- Are experienced or part of a highly experienced property management team
- Have an investor mindset with a focus on helping their landlords maximise their investment success
- Have strong references from both landlords and renters
- Have a strong ability to negotiate and be stern when required
- They offer a wide range of services and can take care of most of your management needs on your behalf
- Work within a high-profile agency with high website traffic, proficiency with rent lists and other marketing strategies to help enable them to market your property effectively
- Are committed to ongoing professional development to ensure they stay up to date with changing tenancy laws and they keep you informed when changes impact you.
WHAT QUESTIONS SHOULD YOU ASK A PROPERTY MANAGER TO FIND THE RIGHT ONE
Now you know the qualities to look for, here are a series of questions to ask your shortlisted property managers to help you find the right one to join your investment team.
- Who will be my primary point of contact and how long have they been with the company / Industry?
- Other than your letting fee and management fee, what other fees should I be aware of?
- What is your policy on rental arrears?
- How many similar properties do you manage?
- Are all your tradespeople licenced?
- What training does your company hold?
- How often do you inspect property’s and what reports do you send?
- What online tools do you use, can I get real time reporting?
- How do you screen tenants?
- What’s your average days on market?
- What’s your vacancy rate?
- What’s your list price to lease price ratio?
- What is your team structure?
- Can you show me your customer experience system and ratings?
- Can you share any Google reviews or testimonials from landlords and tenants
A final word
As in investor staying informed about what is happening across the Australian real estate market is important. To help you understand the latest property trends, how the real estate market is performing across the East Coast and where John McGrath see’s the next property hotspots, download our annual McGrath Report with the link below.
I'M READY TO MAXIMISE THE RETURN ON MY PROPERTY INVESTMENT
Do you own an apartment investment property or an investment house? Get a rental appraisal from your local Property Manager and receive a detailed report of your property, a summary of the current market conditions, a rental pricing guide and practical information on how to unlock greater returns from your property investment.
Simply fill out the form below and one of our Property Managers will be in touch.