We often hear about all the things to do when we have an investment property, but what are some of the things we shouldn’t do?
Not doing regular rent reviews
Some people think that if the tenants pay rent of time and look after the property they shouldn’t need to get a rent increase, investors get comfortable and say things like ‘oh they are lovely tenants and have been there for so long, I can’t increase it now’. It all starts after one or two years of not increasing the rent, the longer you leave it the worse it is. We recently came across an owner who has had the same tenants for almost eight years, not once was the rent increased. Now the property is going through a period where maintenance items are coming up and its costing the owner. The property is at least $80.00 per week under market, which makes bringing it back into line with comparable properties very difficult.
Solution? Conduct regular rent reviews and small consistent increases, this will keep the rental return in line with outgoings and the tenant will not be hit with a large increase when they are least expecting it.
Not keeping up with repairs and maintenance
Owners who only do the bare minimum when it comes to maintenance often think they are saving money, that the investment shouldn’t cost much and tenants can ‘make do’. It is the tenants home. The better the environment that we provide, the more the tenants will appreciate it and do the right thing by you as the owner. The less the owner repairs and maintains the property, the more frustrated and disappointed the tenants become. Keeping the tenants happy is one thing, but more importantly it’s just like a car, constant servicing will keep the car running better for longer. If we don’t do the small repairs they eventually become big repairs and in some cases, require a property renovation as the property becomes un-rentable in its current condition which can end up costing more in the long run.
Solution? Conduct regular inspections and take the time to undertake regular maintenance, the property will thank you for it.
Not be thinking how can the property be improved
Have you recently undertaken a review of your property and considered how you can improve it? Not just on a superficial level with repairs and maintenance but an assessment if each area of the house is working for you as an asset? For example, we advised a client who had a beautiful large spa bath that took up whole room to remove it and make it a 4th bedroom. At first, they were hesitant as they used it regularly, and be regularly they narrowed it down to approximately 12 times a year. We transformed it into a 4th bedroom and increased the rent by $80 per week, easily accounting for the capital investment within two years, not to mention increasing the resale value. Maybe it’s a pool that let’s face it, in Melbourne may get a run for two months out of the year, it may be worthwhile removing it and extending the property, or turning it into an outdoor deck that would increase short and long-term value.
Solution? Take time to review your property and its layout and do a cost benefit analysis to see if removing an underused feature of your property and replacing it with something of more use is worthwhile.
It’s also worth noting that repairs and maintenance and certain capital improvements can be tax deductible, speak with your accountant to find out more.
If you want to get the best out of your property, give us a call to find out how we can help.