Is your rental investment returning what it should?
Thanks to recent changes in legislation and a somewhat stirred-up housing market, owning a rental property in New Zealand (and profiting from it) is not as easy as it used to be. However this country needs rental housing stock as much as ever, and from a diversified portfolio point of view, investing in property remains a solid option for many Kiwis.
The key to making the numbers work is to watch the market closely (consult experts when necessary), maintain a long-term view, and continuously look for ways to optimise the income from your investment, so you enjoy the journey! Here are a few tips to help you on your way.
Attract the right tenants
Real estate trends are constantly on the move. So if you want your rental to appeal to the widest possible audience, it pays to keep abreast of what’s hot and what’s not! From seemingly small things such as your interior colour palette, lighting and floor treatments right through to functional aspects of the home, like air-conditioning, storage and fittings, these are all ‘desirables’ - which, done well, will set your property apart, attract the right tenants and, ultimately, optimise your rental income.
Charge the right rent
Weighing up rent increases with the risk of vacancy is definitely a balancing act. But still, it’s important to conduct regular rent reviews to ensure you’re meeting the market. Things to consider include - what your property is costing you, its current value and comparative appeal, what other rentals are available in the neighbourhood (supply and demand), as well as the cost and effort of moving for your tenant/s. Luckily there are tools that draw on the latest, timely data to analyse your rent level, to see if there is room for movement and to check if it’s competitive. Talk to our property management specialists here if you would like an up to date appraisal or more information.
Stay on top of maintenance
Obviously if your property is in a poor state of repair this will affect its value and rental yield. Scheduling regular maintenance checks, responding to tenants when issues arise, and having a network of trusted tradespeople who can get to your property to sort out problems quickly and efficiently, are all important priorities for you, as the owner. It may also be worthwhile to consider periodic renovations – as mentioned, dated homes reduce tenant interest, which in turn impacts rent.
Make your property pet-friendly
Allowing your tenants to have their furry friends along will certainly boost your income potential, by widening the pool of potential renters, and allowing you to charge a premium in areas short on similar accommodation. However, if you’re going down this route you may need to add a few pet-friendly features – such as fences, pet doors, and scratch-proof floor coverings.
Keep an eye on interest rates
Interest rates fluctuate. So it’s important to monitor your loan and benchmark it against the market from time to time so you know you’re getting the best bang for your mortgage buck. Even the slightest increase can amount to a lot of money over time; if you’re not happy with your current lender or situation, shop around.
Claim what you can
Although some tax advantages are being phased out, you can still claim the usual operating expenses (i.e. the costs that are incurred in generating rental income) on your investment property. Everything from routine repairs and maintenance, through to professional service fees (e.g. accountants, lawyers, property managers), rates and insurance, vehicle and travel expenses and depreciation on capital expenses (e.g. whiteware, appliances or heat pumps). It all adds up!
Call in the professionals
While everything that we have outlined above is designed to help you optimise your return, by far the simplest and smartest move - for any rental property owner - is to get a professional property manager on board.
Our specialist team at Barfoot & Thompson offers tailored services and total peace of mind by handling all facets of your investment property. From marketing to tenant screening and selection, right through to rent collection, inspections, market reviews, maintenance and repairs as well as dealing with and advising on any tenancy issues. Handled with care, and the level of local knowledge and expertise you need.
For more information, or a free appraisal, please don’t hesitate to get in touch.