I just wanted to start a thread discussing ways of increasing rental returns.
Often times properties are available with existing tenants however they are paying below market rents. Increasing the rent or finding other ways to obtain increased income from your property can really increase your returns.
Some of the things I’ve done:
– repainting
– installing airconditioning
– weeks free rental but charge rental at $5 higher than market
– rent garage or car space separately to the homeAny other ideas????
Hi Dingo,
I would personally hesitate to install equipment that would need regular maintainance or could break down eg airconditioners, dishwashers unless it was specifically asked for or was necessary in a particular area eg far north Qld. Sometimes the return is not worth the extra maintainance.
Adding a carport if there is no existing garage or carport is something that is comparatively cheap and often easy to do.
Updating cupboard door handles or light fittings can make a big impression for little effort or cost.
Cheers,
Anne.
This is answering the question a bit laterallly, but getting a great tenant is way of increasing returns.
I have one property where the rent is a little below market. However the tenants have lived there 8 years, never been behind in rent, and haven’t cost me a cent in maintenance in the 12 months I have owned it!
This more than makes up for the $5-10 behind my other similar properties in the same area…Ben
Add in another bedroom is a good one or if you are near a uni you can rent out each room which will equal more than one tenant. Agree to do odd jobs say mow the lawn for an extra $5 a week. Just a couple of ideas.
Can someone please tell me what would happen tax wise if you were to take on the idea of Brett’s of mowing the lawn for an extra $5 per week. Does this mean that if you have bought the lawnmower solely for the reason of mowing this lawn that it would become a tax deduction? Also, would the trailer that you would need to tow it there (potentially if you have a sedan like myself) would that be tax deductible too?
G’day Dingo….
Personally I give a weeks FREE rent, “to help them settle in” but add $10 per week. Provided that they accept that the weeks free rent is afterthey pay bond and first 2 weeks in advance.
Include the lawn mowing “by you” in the lease. You get to keep an eye on the property too…for another $10 pw. You’ll only be mowing 6-9 months.
The mower etc are all tax deductible items, as they arean “expenditure in the persuit of income”.If already under lease you will need to check the legality of a rent increase. It would also pay to “Time to landscape your property”…
weed, mulch, sleepers, paving, plants, planter boxes, hanging baskets, wind chimes, bird bath and put a no junk mail on the letter box.Tell them that as you are increasing your property value and making it more desirable for them, it is only fair that an extra $10. per week is appropriate. Your cost $200-$300.
Compare…
$150pw x52 = $7,800……..$180 x 51 =$$9,180What would that do to your bottom line
Good that you are thinking this way!
Cheers
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Hi Dingo,
Great question. You have me thinking. Circumstances aside, prior to buying my current PPOR I had considered this:
Buy a house and flat. Live in the flat, rent out the house, with gardening done by me. I’d want it done anyway, I could do it during the week to provide the tenant with quiet enjoyment rights on weekends.
This could apply to your own portfolio of rental props if local and if prepared to put in the effort yourself. If so, make them low maintenance .. lots of paving .. and purchase God’s own invention “The Whipper Snipper” and a blower vac.
Bill mentioned 9 months a year. But, find an excuse to keep an eye on the place during winter. A quick clean is enough of an excuse. Property inspections should not be a big deal for the tenant this way. Just ask for a cup of coffee to get your head in the door.
Another thought: this may have come from one of the books, but expand on it. A “rent holiday” you mentioned. Like Steve says, reward the tenant. Provided rent is on time and the prop is in good condition, how about a week’s free rent well into the future, say the 9th month. Better still, the 14th month to encourage them to continue the lease for a second year.
If you are prepared to spend energy on your own rentals properly, presumably you will manage them yourself. You have just saved yourself the standard 10% agents fee.
Having said all that, there is the other side of the coin. An agent’s fee of say $25 a week on a rental of $250 can save a lot of headaches, confrontations and Saturday night calls.
In reality, Ben Deros has the best answer. A good long term tenant with no vacancy is what all landlords desire. There may be no need to jazz up the deal at a cost to you. Keeping it simple may be best.
Whatever you do to add value, consider the perceived value. That is, an expensive chandelier will not entice a tenant to pay higher rent. Time, comfort and effort have a value. The tenants perceived value of gardening might be worth $40 a week to them. But it might only cost you $10 to do it. Provided you charge a premium between the two figures, you are in front. Put value on your own time though.
Also make it easy for the tenant to pay the rent and easy for you to get it. Insist on electronic transfer of funds. That way, no excuses, it’s automatic.
Regards, Phil
Thanks for all the reponses.
Agree that the bast way to ensure good returns is to get the best tennant and then keep them for as long as possible.
I’ve actually seen a couple of IP in Newcastle been turned into student accommodation. These were large homes converted into 8 or 9 bedrooms with a large kitchen and communal area. Then the room are rented out at $60 – $80 per week. Not bad when the original rent would have been $250pw max.
Another idea is to increase returns by allowing tennants to rent items like fridges, washing machine, lawn mower, TV, etc. manty tenants may not have a full range of appliance and will gladly rent them off you for $5 pw. I know its extra work and you do need to take into account maintenance and repairs but I think it can work. Especially when you look at how much whitegood rental companies charge.
When I’m looking at properties I also look at what other usesses the property could be put to and what opportunities there are to gain more income.
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