Achieving the best rental return from your property investment is undoubtedly a key focus for all property investors.
With the new financial year well and truly upon us, now is the time to act and implement steps to maximise your cash flow.
It pays to remember there is more to investing in property than the rental return and there are several expenses you should plan for over the course of the financial year There include insurance, council rates, property management fees, building maintenance, as well as strata or body corporate fees, which are all expenses that affect cash flow.
Creating a budget is a vital step to juggling all these expenses and will help you keep track against the money the investment property is making for you. As part of your budgeting, pick a month, or a two to three-month window and diarise dates such as lease expiry dates, when insurance fees are due, as well as property management fees. These dates should paint a clearer picture of your expenditure. This information will also help create a cash flow projection for the year ahead.
To help monitor revenues, keep a keen eye on the market. What are the advertised asking rents of similar investment properties in your area? It is essential to be mindful of average asking rents as you don’t want to price yourself out of the market and be left with a vacant property and no income when your lease expires. Maintaining consistent lines of communications with your Raine & Hone property manager will be a big help here.
Property maintenance can be a significant outlay for any property investor. Make sure water leaks are fixed fast, check your reticulation and get your air-conditioners and garage doors serviced regularly to save you from more expensive repair bills down the track.
Think about your investment loan. Can you service the mortgage entirely with the rental income? What happens if your tenant leaves? Can you afford the repayments if you struggle to find a new tenant?
Do you have landlord insurance, and does it adequately cover your needs? Alternatively, if a tenant broke the lease after damaging your property, can you afford to pay for the repairs and loss of rental income? Landlord insurance is an outlay you should strongly consider when drafting your plans for the new financial year.