By Danielle Antonello
Property Manager, Ray White Maroochydore
Do you own real estate as an investment and want to know how you can maximise the return on your rental property? I’ve put together our top tips to help you get the best value from your significant investment.
Why should you keep your rental property return close to market value?
Your rental property could be considered a business, and as such it is a valuable asset. Most investors aim to pay off as much debt attached to the property as possible because they want to invest further or plan their retirement. To do this, you need to be maximizing your rental returns!
A goal of your managing agent would be to provide you as much assistance and guidance to ensure you get the best growth possible on your investment return.
Are you achieving the best rental property return?
According to the latest statistics, the rental market on the Sunshine Coast has experienced a significant increase in rental prices over the past few months. This is due to a combination of factors, including growing demand for rental properties, limited supply, and increased cost of living.
The Sunshine Coast rental market return has nearly doubled over the past two years. We have seen property rent increase from $350 to $500 per week during this period (as at January 2024). This is an opportunity for investors to review the market value of their rental rate in relation to the median values for similar properties.
How can you keep quality tenants in your rental property?
Keeping quality tenants in your rental property benefits your property over the long term. Did you know most tenants are happy to pay higher rental prices on well-maintenance rental properties? Having a higher rental return allows you to manage your funds to keep on top of maintenance and improvements to your property.
In addition to well-maintained properties, tenants also look for rentals with air conditioning and/or fans, along with newer fixtures and fittings. These conveniences and upgrades mean good tenants are less likely to look for alternatives when their lease it up.
Turning over tenants
When a rental property is well-maintained tenants stay longer and are understanding when increases are applied. An excellent long-term tenant will often save you money in the long run. We recommend informing tenants of the current market price to provide them with a more balanced perspective on the rental price.
Once that information is processed you may consider offering them a lower rate while being mindful of any of your increased expenses. Remember, this is your business, and if you are looking at for example, a 5% increase over a year, this can add up dramatically over ten years.
Are you worried about finding new tenants?
This is why it’s imperative that you work with a trusted agency with a dedicated leasing manager. This ensures individual and personalized attention, as well as expert guidance throughout the leasing process. In addition to their expertise, a dedicated leasing manager handles all the negotiations with prospective tenants while providing detailed feedback and personalised service.
Working closely with a tested property manager means they know all the processes and can ensure you are informed as well as protected throughout the process. This will ultimately result in reducing the number of days your rental property is on the market and ensure that you maximize your rental return!
How often should you get a current market valuation?
We recommend all investors complete a current market valuation 2-3 months before every lease renewal. Before making a renewal offer, the market valuation allows you to see what rental rates other homes in the area have achieved in the recent market. The Sunshine Coast and similar regions are heavily driven by interstate moves, and you will find the rental values in summer are dramatically higher than a property rented in winter.
What about loan interest rates and insurance?
It’s important to review your rental property loans annually to ensure that you are getting best interest rates for your investment. Your bank or mortgage broker can provide you with the information you need in relation to interest rates and your financial adviser can provide you with investment advice.
Regularly checking your that your rental property is adequately insured is also important. Building costs have increased significantly and having the appropriate level of cover will help you restore and retain the value of your investment if there is loss or damage.
What about depreciation on my rental property?
To substantiate and then claim a tax deduction for your rental property you will need to have a tax depreciation schedule. These are available for new and older (built from 1980) new residential properties and may represent significant tax deductions on your return. If you haven’t previously claimed deductions for depreciation, you may still be able to get an adjustment on your previous returns. Speak to the team at ABA or your tax accountant to understand what is needed and how much you can claim.
Would you like to know what your rental property is worth?
I have been investing in property on the Sunshine Coast since 2008 and currently oversee the running of all property management operations at Ray White Maroochydore. I understand the local property market and can help you with your rental property management. To receive an instant, free rental estimate you can use this link to get a Property Report.
Ray White and ABA are not financial advisers and cannot offer financial advice on your investment property. We recommend you seek investment advice from a licensed financial adviser and would be happy to recommend a financial adviser if you do not have one.
Danielle Antonello and Ray White provide property management services and can provide you with specific and detailed advice in relation to managing your rental property.
ABA can advise and assist you with your tax strategy and accounting needs, including preparing annual financial statements and tax deductions in relation to depreciation on your rental property.