Guest Blog – Maximising the Return of Your Investment Property
- October 31, 2018
- by Endorphin Wealth Management
When we talk about maximising the return on your investment property, we’re referring to several factors that should be considered when calculating your rental income over a 12 month period. It’s not just achieving the highest rent, although this plays a big part, there’s also many other aspects to take in to account.
Is there an oversupply problem?
As an investor, you are more than likely aware that Melbourne’s inner city has seen a huge growth of the number high-rise developments, creating the idea that Melbourne now has an oversupply of dwellings. The good news for investors of these properties is that the tenant demand is still strong, keeping up with the increased supply (it is estimated that Melbourne’s population grew by about 120,000 people last year). The bad news is many investors aren’t taking advantage of the current market conditions and just settling with the advice of their current agency, that there are “too many properties and no room for an increase of rental”.
Getting the best return relies on your agent devising an effective strategy so that your property is best positioned in the market to achieve the highest rent with little to no vacancy period. Below are some of the most effective ways we ensure our landlords are taking advantage of Melbourne’s growing demand for rental properties and maximising their return.
Strategies to maximise your return
The first quarter of the calendar year has always seen an approximate 300% increase of tenant activity. There is no rule to say you have to look for a 12 month lease, if we can work with your tenants to negotiate a longer lease that is more favourable to you then we’ll do it. The main goal being to end the lease in ‘peak-season’ for enquiry. So for example if your property needs a tenant in July try to secure a tenant for a 19 month lease.
Having the best marketing including professional photography, a great written description and a walk through video are key to getting more people clicking on your ad and attending inspections. It is also crucial that the type of ad your agent uses is of the highest quality to ensure that potential tenants are seeing your property before others in the area. If there is high demand from tenants to view and apply for your property, it will translate in to higher rent and lower vacancy.
Vacancy / No Vacancy
Often the cost of a vacancy period between tenants can dramatically reduce the rental income for the year, making it very difficult to maximise the return of your investment property. We start our leasing campaigns sooner with the co-operation of our tenants, which is much more effective than showing potential tenants through a property full of boxes. We also accommodate private inspections in addition to our opens, via our online booking system. The more accommodating and helpful we can be to potential tenants, the better the outcome for our landlords.
Questions to ask when choosing an agent or to assess if you’re maximising the return on your investment property include:
1. In the past year has my agent recommended a rental increase?
2. Does my lease agreement with my tenant expire between January to March?
3. When there is a changeover of tenants, is there a period of time when the property is vacant?
4. If there has been a new property manager assigned to your property, have they taken the time to familiarise themselves with your property and the area?
5. Are there any minor works my agent could handle to ensure the property is presented to the highest standard and set my property apart from others in the area?
Comprehensive analytics and research
Endorphin Wealth Management invests a great deal of time and effort researching the best investment strategies for our clients. We have developed a number of systems to manage and track the marketplace.
The investment landscape always evolves and it is more important than ever to consider your investments and carefully. We pride ourselves on being experts in researching opportunities, investments and strategies that fit in with your goals. We want our clients to get on with enjoying their life rather than worrying about money.
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