EXPERIENCED PROPERTY INVESTOR GUIDE

What are the costs of property investing?

As an experienced property investor, your focus is undoubtedly on driving the greatest returns from your investment in order to achieve your longer-term financial goals.

This guide has been created in conjunction with our most experienced team of property managers to help give you proven insights into how to maximise your returns and drive greater results from your property investment. We look at how to conduct a property investment performance review, tips on how to add value and increase your rental returns, how to retain good tenants, what to look for in a high performing property manager and loads more.

We hope you find it useful.

How to add value and increase rental returns

One of the key benefits of investing in property is you have the ability to make changes, that if done correctly and without over capitalisation, can help add rental appeal and long-term value to your asset.

Here is a look at some changes that can impact your investment property’s rental appeal and its potential long-term value. Keep in mind if you are making bigger changes, talk to your local McGrath Sales Agent and find out what buyers are willing to pay more for in the area.

Whilst you may not be looking to sell at the moment, planning ahead and having a property that will appeal to buyers down the track without over capitalising, makes good investment sense.

12 ways to add value to your investment property

12 changes that can impact your investment property’s rental appeal and value

  • Paint the walls
  • Tidy up the garden
  • Fix the flooring
  • Update the kitchen
  • Refresh the bathroom
  • Add some extra features such as blinds or shutters
  • Add built in’s and storage
  • Add a parking space
  • Create or enhance the outdoor living space
  • Adding security to the property
  • Keep it well maintained
  • Improvements to the apartment building

Before you start planning to make any changes, it’s a good idea to talk to your local property manager to understand your target market and what appeals to them.

Having this insight can help guide you on what improvements could have the biggest impact on the quality of tenants you attract, the rent you can charge and the long-term value of your investment property.

12 ways to add value to your investment property

How to get good tenants to renew their lease

Stable tenants who look after your property and pay their rent on time are incredibly valuable to an investor and undoubtedly a key priority for you. By retaining good tenants, you don’t need to spend money on advertising for new ones, nor worry about how a vacancy may impact your investment loan obligations.

But what can you do to keep your tenants happy?

How to Maximise your Property Investment Guide
Open lines of communication and clear expectations

Setting realistic expectations and time frames to address issues as they arise during a tenancy is critical. If tenants understand how quickly maintenance issues will be addressed, when to expect an email response from the property manager, how often the property will be inspected etc, it paves the way for a smoother relationship.

Address any issues as per the agreed timelines

If issues arise during the tenancy ensuring you or property manager act within the agreed timeframe helps instil trust between you and your tenant.

Conduct regular inspections

By conducting regular inspections (approx 2-4 per year) it not only enables you to keep an eye on the property so you can proactively address any issues, it also provides opportunities for the tenants to communicate openly with or your property manager - helping to create a stronger working relationship.

Consider allowing pets

If your property allows pets, offering this as an option for tenants can be very popular. Tenants are often keen to sign longer leases and pay slightly more rent if they are able to have their furry friends with them. Of course, ensure both you and your tenants sign a pet policy and check with your body corporate to ensure pets are permitted before offering this.

Only make small rental increases

If you are looking to increase the rent, it’s advisable to only make small increases and to ensure you understand the legislation in your State or Territory with respect to how often this can be done and the notice periods required.

Be a bit flexible

Maintaining a degree of flexibility with good tenants can help keep them happy. From time to time, requests are made by tenants, such as small alterations to the property that will not impact the value of the property or may increase the value of the property. Being prepared to be flexible when these requests can help with tenant retention.

Offer them an incentive to renew their lease

If you have great tenants, consider offering them an incentive to stay. Popular incentives include offering a gardener, adding appliances such as a dishwasher etc. Talk to your property manager about what might work here for your tenants.

Ask them to renew their lease

If you’re happy with your tenants, let them know and before the lease ends ask them if they’d like to sign another lease. To make it more appealing, perhaps offer an incentive for them to re-sign.

Practical ways to attract and retain good tenants

Evaluating your current property manager's performance

Given the significant role your property manager plays, ensuring you partner with a high performing one is important. But how can you assess your current property manager to determine if they are the best one for you and your investment?

  • Is your current property manager fulfilling their responsibilities? For example, are they collecting rent on time, conducting regular inspections and providing you with reports, managing maintenance issues and conducting rental reviews?
  • Do you have consistent unaddressed issues with your tenants? This could indicate your property manager is not performing as expected
  • Is your property manager addressing any maintenance issues as per your instructions? Do they make proactive maintenance suggestions? Ensuring your property is well maintained and compliant with health and safety regulations is critically important both from a legal perspective but also can help save you money in the long run
  • Do you often receive late rent payments? Cash flow is important as it impacts your loan repayment. Consistent late rent payments may indicate that your property manager is not enforcing the rental arrears procedures
  • Is your property sitting vacant for months on end, with no prospects of finding a tenant? A seasoned PM will understanding what the local days on market are, whether the asking rent is in line with the market and ways to refresh the way the property looks both digitally and in person.
  • Does your property manager inspect your property regularly and provide you with reports? Do they keep you informed on your tenants, their intentions to stay/move and updates on repairs and maintenance?
  • What is your relationship like - does your current Property Manager understand how you like to be communicated and how often? Good Property Managers understand this to make sure they are building the best working relationship with their clients
  • Is their fee structure transparent or are you hit with hidden fees?
  • Do they provide you with the necessary documentation for your tax reporting purposes?
  • Do they or their team have depth of property management experience in your local area?
  • Do they proactively keep you informed of legislative changes and how they impact you?
  • Do they offer a full range of services including rent payment management, maintenance, marketing, tenant screening, rental appraisals and inspections? If not, you might be missing out on better quality tenants and higher rent

What qualities should you look for in a high performing property manager?

Finding the right property manager is important for your investment’s success but what qualities should you look for? Here are the key qualities that we believe define a high performing property manager.

  • Have excellent communication skills
  • Are highly efficient and organised
  • Are trained and educated with a focus on continual education
  • Have in-depth knowledge about the local rental market
  • Are experienced or part of a highly experienced property management team
  • Have an investor mindset with a focus on helping their landlords maximise their investment success
  • Have strong references from both landlords and renters
  • Have a strong ability to negotiate and be stern when required
  • They offer a wide range of services and can take care of most of your management needs on your behalf
  • Work within a high-profile agency with high website traffic, proficiency with rent lists and other marketing strategies to help enable them to market your property effectively
  • Are committed to ongoing professional development to ensure they stay up to date with changing tenancy laws and they keep you informed when changes impact you.
Key qualities of a great property manager

What questions should you ask a property manager to find the right one

Now you know the qualities to look for, here are a series of questions to ask your shortlisted property managers to help you find the right one to join your investment team.

  • Who will be my primary point of contact and how long have they been with the company / Industry?
  • Other than your letting fee and management fee, what other fees should I be aware of?
  • What is your policy on rental arrears?
  • How many similar properties do you manage?
  • Are all your tradespeople licenced?
  • What training does your company hold?
  • How often do you inspect property’s and what reports do you send?
  • What online tools do you use, can I get real time reporting?
  • How do you screen tenants?
  • What’s your average days on market?
  • What’s your vacancy rate?
  • What’s your list price to lease price ratio?
  • What is your team structure?
  • Can you show me your customer experience system and ratings?
  • Can you share any Google reviews or testimonials from landlords and tenants
How to Maximise your Property Investment Guide

A FINAL WORD

As in investor staying informed about what is happening across the Australian real estate market is important. To help you understand the latest property trends, how the real estate market is performing across the East Coast and where John McGrath see’s the next property hotspots, download our annual McGrath Report with the link below.

The McGrath Report 2021