With the high cost of owning investments property in 2018, landlords are always looking at ways to increase rental income. This is a beneficial practice to keep your investment portfolio fit, healthy and prepared for the unexpected. Increasing your rental income can come in many forms apart from the obvious of increasing weekly rent.
Top 9 Ways To Increase Your Rental Income & Cut Cost
Check the market value of rent.
If it has been a while since you last increased the rent, speak to your property manager about getting a rental review. In most cases you could be undercharging if your rental property has been in your portfolio for a number of years with no rental review. This could also be an opportunity ask your property management company for a discount on fees.
Before you pick up the phone do your research on market rents in the area and what a good property manager charges. This will give you leverage when asking for discounts and also make sure your don’t upset your tenants by asking them to pay above market value.
Decreasing the rent
If you are having trouble leasing the property, speak to your property manager about what price they would suggest to be slightly below market value. Any gains you get through over charging on your rent is likely outweighed by a few weeks of lost income due to vacancy because to property is too expensive.
Speak to a mortgage broker to see if there is another lender out there that could offer you a lower finance rate. Alternative, make an appointment to speak to your own lender about whether that could lower your finance rate. They might be more accommodating if you have a large loan, or if it’s clear they will loose your business. Alternatively consolidate your loans to one large loan, this could save you in annual fees.
Switching to interest-only
Consider different options to your mortgage like using an interest only option, this is an easy way to increase your incomings is to reduce your loan to interest only as it reduces the size of the payments. Using the surplus funds to improve your property then offsetting the new costs by claiming it on tax.
Maximizing tax deductions
Make sure you’re maximizing your deductions by speaking to a tax accountant who specializes in property investment. They might be able to shed some light on extra things you can claim like bank charges, body corporate, insurance, land tax, legal costs, repairs, cleaning, council rates and advertisement. There are something’s which you are able to claim over long periods including capital works, borrowing expenses and the declining value of depreciating assets.
Make a depreciation schedule
Depreciation benefits can be claimed on both newer and older properties. Quantity surveyors can provide a depreciation schedule so you guarantee you’re maximizing your claim.
Buying a low maintenance property
Newer homes tend to require less maintenance, which means you don’t need to worry as much about the constant repairs and improvements older homes require. Regular unforeseen costs can dishearten a seasoned investor with the high cost of trades people. An average plumber charges $100 call out fee and $30 per 15 minutes. Consider changing your insurance to decrease maintenance fees. For instance, RACV land lord insurance cover offers 7 free call outs for general maintenance per year.
Rent your property furnished
Our Wise consultants suggest furnished properties appeal to a very niche market. Either corporate clients (properties within the CBD), or international students (properties close to universities and transport). Furnished properties can attract a higher yield, but also attract a high turn over which means you’ll need to budget to afford a higher than normal vacancy rate. The cost of the furniture can also give you a tax-deduction opportunity.
Rent by the room
Renting by the room is a strategy which might work well depending on the location and clientele. If you had a 4 bedroom house for example, and the market said an appropriate rent would be $350 a week, you could get around this buy renting each room for $120 a week. Thus, you get $480 per week. This would work well if your property was close to a university. Check with local universities about advertising through their website or noticeboards on campus. Also, find out if any laws, such as boarding house regulations, would apply to your property if you rent it out by the room.
At Wise Real Estate Advice, we ensure all boxes are ticked and that sincere care is taken when providing a buyer with the wise advice and action required throughout the buying process. To speak to one of our friendly buyer’s agents click here to fill out an enquiry form or just simply call us on 1300 00 WISE.