Landlord Luxuries – How to Get More Profit From Your Property

Australia’s current record low-interest rates are presenting an extraordinary opportunity for both prospective property investors and those with established portfolios, to optimise profits while the climate is favourable. Whether you are setting up your first investment property or aiming to make substantial inroads into paying off your current properties faster, the time to act is now.

Maximising profits from your property investment can be achieved through a number of key channels including:

● Appointing cost-effective property management

● Optimising the appeal and value of your property

● Minimising costs surrounding the tenancy

● Gaining the most out of your tax return

● Increasing repayments to take advantage of low-interest rates

Tenancy costs

The epitome of the term ‘false economy’ is trying to save money by not employing the services of a professional property manager. It pays to shop around though as some Melbourne agents are charging up to eight percent for their services. The best agents are utilising cutting-edge technology such as Property Apps to increase the effectiveness of their services to both the tenant and landlord, in turn reducing rental management fees to around four percent! If you are paying too much for your property management, now may be the perfect time for a change.

When you consider the vast range of services and responsibilities agents supervise, property managers offer amazingly good value. As an example of this, consider the list below and ask yourself whether your time could be spent more profitably elsewhere, than attending to the immense scope of work involved in a single tenancy arrangement. Professional property managers provide:

● Valuations and advice regarding setting the optimum price point for your property and tips on how to attract higher rental returns.

● Advertising, screening and reference checking of prospective applicants to attract and retain reliable tenants.

● Open for Inspections along with regular, scheduled inspections throughout the tenancy.

● Real-time monitoring and reporting of financial data to keep you up-to-date.

● Acting as a liaison between landlord, tenant and if applicable, contractors.

● Organising timely maintenance and management of repairs plus coordination of safety protocols such as regular smoke alarm checks.

● Compiling, retaining and updating leasing documentation including condition reports and security bonds.

● Disbursement of funds such as rent, security bond and contractor payments.

● Ensuring the tenancy complies with regulations outlined in the Victorian Residential Tenancy Act and staying abreast of amendments.

● Managing difficulties in the tenancy through VCAT including evictions, lease breaks and bond disputes.

Making your money work harder

The current low-interest rates present the perfect opportunity to accrue substantial capital in your property – either by leaving repayments at their former rate or by increasing them. This can literally take years off the life of your loan. In fact, simply by paying an extra $12 per week on a $300,000 loan over 30 years, can cut around two years off repayments!

Tax agent – making claims

Putting in place a tax accountant who understands your rights as a landlord can bring surprising windfalls at tax time. A savvy tax accountant can ensure every last dollar you are entitled to is claimed from the ATO including borrowing expenses (negative gearing), cost of repairs and maintenance as well as agent’s fees.

Don’t cut corners

Finally, give your property a financial health check. Attempting to save money by cutting corners can end up costing far more in the long run. Rental properties are generally subjected to substantial wear and tear and need to be up to the task. Think twice before spending money in areas which may not increase the rental yield such as fancy light fittings, costly curtains or European appliances. 

Below are some suggestions on how to keep maintenance bills down whilst maximising a property’s appeal.

● Flooring – consider polypropylene carpet which is cheap, durable and stain-resistant. Dark grey is an ideal neutral colour which can disguise spills and dirt. Avoid highly polished boards as these are easily scratched and expensive to refinish.

● Walls – avoid wallpaper as it is costly to repair or replace. Keep paint neutral colours and store leftover paint for touch-ups.

● Surfaces – stone and granite benchtops may be expensive but they will withstand far more abuse than laminate or vinyl, which can fade, discolour or be easily scratched.

● Gardens – keep gardens low maintenance and ensure any plants are hardy and drought-tolerant, as tenants often neglect these areas.

● A secure backyard is prized by both families with small children and pet owners.

● Consider installing ducted heating. Some companies run specials offering a package including installation for around $3,000. Ducted heating is valued by the majority of renters and they are willing to pay a premium for the luxury.

As we have seen, there are many avenues available to make your investment more profitable. When investing, every dollar counts, so make your investment dollar work harder for you; ensuring a lucrative, comfortable future.

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Written by Reception Team

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