It’s a new year which means it’s a great opportunity to conduct a health check on your investment property. Whether you’re planning to sell a property or add to your portfolio, a thorough investment health check will give you better insights.
- When was the last time your property had a rent review?
You want to make sure that you’re achieving optimised gross rent each year. This means, reviewing the rent at least annually (sometimes even more often). Speak to your Property Manager about conducting an appraisal of your rental property, especially if it’s sitting vacant. They’ll help you determine how your property is sitting compared to others in the area and what improvements you can make to achieve higher returns and find a suitable tenant.
- Have you had an occasion in the past 12 months where your property has been vacant for longer than you thought it should be?
Brisbane’s vacancy rate is currently 1.4% – the lowest it has been in 10 years! If your agents vacancy rate is higher than this, chances are your property is probably sitting vacant for longer than it should be and it might be time to re-evaluate your managing agent.
- Are your properties compliances up to date?
Two critical factors influencing insurance replacement costs would be the profound increase in construction costs and the susceptibility of natural disasters (i.e. flooding, fires, cyclones, etc). It is important to check your current level of insurance replacement cost (RCE) assessment is adequate, and does it provide sufficient cover in the current environment?
A couple of other things to also check are if your smoke alarms and blind cords are compliant and your pool safety certificate is up to date.
- When was the last time you reviewed your mortgage?
There have been many changes to investor lending rules and interest rates during the past 12 months therefore if you haven’t reviewed your mortgage with your lender or bank, you could be paying too much in fees and interest.
- Is your property safe guarded for the future?
Most costly maintenance items can be avoided if you maintain your property regularly. Your property manager should be able to put a maintenance plan in place so you can set and forget and know your property is being taken care of. Some regular maintenance items to consider are gutter cleaning, air-conditioning services, trimming back large trees/overhanging branches and pest inspections.
- Are you getting what you pay for from the property management fee?
If you are constantly having to follow up your property manager, chances are you probably aren’t getting the best service. Sometimes paying a property manager a higher fee can actually save you money and time in the long term. For example, the difference between 7.7% commission and 8.8% commission is only $5.50 per week based on a property renting for $500 per week. You will find the agent who has the slightly higher fee will also be more proactive when it comes to renting the property and minimising your vacancy, saving you on average at least two weeks rent. They also would have the negotiation skills to increase your weekly rent and putting more money in your pocket than the cheaper agency.
When it comes to ensuring you have the right agent, take fees out of the equation and ask yourself which property manager is going to get you the best outcome over that 12 month period? As the saying goes, if you pay peanuts… you get monkeys!
- Are you maximising your tax deductions and claiming all relevant items?
Do you have an up-to-date tax depreciation schedule to capitalise on allowable deductions? This will increase the cash flow generated by your investment property and ensure that full benefits are paid to you.
If you feel there are areas in which your investment property could improve, contact us today! My contact details are 0403 247 421 or shelby@metrocityrealty.com.au. All it takes is a call or meeting to find out more information about your property and how we can improve your overall return.
