It’s no surprise that a property that can attract a happy, long-term tenant can help you maximise your returns. Whilst this is an easy strategy in theory, ensuring that your property ticks these boxes requires a good understanding of the property market (suburb specific) and what an ideal tenant is looking for in a home.
As an investor who has a long-term strategy, you know it’s in your best interest to meet the demands of your marketplace to give yourself the best chance of maintaining an asset that takes care of itself long-term and attracts a great tenant.
A tenant’s list of requirements will typically fall under the fundamentals of knowing ‘where to buy’ and ‘what type of property to buy’.
- How close is your rental property to major amenities that matter to your ideal tenant – schools, highways, train stations, shopping centres and current employment (or opportunities).
- A rental price that’s appropriate for the area and type of property.
- A well-maintained property that meets their comforts and needs – is having an extra bedroom more valuable than having an extra living space? Does your perfect tenant want to maintain gardens, or should you opt for a low maintenance backyard?
- Finally, most tenants want a good property manager that communicates well and listens to their requests and/or issues with the aim to resolve them.
Many of these requirements should be ticked off before you invest any time or money in an investment property. A well thought out strategy up front will help you unlock a great investment opportunity to attract a quality tenant that will love your property for many years.
To help you get the most from your property, here’s a few tips on how to maximise the returns on your rental property.
Invest in an area that attracts the types of tenants you want
The location of your rental property is one of the most important components of a successful investment strategy. Where your property is located will largely dictate who wants to live there, so it’s important that you understand the rental market demands in that area – what’s going to bring renters to your property and are those factors attracting the type of tenant you want?
It pays to seek the advice of local real estate agents, investment experts and property managers about the types of renters and the market in the area before you buy.
Investing in areas that are well-maintained and have easy access to infrastructure and amenities will help boost your property’s attractiveness to tenants.
However it’s important to keep in mind what types of amenities are important to your target market. For example, if your rental property is near popular schools this will attract families, who often make the best long-term tenants because they prefer to settle. Properties near universities also have a good tenant pool and tend to attract students, however this may also expose you to short-term tenants, a high turnover and long vacancy periods over holiday periods.
“Outside of the suburban family demographic, some of the best areas and types of properties that attract excellent tenants are fully furnished inner city apartments or properties that skirt on the fringes. Generally, the tenant pool consists of corporate couples, professional singles and fly-in-fly-out renters who are seeking lifestyle and/or lock and leave options”.
We are finding that more and more of these types of tenants are looking for walking distance to the CBD, cafe and restaurant strips, shopping centres, parks, and amenities that tailor to their desired lifestyle.
Property management: the make or break for a happy tenant
Property managers play a pivotal role in helping you maximise your returns for two reasons; the way they maintain your rental property and treat your tenants will either help your return potential or render your strategy to a huge waste of time and money.
If you decide to take on the landlord duties yourself, ultimately you need to weigh up whether the cost savings are worth the time you need to spend on maintaining your property, keeping up with shifts that will affect rental demand and prices, tenancy laws, insurances and having any confrontational conversations with your renters.
While property managers are an extra cost, in many ways they can help alleviate the cost of your time involvement and the emotional stress that can impact your ability to make a return over the long run.
Keeping your tenants happy should be your first priority, followed closely by your sanity! An experienced property manager who understands the property market can help to minimise problems and handle all the time heavy tasks like inspections, rigorous screening processes, market updates, industry regulations and carrying out an effective job of communicating and mediating between you and your tenant.
How to find a skilled property manager
Ideally, a good property manager has a thorough understanding of the local property market by years of experience or as an investor themselves.
These property managers are often the best at communicating with you about your property and they act as a great partner on the ground to give you regular updates on the market and how to maximise your rental returns. This is especially beneficial for first time or interstate investors that need on the ground expertise.
As a landlord, it’s also good to get insights on their marketing strategies, fee structure, processes and services to you and your tenant. Be sure to ask questions regarding:
- How do they market your property and is it included in your fees?
- How they select tenants and if they have a quality database
- What fee setup do they have, and do they have lock-in contracts?
- What type of payment plan do they have?
- How often do they conduct inspections, and do they provide you with photos and reports?
- Do they regularly review the market to ensure you are getting the best return?
- Are their tenants happy with the service?
- What strategies do they employ to keep your property tenanted?
You should expect your property manager to go above and beyond and have the trust that ‘they’ll handle it’ for you and be proactive in everything they do.
Know when to raise the rent on your property
Staying up to date on the market is an ongoing process for any property investor which is where on-the-ground expertise can come in handy. A property manager that knows the area and can help identify market conditions can be a great asset to an investor to determine the types of rental returns that can be achieved. Be sure to hire a property manager that carries out at minimum, six or 12 monthly reviews on your property to ensure you are getting a fair rental amount and whether there is potential to increase your rents.
Having a property manager with good market insight can also help you identify your competition in the area and how to stay ahead of the game. Whilst it’s vital to get maximum rental returns, this is often maximised by minimising vacancy rates not necessarily chasing a higher rent.
We like to advise owners on a competitive rental price that ensures their property isn’t sitting on the market vacant and if increasing the rent could risk them losing a good tenant to a cheaper rental property.
As the rental market conditions improve wherever you’re investing, rent increases may be necessary in order to hold onto your investment. Handling this situation requires a two-pronged approach: you need to be keeping your tenants happy while weighing up your costs.
In general, keeping a tenant happy consists of:
- Getting on top of repairs quickly and maintaining the property.
- Listening to their requests and being open to negotiating on enhancements that they’d like in the home such as installing an air conditioner or window treatments.
- Avoid raising the rent too often, showing up unannounced or scheduling too many inspections.
- Having a property manager that takes care of their needs.
Like with any business, when a client feels valued and looked after the less likely you will come up against price objections when it comes to evaluating a fair rental price for your property.
As with any investment decision, be sure to get independent financial advice to ensure you are making the best decision for your situation.
If you’re looking for an expert property manager to take care of your property in Perth’s northern suburbs, we are your local experts! Recently acknowledged as REIWA’s 2018 small residential agency of the year for our commitment to supporting landlords with their property investment strategies and looking after our tenants with a great property management service. To find out how we can help you maximise your returns go here to book in a no-obligation chat with one of our specialised Property Managers.