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Owning a Rental Property - Two Things You Need To Know

AUTHOR: Team Leaders

POSTED: 04 July 2014

All property investors will want the same thing: a vessel to create greater wealth for their futures and to provide passive income. Obviously rental yield, capital growth, tenant quality and demand will be your main concerns but here are just two tips to help you make the right decisions to capitalise your returns and keep your property safe.

Maximising Rent
The time to maximise your rent is when you first make your property available to tenants, or when re-renting. At this stage try advertising for the top of the range – the market will soon let you know if this is attainable. If not, a reduction may be advisable so you don’t have it vacant for long.

Landlords, I have found, can make a couple of mistakes, these being:

Often increasing the rent to the maximum possible, or
Not increasing the rent at all.

If you increase the rent, often, to the maximum possible, you may drive the tenants out. If this happens you may end up with periods without rental income, which can outweigh the original rental increase, and the incoming tenant may not be as good as the previous one.

On the other hand, if you fail to increase the rent, it is lost revenue and it makes it difficult to raise it to market rates at a later date. If you use a property manager, they should already know the market rent rates and be assessing these every three to six months. If you manage the property yourself, the same applies but you will need to complete your own research by asking real estate agents, completing due diligence etc.

Finally, tenants who look after the property and pay their rent on time are worth looking after. If you look after a tenant they will also respect you and the property in return.

Insuring your Property
In a recent New Zealand Herald article by Diane Clement, she overviewed the issue of landlord insurance.

In essence, the article highlighted the need for landlords to check and understand the fine print of their insurance policies. She says just because a policy has “Landlord” attached to it, does not mean it actually covers the risks faced by a landlord, some of which are as follows:

Malicious damage or theft by a tenant
Loss of rent for accidental or malicious damage, abandonment, or eviction
Landlord’s contents, i.e. floor coverings, blinds and drapes, dishwashers etc
P-lab found on property with no tenant references or regular inspections.

She suggests that landlords use an insurance broker who specialises in rental insurance to help you with the right cover.

Remember, owning a property is not a ‘buy, get a tenant and never look at it for the next 10 years’ arrangement. You are now a business owner and it’s important to run your investment as a business, keep the rents at market rates or just under, and check your insurance policies every year to identify any risks you are not aware of.

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Testimonials

Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015

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