When I first started looking into buying a property management company a long time ago the requirements for property managers were pretty straight forward. As long as they got the property leased, did their inspections and reported any maintenance to owners their job was pretty much done, and they got paid a small fee to do so.
Nowadays, every investor including myself, expects more from Property Managers; such as smoke alarm inspections, depreciation reports and discounted insurance. However, with the recent changes made to strengthen tenancy laws around Australia the best Property Managers (who most of the time are investors themselves) realise the need to generate increased income for their clients.
How To Increase Your Income
Just relying on rental income alone needs to be looked at and is not the only way to generate income from your rental properties anymore.
1. Add Solar
You can generate income from solar power and get a fee from the energy provider to generate income every time your tenant pays their bills.
2. Referral Payments
You can get referral payments from most property management companies if you introduce a friend. Property Managers are always looking to grow their business, just like any other business.
Here at Lucra, we are happy to gift a referral fee for an introduction to someone who might like to rent a property or even sell a property.
The rewards can add up to a lot of money and help towards the cost of your investment properties. If you had an extra $5k to put into your mortgage or offset account each year it certainly adds up quickly in reducing your mortgage repayments.
3. Short Term Rental
Another consideration is if your property is more suited to short-term renting instead of a long-term tenant.
Many clients are surprised when we suggest this option because not all properties are suited to short-term rentals. However, with the research available today we can quite accurately work out if your investment would generate more income from short-term renting or better, with the traditional model.
There are lots of different ways now to generate extra streams of income from your rental property and the key is to have a Property Manager who sees the changes affecting investors and can adapt with the times.
Property Managers have an excessive workload due to all the legislation involved with being a Property Manager in the modern world but being able to look at the industry from both an investor and an owner, the focus needs to be on management. It must also shift to income generation for their clients and Principals need to back innovative ways of generating more income for clients which starts with a great Property Manager who can deliver superior returns.
Another big area that is often overlooked due to a large volume of work for Property Managers is rental increases. Having done this role personally myself I can advise that this could be a role just in itself and is very difficult to do as it has to be processed to be efficient which usually means the tenant gets a letter stating that if they want another lease, they need to agree to a price increase.
Generally, no-one responds well to this. Best practice Property Managers are aware of this and have usually built a good rapport. Being trained in negotiation skills also assists them in being able to handle objections.
Every investor wants to increase the rent each year but doing so may jeopardise losing the tenant if the Property Manager is not trained correctly. A phone call explaining the costs involved in moving compared to the small increase our client is seeking and incentivizing the Property Manager is key in the negotiation process.
Signing a 12 month lease is the best way to go as the Property Manager has increased returns for the company but has also saved the owner loss of rent and wear and tear from tenants moving in and out of their investment.
If you would like to know more about getting better rental yields for your investment, please contact the team at Lucra:
Kirk Simpson financially retired at the age of 26 through his families strategic approach to property development and property investment. Now as one of the founding directors of Lucra Real Estate (a specialist property management agency which also looks after his own portfolio), he places his emphasis on being an investor first and business owner second.
Kirk’s drive for maximizing the returns on his client’s investment properties and reducing their exposure to risk is unrivalled in the real estate industry and has brought about a unique and refreshing approach for investors who are seeking more for their investment.
If you would like to discuss your individual circumstances with our OYSI team to see if we can help, contact our office on 07 5510 9341.