PROPERTY MANAGEMENT
Ways to maximise profits from rental properties
By Turnie Morolong
The current tough economic times, characterised by a weak rental market,
require property owners to think outside the box. It is time to start thinking
beyond just rentals from units to increasing the value derived from a property
investment. This entails among other things, focusing on the current portfolio
with a view to optimising value as opposed to acquiring as many properties
as possible. What are some of the ways property owners can achieve this?
Reduce vacancies
Recently, owing to the economic downturn, all major players in the
local property market are reporting an increase in vacancies in their
respective portfolios. This is concerning because vacant units in a
portfolio present one of the largest drains on profit that property owners
face. As mentioned in the last edition of About Time, the best way to
increase earnings from a property investment is to minimise vacancies.
To future-proof their profits against the potential for losses, savvy property
owners may lower the rentals to prevent a vacancy.
Minimise turnover
Minimising turnover is closely related to reduction in vacancies. Tenant
turnover, just like a vacancy, costs money in multiple ways. There are
costs incidental to replacing a tenant, such as repainting walls and
replacing flooring. Do your best to keep your tenants! Lower rentals
combined with excellent customer service are key to tenant retention.
Target your ideal tenant
One of the goals should be to find quality tenants that take care of your
property. When you find these people, do what you can to keep them.
Getting the perfect tenant is a triple financial bonus; you will receive
your rental consistently, they are less likely to leave, thereby saving you
costs associated with vacant units and tenant turnover.
ISSUE 32 - DECEMBER 2017
Taking advantage of tax breaks
Maintenance, repair costs and insurance are some deductible expenses as far
as income tax is concerned. Property owners can claim all the maintenance
and repair costs on their properties. This is an incentive for property owners to
keep their properties in tip top condition at all times. Keeping your properties
in excellent condition makes it a lot easier to find and retain tenants.
Offer property related services
Providing property related services such as landscaping and window
cleaning will not only earn a property owner some extra money, but will
go a long way in ensuring that the property is maintained and kept clean.
The property owner doesn’t have to do the landscaping and window
cleaning personally (although it wouldn’t hurt!) but can partner with a local
sole trader or small business to offer these services to tenants.
Add convenience services
Tenants are always in need of a convenience service like storage or a
concierge service. If your property has space that is not being used,
such as a garage, basement or parking bay, why not rent it out as
storage space to tenants? Storage space is easy to manage as it isn’t
subject to the same strict requirements as office and residential units.
By implementing some of these ideas, property owners can reach their
business goals not only through acquiring many properties, but by
operating a smaller number of properties more intelligently.
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