Staying on top of rental increases

A large part of being an astute investor is staying on top of your investment; your investment is only ever as good as the money it makes you....

As everyone reading this article will have before or soon be buying properties through the wHeregroup, you will be buying in locations with a high population growth. So, because of this, one big fact to keep in mind is that rents CAN be adjusted upwards every six months, obviously, where available. It is important to note that when an application is received from a prospective tenant, there should be a number of points to tick before approving the application;

Income – how much can they afford, as rents go up, are they going to struggle with paying higher rents in the next 12-18 months? Give yourself a 20% buffer, just to be sure.

Condition of their previous property – were they clean...

If they have not rented before – be weary.. it can be common for home owners to sell their home and rent whilst they build a new home, these people are generally good tenants, but ask your property manager to check out their last 6 months loan statements, ensuring they made their repayments..

Plus, all the standard checks your property manager should be performing.

You need to be monitoring this closely so you know how much to increase the rent. Through our research of preferred property managers, our key attribute we look for is, those who are willing to push the rent up ongoing, and who doesn’t need reminders...

What you may not know is that as a vendor you cannot increase the rent one day and expect the tenant to pay the next. In most states of Australia it takes 64 days for the increase to take affect – that’s 60 days notice plus 4 days postage. So, to be a proactive investor set a reminder in your outlook for four months time to remind you to tell your property manager to post the rent increase letter, they should beat you to it... but if not, you’re on the ball.

For those who prefer 12 month leases so you have security, you can and should write into the lease an increase to take effect on day 1 of the seventh month. Tenants won’t generally leave a property over a $5 or $10 increase per week. It would cost them more to move, not to mention the effort of moving. A really astute investor will also have constant rent increases even when interest rates are decreasing..

By doing this you can always achieve rent for above market levels and allow you the best opportunity to be able to buy more properties, after all $10 in your pocket, is $10 towards your next investment.

As we say, your investment is only as good as the money it makes you...

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