We hear it all the time “our tenant is great, so we didn’t want to put the rent up”.
But then, you ask, how I can pay my loan off faster and save more interest? Or how can I look at buying another property sooner?
Investing in property should be looked at like a business, and one of the most important things in a business is cashflow.
Cashflow pays off the loan, covers the expenses relating to the property, and increases your borrowing capacity.
As a buyer’s agent we see a lot of properties on the market with existing tenants in place.
But then upon further investigation we find the rent that the property is under rented, four out of five times it will be rented under the market rate, this can lead to a lower market value too.
We’ve had properties that are $100 – $150 per week under the market rent. At $150 per week that’s close to $8000 a year the landlord isn’t interested in receiving!
We have recently reviewed rents for our existing clients too, and in some cases have found properties rented under market value…
How good is the tenant that an owner would give them a $8,000 gift each year?
Let’s look at some numbers…
That’s nearly half the loans term!
That’s more than half the deposit for your next property!
Over the past three years vacancy rates across Australia have been plummeting, resulting in a housing shortage in a lot of areas, with rents rising quickly as a result.
Currently the wHeregroup is buying properties in five new areas, with some of the locations, there is literally ZERO properties available to rent at any price.
For our investors, when vacancy rates are low this is great news for you, as you can be picky when choosing a new tenant, and if you’re on top of it, you can increase on the rent and improve your cashflow.
Its important to note though – if you have an existing tenant in place – you should be careful when increasing the rent that your current tenant can in fact afford the rent – this is something your property manager can verify with the tenants directly before renewing and increasing the rent – no point increasing and having a defaulted tenant.
We 100% understand though, you have a great tenant, and you want to look after them, they have been kind, and they have looked after your property like it’s their own – no dramas. just make sure you are at least meeting them in the middle – your council rates are increasing, insurance is increasing, the water rates are higher – all of these are fixed expenses, regardless of what you owe.
We like to say, run your portfolio like a business, while you’re giving your properties the time to increase in value, don’t lose sight on the second part of investing…cashflow!
You could be closer to your next purchase, or to having your owner-occupied loan paid off a lot sooner than you think.
If you need help figuring out if your property is getting the right rent, just reach out, we can review your existing portfolio and see what you should be getting, what the current values are and how close you are to your next investment purchase.
We have even created a guide “how to get the most out of your property manager” – this even includes step’s to take when the renewal comes up – If you would like a copy, email us @ email@example.com and we will forward you a free copy.
cheers team wHeregroup