Give your rental property a money saving makeover with these six simple steps, say the experts at Belvoir.
Saving money equals making money so it’s important to regularly review your finances to ensure your rental property is promoting long-term positive cash-flow and performing to its maximum profit potential.
Of course, it’s vital never to cut corners in order to cut costs but an objective look at your incomings and outgoings will reveal where realistic savings can be made.
1. Rent review
Is your tenant paying the right amount for your property? Is this in line with current market conditions?
“It’s important that you’re getting the best return on your investment so don’t be afraid to carry out a rent review,” says owner of Belvoir Swansea and Belvoir Mumbles Daisy Davies.
“At Belvoir Swansea and Belvoir Mumbles we usually review rents annually on behalf of landlords to make sure what’s currently being charged is in line with demand in the local area.
“This review doesn’t necessarily mean that an increase will follow but it’s important to regularly evaluate your property alongside similar properties in the area to assess this. If the demand is there – or you’re currently charging less than market value – you can then suggest a rent increase accordingly.
“However, while you want to get the best return, any rental rise has got to be fair,” she continues. “Over-inflated increases with no research to back up the decision can lead to tenants leaving and therefore no rental income at all!”
2. Mortgage matters
“One of your largest monthly outlays is likely to be your mortgage payment so review this regularly to make sure your current product is still working for you,” says owner of Belvoir Birmingham Central Major Mahil.
“New products are constantly being introduced to the market so keep an eye on what’s available, especially if your current mortgage product is coming to an end.
“As well as looking at the mortgage rate itself, don’t forget to take into account any additional fees that may apply too.
“To assess mortgages currently available, compare deals on mortgage comparison websites or take advice from a mortgage advisor.”
3. Get it covered
“Taking out the appropriate insurance is vital,” says Daisy. “It’s there to cover eventualities and emergencies and can save a landlord literally hundreds or thousands of pounds in the event of a claim.
“Look at your policy and make sure it covers everything you need, from damaged curtains and carpets to accidental and malicious damage to the property itself.
“It’s fine to shop around for the best price, but always read the small print and terms and conditions. It goes without saying that it’s a false economy to opt for a policy just because it’s cheap if it’s not going to cover the essentials.”
Think about other available packages too, such as boiler, drains or plumbing cover. Would these be a cost effective solution for you? Do the maths to work out whether spending out could equal cashing in.
If you already have these in place, check that they are still providing value for money and that you’re not paying for something that is no longer relevant to your needs.
4. Review and renew
“Frequent inspections of your property during a tenancy are essential,” says Major. “And we usually recommend that these are carried out once a quarter.
“During this visit you can observe whether tenants are fulfilling their obligations, plus if there are any signs of wear and tear you can ‘make good’ there and then.
“This is two-fold: not only does it show the tenant that you’re looking after their needs and requirements so they can enjoy their time at your property, it also saves long-term money spend as there won’t be a big bill at the end of the tenancy when the property is being re-let.”
5. Long-term gains
“Retaining good tenants can mean massive savings for a landlord so always think long-term,” says Daisy.
“The longer the tenancy the more likely the tenant is to look after the property and treat it as their home. They’re more likely to report maintenance issues at speed too.
“In addition, you won’t need to remarket the property or pay a fee to an agent for finding a new tenant for you, plus there will be less wear and tear on your property caused by tenants regularly moving in and out.
“To help retain a tenant make sure you treat them well, that the property is in good decorative order, that you fulfil your repair obligations promptly and that you’re always fair and reasonable throughout the tenancy.”
6. Agent experts
“The expertise of a specialist letting agent can help you save money in many ways,” says Daisy.
“We can market the property across multiple platforms to help ensure it is let quickly, plus carry out the necessary referencing and credit check procedures to make sure you’re getting the right tenant who is going to look after your property.
“We can also help reduce potential periods of void by making sure notices are served correctly and check outs are done competently to allow new tenants to move in as soon as possible.
“Additionally, we can ensure the property is managed efficiently and all maintenance issues are dealt with effectively so that they don’t escalate (along with the associated costs to rectify them).
“We can also help ensure that the landlord is accurately following current legislation, plus help to maximise rental income by performing rental reviews and implementing rent increases where appropriate.
“Importantly, too, we are also able to advise landlords on new investment opportunities to help them grow their property portfolios… and their long-term profit potential.”
Savvy savings… at a glance
- Increase rent in line with market conditions
- Review your mortgage
- Ensure your insurance policy is adequate
- Will boiler cover and similar utility packages be cost effective?
- Regular inspections are essential to review your asset
- Think long term, plus have an exit plan
- Avoid the void
- Speedy maintenance can help prevent further costly repairs
- Retaining tenancies will mean multiple savings
- Ask a specialist agent for their money-saving advice
Article Courtesy of: Belvoir