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How to improve the ROI (return on investments) for rental properties and what role play renters to increase the cash-flow? Look after your investment and set transparent rights and obligations on the tenancy agreement for both parties.

 

 

Property Maintenance

Protect your Investment and Increase Cash-flow

Cash-flow to invest and protect

 

Building up wealth for later in life is the most common reason that people buy properties by thinking of capital gain, off-setting tax, and few to create an additional income stream, maybe for later to quit a job. That is good thinking as you don’t know how long you have a job, right?

 

When building a business cash-flow will make it or break it because you need to pay your bills and for business development you need finance. Serviceability (income to pay the bank) is the first question you have to answer when speaking to financial institutions.

 

 

When working to improve your ROI (return on investments) from investment properties, you not only need to understand the fundamentals of splitting rentals in capital growth and yield investments, you also have to develop strategies to increase cash-flow. It might be working harder in your job for increasing your salary and engaging a property manager  or

increase the ROI by efficiency and  quality of your rentals.  In other words look after and develop your investment.

 

 

Look after your investment

 

When investing resources are limited. LVR prevents buying more, your job pushes you to the limit and rising costs for maintenance and repair pressure your cash-flow—what can you do? The counter-question is—what was the initial plan? If you wanted to invest in assets stick to your budget, wanting to build a rental business, execute your cash-flow strategy  and look after your investment properties. Small improvements can make your investment more attractive resulting in better rents and minor repairs might save you a fortune in expensive damage repairs. Think about damage from leaks, tree branches or roots, ingress of moisture...

 

How do you know what maintenance work is needed?

 

A fellow-investor had authorized his property manager to deal with any repairs below 500 Dollars per month without owner’s approval. What seemed to be a convenient arrangement turned out that the repair and maintenance costs inclusively additional administration fees had more than doubled by the end of the financial year. You can guess the impact on the cash-flow that has caused.

 

Even when using a property manager, liabilities stay with you, the owner.  Less control in money matters is like inviting theft. When engaging a property manager, it really makes sense to specify deliverables like providing regular inspection reports and to be involved in process of taking care of the investment property. In this way minor problems can be addressed and sooner or later fixed. When leaving everything to the property manager, you may take the risks and higher expenses, too.

 

In our experience taking control and managing the smaller issues like blocked (overflowing) gutter, moisture from not ventilating, loose door locks and window handles, or whatever needs to be done. We don’t have expensive repairs. Tenants can see that we take care and they behave accordantly. Let me show you how easy it really is.

 

 

 

Maintenance protects your investment,

Tenancy agreement protects both parties

 

 

The starting point is awareness. If you as investor/landlord wait until your tenant starts complaining about something, often the damage has been already done.

 

Quite the opposite, the pro-active approach to keep your rentals in good working order can save you a fortune in repairs. Examples:

 

· Clear storm water ways and roofs from debris and tree branches

 

· Check gutters, remove leaves, blockages and sprouts of grass

 

· Inspect roofs, fixings, flashings and remove build-up of moss

· And everything that impacts water tightness

 

· Prune trees, especially overhanging branches, and shrubs close to the house

 

· Check for tree roots which might lift up the footpath or entering the house and causing damage to waste/sewer/storm water pipes.

 

· Touch up damage to paintwork, windows and doors before rotting timber needs to be replaced

 

· Veranda, porch and carport—check for discoloration and leaks

 

· Water blaster drive ways

 

 

For the general appearance of the rental property, we agree about house rules attached to the tenancy agreement which clarify who does what in terms of 

 

· Mowing the lawn and weed control

· Keeping driveways clear and weed free

· Watering fruit trees and gardens

· Pet rules for owners with cats or dogs etc

 

 

A tenancy agreement that makes transparent rights and obligations for both parties.

 

 

Summary

All in all, if you are at the stage where you want to increase your cash-flow start with improving the appearance  of your rentals, just by intensifying pro-active maintenance and repair. By reaching the next level - good rentals attract better paying renters, and improvements increase the value (capital gain), too. Who does not want to live in a well maintained and good looking house?  It is renters and investors choice.

 

 

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Klauster Blogs lead to a real person, IT professional, investor, landlord and business owner with interests in technologies, properties and trading.

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His passion, making experiences available and helping people like you, comes from extensive travelling and the principles of life—how to avoid pitfalls in unfamiliar territory when investing or forming relationships.

 

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