Ways to save money on your rental property

Minimise your property’s vacancy rate

ways to save money on rental

One of the best ways to save money on your rental property is to keep it tenanted and avoid expensive vacant periods. There are a number of ways you can help minimise your rental vacancy rate.

A prudent rental property investor will conduct quality research into the proposed rental property’s location. As Neville Sanders, president of the Real Estate Institute of Australia explains, market research will provide insight into the ratio of properties to tenants. When there are many more properties than prospective tenants, it will inevitably effect overall vacancy rates.

Existing landlords have little or no control of the property-to-tenant ratio in their local area and these ratios can change.

“If you are already a landlord, ensure that you are offering your property at a competitive market rate. Your agent or property manager should have access to data that can help inform the rental rate of your property. It also pays to ensure that your property is in good condition. And if you have an existing tenant, make sure that any maintenance issues are attending to promptly,” advises Sanders.

Seek competitive maintenance, repair and building services

Paul Drum, Head of Policy at CPA Australia, recommends that property investors shop around before engaging suppliers of maintenance, repair and building work, and look beyond a real estate agent’s preferred supplier list.

“As with anything to do with building, before doing anything, get a number of quotes and negotiate. Don’t necessarily go with the cheapest quote – go with the quote that best meets your needs,” says Drum. “Don’t just accept the tradespeople proposed by your agent – ask your agent to seek several quotes.”

Claim all possible tax deductions

Are you aware of all the tax deductions you are entitled to? If you can’t confidently say ‘yes’, refer to our rental property taxation special with in-depth guidance from CPA Australia’s Paul Drum on eligible deductions and capital gains tax management.

Cut rental property running costs

Utility bills

Across the Australian state and territories it is common for water rate charges to fall to the landlord. There are exemptions; for example, if the property is individually metered and the property meets required water efficiency standards. If water rates are to be passed on to the tenant, this needs to be outlined in the tenancy agreement. Enquire at your local Fair Trading or Consumer Affairs branch to determine your water rate obligations.

There are simple ways you can cut water consumption at your rental property. First, ensure there are no leaking taps or fixtures – a leaking tap can waste more than 12,000 litres in a year, while a leaking toilet can waste up to 96,000 litres in a year. By installing water-efficient taps and showerheads you can literally cut water usage in half.

Insurance costs

As a landlord, you are likely to have several forms of insurance covering your rental property, including building insurance, landlord insurance and, if you own an apartment or townhouse, strata insurance. Depending on your financial status, you may also have mortgage protection insurance or lenders mortgage insurance (if you have borrowed more than 80 per cent of the property’s value).

There are key ways you can reduce your insurance costs, such as:

Council rates, land tax and strata fees

Council rates are a significant ongoing cost to property owners. They vary between local councils and are levied against the value of your property. If there has been a sudden hike in your rates or if you believe the rates you are paying are inflated, your best recourse is to request an Objection to Valuation from the Valuer General.

A similar process applies with land tax levies. A land valuation is carried out annually, which is used to determine the rate of land tax an investment property owner must pay. If you disagree with the valuation, you can contest the outcome. There are firms that specialise in land tax valuations – always use an accredited valuer.

Finally, to strata fees. Owners of an investment unit or townhouse will be required to pay strata or body corporate fees, which cover the maintenance and upkeep of the building’s common areas. There are a number of ways to minimise strata obligations, including reducing building running costs (such as by installing energy efficiency fixtures and reviewing the strata scheme’s insurance) and contesting unnecessary upgrades or renovations.

 

Source: https://www.domain.com.au/

Posted by Steve Aberline