The market for rental properties in Palmerston North & surrounding areas is still in high demand.
Are you keeping up with market rent in your region/suburb?
Landlords have been hit severally by the Government in the last couple of years or so.
With healthy home regulations, bright-line tax, and interest on loans as a deductible tax claim acquired before 27 March 2021 being phased out over four years, property investors will begin paying more tax on their rental income.
The below scenarios show how some landlords maybe losing substantial cash flow and how to increase it.
Case Scenario - Self-Managed
A busy couple did not bother keeping up with the market rent on their rental property.
They thought they might upset the tenants, and if they did increase the rent, the tenants might leave.
They were good tenants, and it was better to leave things as they are. Besides, the couple worked full time, and it all seemed too hard to keep up with the market rent on their property.
Let alone keeping up with repairs and maintenance and other tenancy issues.
The market rent for the three-bedroom Palmerston North rental property was $500 per week.
However, the current tenants who had lived at the premises for four years were paying $430 a week in rent. $70 below the market rent adds up to a significant amount of money over a year.
Multiply that by fifty-two weeks; there’s a rent loss of $3640.00.
The tenants are unlikely to leave in a hurry because they know they are on a good thing, and the landlord will lose on potential profits.
If the landlord’s kept up this tactic, not keeping up or close to market rent over five years.
The loss of return would be $18,000 or so over five years and ten years could likely be more than $36,000; this money could have been in the landlord’s pocket.
Case Scenario - Professional Property Manager
This Palmerston North couple understood the power of leverage; having looked after their rentals properties in the past, they knew they did not have the time to do it properly.
Knowing what was involved, they would prefer to leave their properties in the skilled hands of an experienced full-time professional property manager who kept up to date with current legislation.
The property manager did timely rent reviews after researching the market and with discussion with the landlords that felt fair and reasonable to them and tenants.
A yearly rent increase was processed, optimising their return on investment.
All other facets of management were carried out effectively and efficiently by the property manager, including repairs and maintenance, routine inspections and property compliance with healthy home standards.
Are you losing money on your investment property?
Let’s meet for a coffee and a chat – call 027 249 8295 today’ to see if we make a good fit.
All Ways Property Management is here to grow your investment property returns with no fuss.