If you have a property portfolio, the success of your rental properties will depend on several factors – all of which you are in control of. Here are some ways to ensure you are maximising your income through your rental portfolio:
It’s important to do your due diligence when purchasing a rental property, but how do you do this effectively? You need to carry out thorough investment property analysis and calculate the capitalisation rate, cash-on-cash return and profit margins to understand your return on investment (ROI). You need to ensure your property is cash flow positive. Use an online ROI calculator to make sure you will earn the maximum amount from a chosen rental property and talk to a good lettings management company and financial advisor to get to grips with the numbers.
Regardless of the predicted ROI, this is moot unless you actually have a tenant who will pay the rent, on time, every month. The best thing to do is use a letting agent that will carry out all the necessary checks before offering a tenancy agreement, ensuring they are in a position now and in the future to pay their rent. Make sure you carefully consider your tenants to avoid any potential void periods.
Positively geared property
A positively geared property (or positive cash flow property) is an investment property that makes more money in rental income than the outgoing costs put together. Talk to an advisor regarding the figures to ensure you are investing wisely.
When you invest in property you can take advantage of several tax benefits. Make sure you are aware of all tax deductions that apply to your property whether they are profitable or you experience losses. Talk to a good financial advisor to make sure you understand your rights and responsibilities.
Don’t include utility costs
The rent you set should exclude all utility costs as this will help you to maximise your income and make as much money as possible through your investment.
Make sure you get a top-rated insurance policy when investing in rental property. This will give you a safety net should your property experience any damages. You could also consider cover for non-payment of rent and any associated legal costs – something that has been an issue during the pandemic. Talk to an independent broker who can find the best policy and who is aware of all the small print with exclusions.
It’s important to equip yourself with the right knowledge and advice to make sure you can maximise your income. Talk to us at Newton Letting if you would like advice on your property portfolio.