Have you ever wondered how property management relates to an increase in value? They may seem like completely different things, but rest assured your property manager works tirelessly every day to not only maximise your returns, but to also increase your property value over time.
Here are 5 ways a property manager can increase your property value:
1. Tenant Selection
Tenant selection is absolutely vital when looking to increase property value, because one bad tenant can really set you back financially. Take for example, a tenant who doesn’t report a water leak. Chances are that over time, the leak will cause significant damage to the wall structure.
This kind of repair issue shows up in ‘building and pest’ reports when it comes time to sell, which means a reduction in sale price will be negotiated. It also means a valuer will put a lower figure on the property, compared with other well-maintained property’s in the area.
You don’t want to be put into the position of having to sell your property under market value because of issues caused by bad tenants. It is your managers job to make sure your property value is maintained.
2. Property Inspections
There are two main reasons for regular inspections. Firstly, it encourages tenants to take responsibility for the condition of the property, because they know there is someone to communicate with about any issues that arise.
The second reason is for the property manager to physically identify any issues which the tenant may not realise is there; such as roof leaks, mould and ventilation issues or insect infestation. These issues can decrease value, so it’s important to address them as soon as they are identified.
Inspections are actually a legal requirement for a property manager, but there is another benefit to inspections – the property manager can assess the rent at the same time.
3. Maintenance and Repairs
Your property manager is responsible for organising and supervising the tradespeople who attend repairs at your property. As we have already said above, addressing these issues in a timely manner will ensure your property value is maintained.
As an investor, most of the costs incurred for repairs are tax deductible. Depreciation can also be claimed back throughout the year to help pay for these kinds of issues. It is best to speak to your accountant with regards to deductions. A lot of our owners have a buffer or savings account for emergency repairs.
4. Rent Reviews
Rent reviews are the regular assessment of the rent payable by the tenant, which is best reviewed at the same time as an inspection. It is also the best time to determine if the property requires some renovations to maximise rental return.
Your property manager adjusts the rent to be in line with the market, by comparing it with other rentals in the area and considering the affect of inflation on rental values. They will increase the rent periodically, either when it is time to renew the lease after 6 months, or by making an amendment to a longer lease.
Regular reviews provide an indication of where the property sits in the market in relation to other property. An increase in rent supports an increase in property value.
Property managers are best positioned to determine if your property requires repairs and/or renovations in order to increase rental return, because they regularly inspect a variety of property every day.
This gives them an in-depth knowledge of the what kinds of rent the market achieves for different property based on their ages, layouts and level of renovation. A property manager can make recommendations based on their physical inspections and experience with renting other properties in the area.
Where agencies have sales people in the same office, property managers have the added benefit of knowing what kind of renovations achieve the greatest increase in property value.
This is the ultimate goal isn’t it? To increase property value, so that we have more equity to work with and be one step closer to financial freedom! We think so.
That’s why our team at Airtrip not only manage everyday property tasks, but we also focus on maximising income and maintaining property value. Get in touch and speak with an experienced property manager today!