Whether you’ve owned your rental home for one year or more than a decade, it is easy to underestimate the costs of holding investment property. 

Mortgage, rates, insurance and maintenance have all increased, and it can be difficult to know what to do without falling further behind. 

There are two parts to consider; general maintenance, which is to keep the property tidy and safe to live in, and compliant with all current regulations; and improvements, to increase value, attract better quality tenants, and charge a higher rent. 

So, in a competitive market, how do you increase the rental income and profitability of your precious investment?

First of all, know what is easy to cut costs on, and what will cost you more in the long run. 

1. Keep up with seasonal garden maintenance and general property maintenance. An untidy or uncared for home won’t attract quality tenants, and will limit the weekly rent you can charge. 
2. Ask around for insurance quotes if you directly insure with one company. If you have an insurance broker, ask them to review your cover. Be sure you’re protected against all essential risks. 
3. If you’re due for a mortgage re-set, there are new offers from various banks. Talk to your mortgage broker to see if you would be eligible for this.   
4. There is plenty you can do at minimal cost. Paint the front door, waterblast paths and decks, replace the letterbox, ensure the house is spotlessly clean when re-letting. Change tired old curtains for warm, lined quality curtains in neutral colours, purchased online or at a local curtain re-seller. Add a few raised vege beds if tenants would like this. 
5. If the property is fenced, would you allow a dog or other pets? Tenants with pets and great previous rental references are generally responsible and stay longer, cutting down vacancy times over the long term. 
6. Focus on key areas for upgrading. If you can’t upgrade the bathroom at least add a new shower mixer and flexi-hose with water saving shower head. Add LED lighting in kitchens and bathrooms, to brighten these areas over winter. If the budget doesn’t allow to fully replace the kitchen, change kitchen door and drawer handles for a more modern look. Have an auto garage door opener installed, your tenants will love you for this in winter. 
7. Everybody loves storage! Can you add extra shelving or fitted cupboards, or put in a shed for bikes and kids toys. 
8. Schedule one large expense each year or two so the house doesn’t get run-down. For example, upgrade the bathroom or kitchen; add extra insulation above current requirements; repaint the interior or exterior; replace carpet or other flooring; add a heat transfer/ventilation system; build a covered deck; replace the roof/guttering 
9. Tenants are attracted to sunny, warm, light and contemporary spaces, which have great functionality. Can you easily remove a non-load bearing wall to open the kitchen to the living room (talk to a builder first!). This may affect your Healthy Homes heating assessment, so check this out before you take action. 

Once you’ve looked at property maintenance, think about the rental income. Some landlords only increase rents between tenants. It’s great to have tenants who stay long term because the rent is cheap, but not keeping up to date with market rent will result in not enough income to cover basic expenses, let alone upgrades. If you own a large block of units this will often be valued on the cap rate, similar to a commercial property, so the rent is used as one of the key factors in calculating the value of the property. Don’t miss out on equity gains that could improve your loan-to-value ratio! 

You can’t charge more rent for work that is to get the property compliant with the RTA and Healthy Homes Standards, but it is fair to review rent each year against similar homes in the area. 

For other ways to improve your investment home and charge more rent, here are a few things to think about: 

1. Can you create an extra bedroom out of the corner of a large living room, or an underused large separate laundry?
2. Is the section large enough to add an insulated and compliant sleep-out, for work from home options or to allow a teenager some extra space. 
3. A separate laundry could be converted to a second bathroom, with laundry facilities fitted into the cupboard. (Building consent may be required)
4. For older homes with bare concrete block on the internal walls, lining and insulating these will greatly improve the warmth and energy efficiency of the home. 
5. Instead of one heatpump in the living room, can you install ducted heating, or an Ultra-Low Emissions Logfire with a heat transfer system? 
6. Change an old low pressure hot-water cylinder to mains pressure. 

If your investment properties are no longer attracting the best tenants and giving you the best rental yield, contact me for a free rental assessment; Kim Willems, Ruby Housing 03-3795033, or 021 385780.