How Can You Maximize Your Investment Property Returns?

09/05/2020 15:37

Whether you are new to Buy-to-Let Private Rental Sector or a seasoned professional landlord, Fund manager or Private Equity Asset Manager maximizing returns on your investment property or portfolio will be one of your main ongoing objectives or responsibilities.

Below are some thoughts on what you may want to do improve your investment and capital returns.

1. Understanding Market Rent & Pricing Your Rent(s) Appropriately

This is not about being the most expensive or the least expensive (cheapest) but rather pricing to maximise value for money for your target market potential tenants, reduce your vacancy rates and ensure long term profitable paying tenants.

Rent should cover all ongoing costs, take into account inflation and with a margin to absorb any unexpected events whilst still breaking-even and still making you a profit. Its a balancing act where you want the scale to be always on the generating positive cash flow with full occupancy all the time if not most of the time.

When it comes to determining fair market value for rent, market data is available for free from online portals such as Rightmove, Zoopla, NetHousePrices, HousePrice.AI as well as from local property letting and management agents who would also want to win your ongoing letting management business.

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2. Professional Property Marketing Images, Brochure

First impressions count the most and getting market rate for your investment property requires finding prospective tenants who aren’t looking for the cheapest property, but rather, exception value for money property that they’ll love to live in and be proud of.

Whilst its always tempting to take the pictures yourself and save a few pounds in the process, its more important that these pictures taken by professionals and make your target tenants want to arrange a viewing. Cutting costs on your ultimate sales brochure is not an option if you are serious about maximizing your investment returns.

Sell & rent safely with for example Spec whom are ready to help with 360º virtual tours, delivered to over 500 agents in London alone. Spec Digital Surveyors are certified by RICS and scan every property using the Leica BLK 360, a revolutionary 3D camera.

3. On-going and Preventative Property Maintenance

This is much easier said than done as many investors approach is "why fix it, if it isn't broken" which is ultimate the wrong approach and can be costing more than most realise. Along with this common approach to only fix things when they’re in need of repair, is to try and DIY the repairs and maintenance.

Reactive maintenance is, almost by definition, more costly and far less convenient.

Better is to have a professional maintenance company that can handle any and every likely property maintenance job that will inevitable occur as its not a matter of "If" but rather "When" required. Disney is one well know company that does on-going preventative maintenance on a daily basis.

4. Mitigating RISK via Insurance

Insurance is a usually an afterthought for most people and businesses alike, even though we all know that life is full of unexpected events we should have contingency plans for.

Whilst you don't need to be over-insured, adequate insurance is paramount and its adequacy should be reviewed on a regular basis - yearly ideally.

Its always a good idea to take the time to get a few quotes to compare with each other but I wouldn't spend too much time on this and also remember you want a reputable insurer that will pay out should the unexpected occur. Insurers claims payment track record is more important than cost in this aspect. The cheapest insurance that wont pay out is just as expensive. ts always a good idea to take the time to get a few quotes to compare with each other but I wouldn't spend too much time on this and also remember you want a reputable insurer that will pay out should the unexpected occur. Insurers claims payment track record is more important than cost in this aspect. The cheapest insurance that wont pay out is just as expensive.

Insurance providers will usually give you better rates if they’re insuring more of your assets as a loyalty benefit and also helps with simplifying your administration etc.

5. Debt or Mortgage Finance Review

Professional advice in the aspect - whilst it is not free - will benefit you timewise and money wise, by taking a review of the mortgage rate you’re currently paying on your investment property, comparing it with today’s mortgage rates and giving you an objective refinance cost vs benefit analysis. Yes, refinancing involves more administrative paperwork and can be a pain, but a lower rate could save you thousands of pounds every year translating into more bottom line profits.

Don't forget, when you refinance your mortgage, there’s often an opportunity to pull some cash out for further property investments or portfolio maintenance as well as refurbishments.

6. The Right Ownership Vehicle, Tax & Tax Planning

Perhaps the very first consideration at the point of considering acquiring investment property and maybe even review in conjunction with mortgage debt review?

The right entity structure, Individual ownership (Sole Trader), Limited Liability Partnership (LLP) or Limited Company (Ltd) will depend on your circumstances and is a decision that should be taken with appropriate professional guidance from a qualified and chartered accountant.

A qualified accountants guidance will go a long way in looking at and planning for your Wealth Creation as well as Wealth Preservation.

Whilst the above suggests a little more administrative time investment that is a limited resource for all of us, its a MUST and Worthwhile endeavour even if you follow through on just one or two aspects, you will have more money in your pocket at the end of the day. Its ultimately not just about earning money but also keeping it...

By CEO, GIC Capital

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