Slash mortgage by 6.5 years - and six other ways property managers can boost cash flow
From cutting years off the length of a mortgage to maximising rental income, these seven tips highlight how there is much more to a good property manager than collecting rent and doing property inspections.
If you’re one of the 2.2 million Australians who own an investment property, cash flow is the priority.
Your investment property (or properties) should be optimised for cash flow.
With an estimated 80 per cent of Australian property investors employing the services of a professional property manager, your property manager should be one of the key professionals who help improve your cash flow.
While most property investors look to their accountant to help improve the cash flow of their investment property, they often forget the value a professional property manager can bring to a property’s cash flow.
Here are seven strategies your property manager can implement to improve your cash flow:
1. Optimise rent disbursement frequency
Consider the benefits of more frequent rent disbursements.
While monthly payments are common with most property managers, switching to weekly disbursements can save you on interest costs, if you match your mortgage repayments accordingly.
For example: If you consider a loan amount of $500,000, with an interest rate of 6.6 per cent, paying principal and interest on a 30-year loan term, the savings can become obvious.
Swapping from monthly mortgage payments of $3213 to weekly mortgage payments of $803, the interest savings over the 30 years could be up to $163,730 (or reducing the loan term by six years, five months).
By aligning rent disbursements with your mortgage repayment schedule, you can effectively reduce interest expenses and improve your cash flow.
2. Maximise rental income
By staying informed about market trends and conducting regular rent reviews, property managers can ensure income is not left on the table.
Many places haves generated weekly rent increases of up to $200, highlighting the potential for significant income growth.
Property managers will, of course, be bound by any state’s legislation regarding rent increases.
3. Minimise vacancy periods
Vacant periods can have a significant impact on cash flow.
A property manager should manage lease renewals and minimise downtime between tenancies.
By commencing the re-leasing process early and avoiding lease end dates on “dead days” like Mondays, they can ensure a steady stream of rental income.
Furthermore, your property manager can implement targeted marketing campaigns and utilise online platforms to attract prospective tenants quickly, reducing vacancy periods and optimising your cash flow.
4. Reimbursing water consumption charge
Ensure that all allowable water consumption charges are passed on to tenants.
Whether your property is new or old, your property manager can implement systems to accurately track and bill tenants for water usage, helping to offset your expenses.
In some areas, strata title properties don’t issue individual property consumption information, and this can impact your ability to seek reimbursement of water consumption from your tenants.
5. Fair pricing from tradespeople
Qualified tradespeople are essential for maintaining your property, but their costs can vary.
Your property manager can leverage their network of trusted professionals to ensure fair pricing for maintenance and repairs, preventing overcharging and minimising expenses.
Additionally, your property manager can obtain multiple quotes for larger projects and negotiate favourable rates on your behalf, ensuring cost-effective maintenance solutions without compromising on quality.
6. Implement preventative maintenance programs
Proactive maintenance can prevent small issues from escalating into costly repairs.
By scheduling regular inspections and addressing maintenance issues promptly, your property manager can help you avoid unexpected expenses and preserve your property’s value.
Additionally, a property manager can develop customised maintenance schedules tailored to your property’s specific needs, addressing potential issues before they impact tenant satisfaction and annual rental yield.
7. Manage insurance claims efficiently
In the event of an insurance claim, your property manager should be experienced in managing these claims, which can facilitate a swift resolution.
Their expertise in property management and established relationships with insurers and local tradespeople can expedite the claims process, ensuring minimal disruption to cash flow.
Your property manager can document and report property damage promptly, liaise with insurance adjusters on your behalf, and oversee repairs to ensure timely completion and reimbursement. By efficiently managing insurance claims, your property manager can safeguard your investment and maintain uninterrupted cash flow.
