Losing tenants or failing to replace them quickly can result in a painful hit to an investors cash flow. To help protect your assets against this you need to remain competitive. Don’t be tempted to increase your rent above what the market is prepared to pay and ensure that your property is well maintained and includes features that today’s tenants have come to expect.
Your property manager is a great resource and can provide you with all necessary market intelligence and how much your rent increases could be whilst still remaining competitive.
Additionally, to help protect your asset for the future, ask your property manager to provide recommendations and a schedule of jobs worth doing over the next 1-3 years. Enhancements such as installing air conditioning, adding a garage or an outside entertaining area, adding a laundry or re-doing the kitchen may be required to protect your asset, but undoubtedly will require you to budget for the expenses, so having a 3-year plan is important. At the same time your property manager should be able to give you a guide as to the likely payback in terms of rent increases that the enhancements will bring.
Preparing for the future is important to protect your assets
Are your assets structured and insured effectively?
Whilst many of us feel financially secure as a result of owning an investment property, it is important to also consider if it is structured and insured in the right way to withstand any potential nightmares.
Many investors understand the importance of being protected but they fail to take out insurance or to receive the full benefits associated with their policy. Without the correct insurance in place, investors run the risk of losing everything if something goes wrong. For an investor, or for that matter any home owner skimping on insurance is not a good idea.
As an example, if someone was injured or worse at your investment property, and there was a lawsuit brought against you, it is possible that your insurance would not fully cover the amount of the claim. If your investment is owned in your own name, then all your assets can be claimed in the lawsuit including your own home!
Setting up the right structure when purchasing an investment is critical and it is important that you seek advice from your financial planners, accountants and solicitors who have experience with property. They will be able to assess your overall situation and help you implement a strategy that is most suitable to your circumstance and your portfolio.