Tips on how to increase your rental income & reduce costs with rising interest rates

Rising interest rates can put additional strain on your finances. Here are some tips to consider how you can increase your rental income or reduce costs. Alternatively, if you have investment properties that are negatively geared, meaning that the rental income is not enough to cover the costs of owning the property, these tips will also help.

Reassess the property's rental income: Ask your property manager to provide you with an updated market rental appraisal to ensure you are receiving the right amount of rent. You can also check this yourself. It is as easy as checking the different real estate portals to understand how much comparable properties are renting for. If you need help with this or want another professional opinion, reach out to another property manager and request a rental appraisal on the property, they will happily oblige.

Review your interest rates. Don't be afraid to ring your bank and ask them for a more competitive rate. Otherwise, speak to your mortgage broker and request them to seek a rate reduction on your behalf. Request a bank revaluation on your property and if your LVR (Loan-to-Value Ratio) has reduced if you may get a reduced interest rate. Consider refinancing the mortgage to get a more competitive rate. Banks will want to keep your business, it always pays to ask for a review of your interest rates. Make sure you discuss and understand the different options with your bank or mortgage broker.

Look for ways to reduce expenses on your investment property. This could include asking your property manager for a more competitive management fee, (especially if you have multiple investment properties under management), review your insurance policies, or lowering property maintenance costs. Request your property manager to provide you with a summary of all costs and understand exactly where money is being spent. Ensure your property manager is using local trades to reduce travel time, ensure jobs are being grouped together so you avoid multiple call out fees, always read and check your monthly rental summaries sent from the property manager and check everything.

Engage a quantity surveyor and get a tax depreciation report to ensure you are claiming all available tax deductions.

Increase your rent and look for simple and cost-effective ways to add value to your property, for example, add a dishwasher, built in robes, air conditioning, new carpet, internal paint. These simple cosmetic items can dramatically improve your property and increase your rent. Before committing to any work, always speak to local property managers in the area and find out what renters are looking for. A good example of this is air conditioning throughout a property in warmer climates will significantly increase rent.

Maintain your property and always use licensed and experienced tradespeople. Ultimately, this will cost you less in the long run.

Consider different lease terms and tenants who are less likely to vacate at the end of every lease. This helps to reduce the time the property is sitting vacant without a tenant and lost rent while also reducing associated advertising and lease renewal fees to find new tenants.

As a last resort, carefully consider selling the property. Selling can provide an opportunity to access capital gains and reinvest the proceeds into a property with better cash flow and capital growth prospects. Carefully consider all future implications and costs involved in this.

Ultimately, the best course of action will depend on your investment goals, financial situation, and risk tolerance. It's important to carefully consider each option and seek professional advice.