While raising rent between tenants is tempting, it does not always maximize return on investment properties. Leaving rent the same can improve overall return if maintenance and upgrades are not performed. The quality of tenants, how long they stay, vacancy periods, and reletting costs must be considered alongside rental income. Pushing top dollar can cause financial strain for tenants and lead to maintenance issues, late payments, and high turnover, reducing the true long term return. Maximizing return requires attracting reliable tenants through fair rent and property presentation while minimizing costs like maintenance, vacancy, and reletting fees.

1. IS PUTTING UP THE RENT
THE BEST WAY OF
MAXIMISING THE RETURN
on your investment property?
Tony Morrison
1
Is putting up the rent the best way of maximising
the return on your investment property?
Tony Morrison

2. It is a common assumption that rents should
consistently go up from one tenant to the next.
2

3. 3
Whilst this can happen you need to be aware that this
Is not always the case and you need to understand what you can do
To help increase the return on your investment.

4. 4
Sometimes leaving the rent where it is can
actually improve your overall return.

5. 5
Just as in sales the state of the market has a huge bearing
on the speed of renting your property and the return you
get for it.

6. 6
It is all very much a case of supply and demand. If there are a large
amount of properties available for rent similar to yours then this
is going to affect your return and speed of renting.

7. 7
If your property is available in the warmer months you
generally have more tenants looking to relocate which
leads to competition and sometimes higher rents.

8. 8
On the other hand if your property becomes available in the
colder months there are generally less rental properties
competing against yours.

9. 9
Whilst premium prices are harder to achieve in these months less
competition can at times lead to shorter vacancy.

10. 10
A common comment that property managers get thrown at them is -
"I have been getting $300 per week rent for five years from the same
tenant so with a new tenant coming in surely I should get a lot more?"

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This may be the case but if you have done no maintenance or
upgrading of the property over this time your rent may very well
have gone backwards.

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There are very few home owners who over a five year period
wouldn't do a reasonable amount of maintenance or simply
upgrade parts of their house to maintain its value.

13. 13
At the same time many investors will spend only the absolute
minimum on their investment property and expect its value and
rental return to keep going up.

14. 14
If you are in a buoyant market, whether it be for sales or rentals
this can happen but if the market is average or indeed going
backwards sometimes money needs to be spent purely to maintain
value, let alone increase it.

15. 15
The renting of homes is a competitive business so if you want to
rent quickly for a greater return you need to be more visible than
your competitors.

16. 16
You can do this by making sure the company trying
to rent your house has a strong presence online, with a
good experienced team and up to date data base of
prospective tenants..

17. 17
Then you need to be either better presented than
your competition or be better value price wise.

18. 18
Whilst it is always tempting to put the rent up between tenants or
even mid tenancy an often over looked fact is that ...

19. 19
Landlords are inviting complete strangers into their properties
to look after and maintain their investment that their hard
earned money has bought.

20. 20
Therefore the quality of the tenant is just as important
as achieving the maximum rent.

21. 21
If you have ever had a bad tenant you will know how much damage
to the value of your property that a poor tenant who is prepared to
pay a little more can actually do.

22. 22
Pushing prospective tenants to pay absolute top dollar for your
property is also one thing that can lead to tenants falling behind in
rent as they struggle to meet their many life commitments.

23. 23
The hassle of chasing slow payers is also a pain for landlords who
are often reliant upon rent coming in consistently on time to
meet mortgage payments.

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There is also strong evidence to suggest that tenants who pay top
dollar are less likely to stay long term as they are on the look out
for cheaper options as soon as their lease expires.

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This can lead to potential weeks of no income for the landlord whilst
tenants who consider they are paying a fair and reasonable rent may
stay a lot longer which can save the landlord expensive re letting fees.

26. 26
If you are successful though in chasing the extra $10/15 a week
rent that you are wanting but it takes a long time to achieve this
figure it is a worthwhile exercise to actually work out how long
it will take to make up for the rent you have missed out on. It just
might not be worth the extra rent.

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In conclusion in evaluating the true return on your rental
property it is not just about calculating your weekly rent.

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It is also about how many days the property sits vacant each year,
how often you have to find new tenants, whether ongoing
maintenance and upgrades are carried out regularly and whether
your tenants feel obliged to look after your investment.

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The question is will putting up the rent help or be detrimental in all
the other areas which form part of the overall strategy to maximise
your return on investment?

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This Key note was created by Tony Morrison,
CEO Harcourts Tasmania to help investors
understand how to maximise the return
on investment of their rental properties.
tony.morrison@harcourts.com.au