When looking to upgrade your investment portfolio with a rental property, be sure to acquire properties that earn you a steady income as well as an increase in their value.
Of course, rent can’t all be considered income, a property has needs, therefore it will also generate its own set of expenses which need to be met to maintain its value over time. These costs include facade re-painting, repairs, lawns and even cleaning of the carpets. Still, the reward after all this hard work is having a decent return coming in after all the maintenance expenses have been paid.
Expenses Tied with a Rental Property
Don’t tally for gross income on your property. Look at the bigger picture, there are expenses incurred in the process of keeping the rental in top shape. Only after you’ve considered these expenses that the real cash flow will reveal itself.
So how does one come up with the estimated expenses with a rental property?
Assume the real estate 50% rule, expect that maintenance costs will be around 50% of your gross annual income. So a rental property in Whangarei that makes $15,000 will have maintenance expenditures of $7500. But if you want a clear picture, you can break it down into two occurring expenses.
First, the basics which is the operating rental expenses. Like any business, the operational expenses are upfront costs. These regular and recurring expenses are usually the property rates, property insurance, routine maintenance and repair items, property management and letting fees, and vacancy voids.
An empty rental still accumulates bills, and these costs accumulate when your property remains unoccupied for a long period of time.
Second are capital expenditures. These are expenses that are bound to happen, though most are largely unplanned. You can expect an appliance in your rental to give out after several years, such as a water heater or an air conditioner unit. They need to be replaced after the end of their serviceable life.
Also your rental property is subject to wear-and-tear, and maintenance repairs for a leaky roof, broken pipes or damaged ceiling can be costly.
The Benefits of Rental Properties
But it’s not all about cost and expenditures, rental properties can genuinely contribute a good profit to a growing investment portfolio. For Whangarei property holders, rentals have become a good investment choice when it comes to having a steady income stream. The vibrant coastal life in Northland is enough to attract renters seeking a change of pace from Auckland.
But why do investors look into buying rental properties, mostly this is due to the following reasons:
When your savings won’t cut it. Banks may give you a return on investment, but not profitable enough for you to feel any abundant returns. Rental property investing on the other hand, with the right property can give you returns good enough to cover your basic expenses and leave you with a hefty take home profit.
Rental property investments are a hedge against inflation. Such real estate have a built-in protection against the tides of inflation primarily with the market and with prices soaring, the return on investment on rentals are tied down to rental payments. Rent payments tend to rise over a period of time.
Beyond building wealth, property owners want an extra residence. At some point, if you cease to rent the property out, you can simply move in and enjoy the property.
Property Management for Rentals in Whangarei
Get the most out of your rental property in Whangarei. We can help you maximise your income.
Each day that your property sitting empty, that’s another out of pocket expense right there. RentalsCo can get you the tenants you need, and get the money coming in.
We handle the comprehensive marketing and advertising of rental properties throughout Whangarei. Plus we do a thorough tenant screening and selection process to make sure your vacancy requirements are met. Call us RentalsCo at 09 459 7139 or email us at email@example.com to inquire about our property management services. We offer full-service leasing and on-time rent collection, so you don’t need to worry about getting paid.