If owning a rental property has become all too hard and you can’t seem to make it work for you, here are ten reasons why you should hang on...
An investor recently asked me if I knew anyone who wanted to buy his rental, it had a good long-term tenant and was in a sought-after location. “Why on earth would you sell this?” I asked. He replied, “To fund my own home build.” To which I replied, “You need to see if you can leverage off the rental using the increased equity to help with the build, there’s no need to sell it.” … “Oh! I hadn’t thought of that!” he said.
House Prices Soaring
Quotable Value's latest house price index report shows the rate of house price growth is still on the up. REINZ data of the median house price from November 2020 showed Christchurch with a median of $526,000 – now we are looking at around $715,000 and we expect this to increase further yet especially when the borders open.
Supply vs Demand
The key driver of the market is the lack of supply – and currently there's just not enough stock on the market. Listings are down which drives house prices up. Now is the time to hold onto your rental to enjoy easy increased equity.
Low supply coupled with high demand to buy property has left many people renting which in turn has caused rental shortages and higher rents. Increasing compliance costs have also been a factor in the increase of rents. It’s important your rent is set to market levels in order to maximise your returns.
Compliance Isn’t That Scary
Some think selling is the easiest option, but ensuring your rental meets the current Healthy Homes Standards is easy with the right advice, right tradespeople and financing the work if needed. It also future proofs your property – after all, good insulation, ventilation and heating not only benefit the tenants, but the property itself.
Have you maximised the potential of your rental? Rental properties need a decent upgrade approximately every ten years. Maybe you don’t know how to go about it or haven’t got the expertise? If you need ideas on how to complete a cheap and easy renovation, or what it could cost to renovate a bathroom or a kitchen, it’s worth doing some research and talking to the experts to unleash these X factors!
Do you know the land zoning of your property? Perhaps this has changed since you last checked and your property has more potential than you previously thought. Maybe you could subdivide or add a minor dwelling? Could you re-jig the current floor plan to create another bedroom? Perhaps there is room to add an extension? Working out if your property has an up-side could give you the increase in rental income you’ve been looking for.
Low Interest Rates
What will you say to your kids in 15 years’ time when they ask why you didn’t buy property when interest rates were 3.5%? What are you waiting for? Talk to a good mortgage advisor and get hunting. Now is the time to make the most of the current climate.
Don’t Sell! Buy More!
Mum and Dad investors are selling because it’s all too hard, but investors with large portfolios are upsizing. This doesn’t make sense when it’s so easy to generate positive cashflow in this market. If you don’t know where to start looking, you need to surround yourself with some experts who are well versed in property investment or join your local property investors association.
Hire An Expert
A good property manager will handle everything plus provide you with expert advice. They should also inspire you to maximise your returns which in turn allows you to sit back, relax and live the dream. More and more Kiwis are seeking professional property management to take the stress out of what is meant to be an exciting and rewarding endeavour. So, if you’re not enjoying yourself, perhaps it’s time to get in touch and let us help.
An active investor with her husband Hamish, Claire loves to inspire & inform others, all whilst juggling three little boys and living her mantra to eat well and travel lots.