How a Father of Three Increased his cash ﬂow by more than an extra $4,600 per annum by using the right property manager.
When we met Stephen Clancy at the end of 2017 he asked us for help moving his current investment properties to a new agent. Stephen hadn’t had a rent increase since the properties had purchased his investment properties back in 2014. Like a majority of property managers, they hardly came running to Stephen at the end of each lease encouraging to increase his rent. Most property managers are lazy and cannot justify the paperwork involved in increasing the rent 2-4% at the end of each lease. The other reason most property managers are not comfortable increasing your rent at the end of each lease period is that they are afraid the tenant will leave and the property manager will lose their management fee.
We knew that Stephen’s investment portfolio was not cash flowing him the money that it should have been. The rents were so low that Stephen was having to put way too much of his own money into his properties just to keep them running. We knew we needed to increase the rents, but couldn’t do it in a way where the increase was so steep as to scare the existing tenants away. This was tricky as the laws had also changed which sadly seemed to favour tenants over landlords.
We handed the portfolio over to our management team and asked them to go and sit down and speak to each of the tenants occupying the properties. After many discussions and going back and forth multiple times, we were able to successfully increase the rent on each of Stephens properties to a point where the properties were almost paying themselves without any additional contributions from Stephen.
Once we took over the Property Management of Stephen’s Portfolio in November 2017,
we achieved a $45 per week increase on both properties whilst maintaining the same tenants on an additional 12 month lease.
This was from $345pw to $390pw and $360 per week to $405 per week.
This was a $4,680 per annum increase across two properties.
Property Management can make or break the viability of your investments. The aim is to have your properties appreciate in value and provide you with positive cash flow. It’s important to ensure that your rents are increasing each year. If the cost of living is increasing each year (inflation), your rents need to at least keep up with inflation. Don’t leave your rents idol. It could turn a good investment into a bad outcome very quickly.
“My new Property Manager Patricia is extremely proactive rather than sitting back and seeing what happens, she encouraged an increase and I hardly lifted a finger. I was constantly kept informed of what was going on and will deﬁnitely reap the rewards of the rental increase. I am very happy with how my properties are being managed.”Stephen Clancy