Historically, investing in property has proven to be one of the most effective ways of realizing long-term capital growth. However, to maximize returns on investment and increase cash flow for the period that you're holding the asset, there is the need to optimize your property investment portfolio. Here you will learn some of the basic strategies that you can use to fast-track the performance of your property, improve capital growth, and generate additional cash flow.
Review your rents
The property industry is constantly changing, and it is essential to keep abreast with these changes if you want to generate more returns. One of the aspects that you need to review regularly is your rent rates. Do your research and find out how your property stacks up against other similar properties on the market. Adjust your rents upward or downward so that they are in line with the market. If your property is more expensive than other comparable ones in the industry, it will be less attractive to prospective renters.
Maintain your property
The condition and appearance of your property play a significant role in determining its competitiveness on the market. Property with old and broken fixtures, faded or flaky paint and inadequate security systems may frustrate your efforts of maximizing returns on investment. Take the time to maintain your property and improve its appearance and performance so that your renters can be comfortable. Carry out the necessary repairs and upgrades, and have it regularly inspected. This will increase the value of the property and help you realize additional cash flow.
Claim the available depreciation
Are you aware of all the forms of tax deductions that your property qualifies? Tax deductions for depreciation are worth thousands of dollars, and claiming them can result in significant tax savings every year. If you haven't started claiming depreciation, you are losing out on a lot of money that could be used to improve and maintain your investment. Ask a tax expert to help you calculate your deductions and prepare a depreciation schedule for your property. Don't forget to include structural renovations, additions, and upgrades as they are also allowable against your taxable income.
Don't over-capitalize on renovations
As more investors enter the market and put up new structures with advanced technologies, you may feel the pressure to renovate your property to these standards. Although upgrades can increase the value of your investment and increase capital growth, it is essential that you don't go overboard. Analyze the renovations that you want to undertake and make sure that the features you want to add are worth the additional cash flow.
Contact a financial advisor if you are looking for more ways to optimize your property portfolio and realize better returns on investment in the long run.