Property Management How to Make Any Rental Property into a Positively Geared Investment Property by Sylvia Shalhout January 25, 2018February 19, 2019 by Sylvia Shalhout January 25, 2018February 19, 2019 Looking for a positively geared investment property? While it is totally possible to find a rental property in the real estate market that will be positively geared, real estate investors should also know how to make any rental property into a positively geared investment property. A positively geared investment property requires two main things: High rental income Low investment property expenses If real estate investors achieve these two elements, a positively geared investment property will provide spare cash, and who doesn’t want spare cash? This extra money can go into purchasing new real estate investments or paying off an investment property mortgage early, or even go towards personal use for the real estate investor. Many real estate investors have negatively geared rental properties in their investment portfolio, as they have their advantages as well. A positively geared investment property could help fund this kind of rental property. The possibilities for what to do with the extra cash from a positively geared property are endless, really. Related: What is a Positively Geared Property and How Can a Real Estate Investor Find One? Before Getting Started: Before getting into tips on how to make any rental property into a positively geared investment property, real estate investors should know how to choose good real estate investments. Good real estate investments will be much easier to make into a positively geared investment property. Focus on these things when choosing a rental property: Choose a good location for the investment property: one with high rental income and rent prices, low vacancy rates, etc. Look for rental properties that are in a decent condition, with room for improvement. These can make for the best real estate investments. Take steps to get good financing: improve your credit score, shop around for the best mortgage and interest rates, etc. Click here to visit Mashvisor and find a rental property that can be easily turned into a positively geared investment property. Once real estate investors find good real estate investments, they can start taking steps to make a rental property into a positively geared investment property. Make Any Rental Property Into a Positively Geared Investment Property by Increasing Rental Income Increasing rental income can be done in many different ways. It doesn’t have to be overly expensive either. In fact, real estate investors should avoid overspending when looking into these options for their rental property. Make Your Rental Property More Appealing to Tenants When looking for a rental property to make into a positively geared investment property, keep your eye out for properties that need simple makeovers. Sometimes a rental property looks unappealing at first, but with a few changes, it can become very desirable in its real estate market. Consider Kitchen and Bathroom Makeover Emphasis on the word makeover. Real estate investors often jump to complicated and costly renovations when trying to make a rental property into a positively geared property. But, take a closer look at the kitchen and the bathroom of the rental property. Sometimes, all they need is a paint job, thorough cleaning of every nook and cranny, and updated faucets, shower heads, and cabinet handles. These simple changes can turn a dingy room into a beautiful space. Tenants will be willing to pay a bit extra if real estate investors make these changes to rental properties. Add Appliances When it comes to smaller investment property units in the real estate market, like townhomes for rent or condos, tenants will pay more if real estate investors provide certain appliances. An air conditioner, a washing machine, a dryer, and a dishwasher could be what puts your rental property above other investment properties in the real estate market. The key here is to know your real estate market and know your tenants. Are these things that they desire, that other rental properties might lack in the location? If so, you can find these machines in a good condition on second-hand websites, so you can save money while increasing rental income. Even if these appliances are a bit costly, they are good investments in the long run. Do Everything to Increase Storage Space Tenants often reject rental properties because there is little space for all of their belongings. Take the time to study the layout of your investment property and find ways to increase space for your tenants. Place wardrobes in convenient places, appliances can be hidden away in larger cabinets, and even building an extra small closet could be a possibility. Don’t underestimate the role of increased storage space in making a positively geared investment property. Improve Landscaping and Add a Parking Space Have you ever walked onto a lawn with dead grass and trees? Some tenants can’t move past this sight, even if the interior of the investment property is decent. Their first thought might be the expenses they’ll have to pay to fix it up and make it presentable. Don’t let your prospective tenants worry about this. Clean up the lawn and yard and hire a professional to take care of the landscaping. Tenants look for parking space, especially in real estate markets with busier streets. Try to add an off-street parking space, maybe in the driveway or in the form of a small extension of the rental property. Tenants will be willing to pay higher rent prices for this space and you’ll get more rental income. Don’t Get Carried Away Don’t get carried away with the makeover. Not all rental properties need all of these improvements to turn into a positively geared investment property. Real estate investors who go overboard try to compensate with really high rent prices, hoping to make up for the costs through rental income. This is not the way to make a positively geared investment property. Study your rental property, the real estate market, and prospective tenants. You might even find that there are unique improvements to make specifically for your investment property. Allow Tenants to Have Pets Something that can win tenants over immediately and get them to pay higher rent prices is allowing them to keep pets. Many rental properties are not flexible in this aspect, so it will give your investment property an advantage over the real estate market. This is one of the simpler ways of making a rental property into a positively geared investment property. Airbnb Rentals Can Bring Higher Rental Income Consider converting long-term rentals into Airbnb rentals. If managed correctly, Airbnb rentals generally bring higher rental income for an investment property than if it was used as a long-term rental. Make sure the rental property is in a location that will attract tenants. If this is the case, real estate investors will find that they can charge higher rent prices and increase their rental income. Related: Four Things to Consider Before Purchasing an Airbnb Investment Property Consider Dual Occupancy Do you have in your portfolio an investment property with multiple bedrooms? Another way to make a rental property into a positively geared investment property is to convert it into a dual occupancy property. If the layout of the investment property allows, it can be converted to allow multiple tenants to rent at the same time. This will mean receiving more rental income. Check with local authorities to make sure this is allowed in the location. If You Want a Positively Geared Property, Don’t Be Afraid to Increase Rent Prices Many real estate investors miss out on higher rental income because they are hesitant to increase rent prices. They fear vacancy and losing tenants. However, if you take the steps mentioned, your investment property will be worth more, and you should be able to demand higher rent prices. Of course, don’t overprice yourself out of the real estate market. If you do, you can always change it back. Make Any Rental Property Into a Positively Geared Investment Property by Decreasing Expenses There are many ways in which real estate investors can cut back on investment property expenses to create a positively geared property. Understand Property Tax Deductibles If real estate investors don’t know what investment property expenses are tax deductibles, they miss out on a great opportunity for saving money. The following can all be claimed as tax deductibles for a rental property: Depreciation Repairs Interest Rates Home Insurance Professional or Legal Services Manage the Rental Property Yourself Cut back on expenses by avoiding a professional property management company and managing your own investment property. This is even possible with out-of-state rental properties. While it can take some time and experience to make managing a rental property a bit more effortless, it’s a great way to decrease investment property expenses for a positively geared property. Rent to Good Tenants Want to make managing rental properties easier and save even more money? Take the time to find good tenants. Background checks, personal interviews, and references are all ways to find the best tenants. Not only will good tenants make it easier to manage a rental property, but it will mean less property damage to the investment property. Related: What to Do With a Tenant Not Paying Rent For more tips on cutting investment property expenses, click here. Disposable income from real estate investing can be a reality. First, take the time to find good real estate investments. Then, focus on increasing rental income and decreasing investment property expenses. These can be done for any rental property, making it into a positively geared property sooner rather than later. Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL AirbnbCash FlowRenovationsRental IncomeRental ManagementTax Benefits 0 FacebookTwitterGoogle +PinterestLinkedin Sylvia Shalhout Sylvia was the Content Marketing Manager at Mashvisor. As a real estate writer, she has been covering topics for the beginner and advanced real estate investor, helping them make smarter decisions as well as real estate agents looking to take their business to the next level. 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