When you first squared a rental property, you were likely filled with excitement. A rental that serves as a holiday home for others can be a great investment and a tool to generate income. However, property business is rarely without its challenges, and changes are inevitable. A property that created a healthy revenue stream last year could now be standing empty. If the market has changed, if a natural disaster frightened tourists away, or if many others in the area also offer the same service now, you may struggle to get bookings.
Luckily, you don’t necessarily have to sell your asset. If you hate the idea of capital gains tax, this is good news. There’s a lot you can do to start making money from your investment again.
Do Some Renovations
While the market is slow, why not use the time to upgrade the facilities? You’ll have a better product to offer when people start booking again. If there’s a seasonal slump, you may have people filling your inbox again in a year’s time.
These are the areas to remodel and upgrade so you can increase your rates:
• Make sure to do proper repairs on general faults, so future visitors won’t complain about dripping water or a strange odor.
• Renters spend a lot of time in the kitchen and they appreciate a clean bathroom. New fittings, cupboards and tiles in these areas can go a long way in making your property a customer favorite.
• Adding an additional room may increase revenue
• If you make it pet-friendly you’ll attract a new demographic and cater to a wider audience
• Allow more natural light into the rooms by adding skylights or installing larger windows. This will give the house a cosier atmosphere, and best of all you’ll save on utility costs because renters will rely less on artificial light and heat
• Invest in features that will attract couples. Add a fireplace if the property is in an area where snowfall is common in the winter. Alternatively, upgrade your master suite with his-and-hers basins in the bathroom or a luxurious master bedroom
Cater to a New Niche
If you’ve only been marketing your unit as a holiday home up until now, perhaps it’s time to change your focus. Your property could be the ideal place for business professionals to stay while they’re traveling.
With the COVID-19 pandemic changing people’s priorities, furnished homes are popular destinations for families who need to be closer to family members. Make sure your marketing reaches these unique demographics.
Get Tech Savvy
The modern rental owner can no longer shy away from technology, as most of the renters will require state of the art amenities. For example, business professionals will need reliable Wi-Fi to continue their work, and a family will need the luxuries they’re used to at home. Buying a new, bigger TV could be the key to securing a long term rental.
Try digital welcome packages that renters can access on their mobile devices. They’ll see all the information about the house and the surrounding area, ensuring a streamlined visit even if you’re not on site. Also consider upgrading security to help them feel secure. This could be a key factor in whether a potential client picks you or the competitor across the road.
Swap Your Property
In certain circumstances, the reality could be that your rental property is a lost cause. However, if you still want to avoid a capital gains tax, you can simply switch your focus to another area of the country where you’re more likely to make a proper income. Under the 1031 Exchange guidelines, you can sell your rental property and acquire a replacement property without paying this dreaded tax. There are simply guidelines to follow:
• You must identify the replacement property within 45 days of selling the relinquished asset.
• You must close the new deal within 180 days after the other deal is closed.
• The new property must be worth as much or more than the relinquished one.
• It must be property of the same kind, in this case a rental property serving as an investment, not a home that will become your primary residence
Final Words
With the above tips, there’s a solution that makes financial sense for your rental property. Property management becomes easier when you know about all your options, so it’s worth doing some research before you put up a ‘for sale’ sign.
