How To Increase Rental Income With Air Conditioning
With recent hikes in interest rates many property investors are looking for ways that they can increase their rental income to help pay for rising mortgage costs.
While there are a variety of ways to increase the rental income of your properties, one of the best and most reliable ways to increase how much tenants are willing to pay for your property is by installing a reverse cycle air conditioning unit.
Offer Tenants An Air Conditioning Unit For a Rental Increase
If you already have existing tenants then they may be willing to pay extra for an air conditioning unit.
I have personally lived in multiple places where I would have been happy to pay $10-$20/week more in rent in order to get air conditioning installed in the property.
An air conditioning unit can more than pay for itself in a few years and often it can offer a much better return on investment than that money sitting in your offset account.
It makes the property much more pleasant to live in year round and if it’s reverse cycle it can be used to both heat the house in summer but also cool the house in winter.
Just make sure you don’t try to gauge your tenant with a huge rental increase. It should be a reasonable amount.
If your tenants decline you don’t have to accept that. You can still choose to go ahead and install the unit and increase the rent appropriately anyway, you may lose your tenants in the process though so this is something you need to take into account.
Install An Air Conditioner Between Tenants
If your tenants move out then this can be the perfect time to install a new air conditioning unit before new tenants move in.
Often you don’t even need to have it installed before the open home. Your real estate agent can simply advise new potential tenants that an air conditioning unit will be installed in the property on a set date, or before they move in.
Pick Your Market
Not all areas benefit from an air conditioning unit to the same degree.
In a hot city like Brisbane an air conditioning unit will get a lot of use and can add significant value to the rental appraisal of a property.
However, in a colder city like Hobart you might be better off installing central heating instead of air conditioning as the brutal winters will make tenants more likely to pay more for heating than cooling.
If you’re unsure whether or not it’s worth installing an air conditioning unit simply talk to your rental manager and ask for their opinion on the matter. They likely know the market well and will also be able to advise on roughly how much more rent you can expect if you add the air conditioner.
This will allow you to work out your return on investment more clearly. There are also a variety of other ways to increase your rental income for under $1,000.
Beware Of Repair Costs
Installing an air conditioner has a large upfront cost which you need to consider but there is also ongoing maintenance that you’ll need to pay for as well if the air conditioner breaks or needs to be serviced.
Having lived in many rental properties over the years I think I’ve only had the air conditioning unit break once. Most of the time the increase in rental income will far outweigh any repairs you may need to do.
If you do need a repair then companies like Alliance Climate Control AC repair specialists can liaise with your rental manager and tenants to come and service or repair your air conditioning unit without you ever having to lift a finger. Just make sure you allow some of your maintenance budget to air conditioning – especially as the unit gets older.