10 ways to maximise returns on your investment property

The steady downward movement of interest rates over the past year has been met by a resurgence of buy-to-let investors prepared to back their belief in the medium to long-term merits of owning rental properties.

“The Reserve Bank has lowered rates by 125 percentage points since September 2024, and that has significantly reduced the minimum monthly repayments on bonds – and the gap between what buy-to-let investors can earn in rentals and what they must pay the bank each month,” says Stephen Whitcombe, MD of leading Johannesburg property group FIRZT Realty.

“Of course, lower rentals mean that more tenants and potential tenants can now afford to buy their own homes, but many still cannot or do not want to buy, and with developers being slow to bring new flats and townhouses to market, demand is strong relative to supply.”

According to the latest PayProp Rental Index, this has caused rentals to rise by an average of 5% over the past 12 months, and to show real (after inflation) growth for the first time in many years, he notes. This has further narrowed the margin between income and expenses for landlords, and more good news is that the percentage of tenants in rental default has dropped to 16,9%, and even lower in certain regions.

“But as with any investment, there is no room for complacency. Essentially, buy-to-let investors should continuously be seeking ways to maximise returns while minimising costs – without skimping on levies, maintenance or any other expenditure which ensures that their property remains attractive and appealing to their tenants.”

Whitcombe says some of the best ways to do this include:

+Extending the bond over a longer period (like 30 years) to reduce your monthly instalment. Don’t focus on the extra interest you will have to pay in return for this convenience; the tenant will pay it for you.

+Negotiating a better interest rate with your bank. Usually, when you extend the bond period to 30 years, they are willing to drop the rate.

+Entrusting the management of your rental properties to a professional rental management agency. “This will save you money in the long run, as they are much better able to vet prospective tenants and help you avoid rental defaults as well as the huge costs and loss of revenue that occur when you have to evict people for non-payment,” he says.

+Keeping your property well-maintained. Regular upkeep not only prevents costly major repairs later but also justifies higher rental increases and attracts quality tenants who stay longer.

+Making modest upgrades that add perceived value. “Simple improvements such as energy-efficient lighting, modern fixtures, or installing prepaid electricity and water meters can lower running costs and make your property more appealing,” Whitcombe says. “If the property is located in a Sectional Title complex, you may also want to encourage the installation of a solar power system to supply the common areas.”

+Claiming every allowable tax deduction. “Interest on your bond, rates and taxes, levies, insurance, maintenance costs and agency fees can all be deducted from your rental income,” he says. “But keep meticulous records and consult a tax professional to ensure that you can support your claims.”

+Adjusting rental prices strategically. Review local market data annually and avoid both undercharging and sudden, steep increases. A steady, moderate adjustment keeps occupancy high and ensures stable cash flow.

+On a freehold property, Whitcombe says, you could perhaps convert a storeroom or double garage into a granny flat or converting a four-bed two-bath house into two separate two-bed apartments. “This will not only generate more income but also reduce your risk. Alternatively, if the stand is large, you could also consider sub-dividing or rezoning and building a second rental unit.”

+Reducing vacancy periods. “Maintain good communication with your tenants and start advertising early when leases near expiry. Even a one-month vacancy can wipe out much of your annual return,” he notes

+Insuring against the unexpected. “If you have a bond, it is likely that you will also have sufficient HoC to protect you in the event of a natural disaster. But as a landlord, you may also want to look into insuring against loss of rental income, and liability claims if someone is injured on the property.”

Issued by FIRZT Realty

For media inquiries contact

Stephen Whitcombe on

082 412 2949

Or visit www.firzt.co.za

About FIRZT Realty 

Established in 2003, FIRZT Realty initially focused on residential real estate, but has since expanded to offer a broad range of services in both the residential and commercial property sectors, including sales, rentals, auctions and property management.