Is Your Investment Property Underperforming?

Rental income is important to property investors.

But they should also consider the broader implications of their investment. An investment property should be generating strong returns, growing in value, and remaining competitive in the market. 

But how do you know if it’s truly performing well? If you’ve ever asked, “How do I know if my investment property is underperforming in Melbourne?”, this guide will help you identify key warning signs and what you can do to turn things around.

Signs Your Investment Property Might Be Underperforming

1. High Vacancy Rates
   Struggling to secure long-term tenants? A prolonged vacancy period is a major red flag. If your property remains empty for extended periods, it could indicate pricing issues, lack of demand, or an outdated rental offering.
2. Below-Market Rental Income
   Is your property earning what it should? If similar properties in your area command higher rent, it’s time to reassess your pricing strategy. Staying competitive is key to maximising returns.
3. Rising Maintenance Costs
   Unexpected repairs and ongoing maintenance expenses can quickly erode your profits. Frequent issues may signal that your property needs upgrades or a more proactive maintenance plan.
4. Negative Cash Flow
   If your property costs more to maintain than it generates in rental income, you may be dealing with a negative cash flow. While some investors are comfortable with this short-term, a long-term negative trend could mean it’s time for a change.
5. Low Capital Growth
   Your property’s value should appreciate over time. If it remains stagnant while comparable properties increase in value, it might be an indication that your investment isn’t reaching its full potential.

The Importance of a Regular Property Performance Review

Conducting regular reviews ensures your investment remains profitable. Here’s what a strategic review should include:

• Rental Income Review: Is your rental income in line with market trends? Are there opportunities to increase rent? 
• Market Conditions Assessment: Understanding local rental demand and comparable properties helps ensure your pricing remains competitive. 
• Cost-Saving Strategies: Reviewing expenses such as maintenance, refinancing options, and tax deductions can significantly impact profitability.

How to Improve an Underperforming Investment Property

If your investment isn’t performing as expected, consider these strategies:

• Rent Optimisation: Adjusting rental prices based on demand and market conditions.
• Strategic Renovations: Small but sustainable upgrades (e.g., kitchen improvements, fresh paint, or updated fixtures) can increase rental appeal.
• Better Property Management: Engaging a professional property manager can help with tenant retention, proactive maintenance, and minimising vacancies.
• Tax & Depreciation Review: Consulting an expert can ensure you’re maximising deductions and financial benefits.

When to Consider Selling vs Holding

Not every investment property is worth holding onto long-term. If your property has struggled with low capital growth or persistent vacancies, it may be time to reassess your options:

• Selling Might Be Smarter If: Your property’s capital growth prospects are weak and holding onto it is no longer financially viable.
• Holding Is Best If: Refinancing or upgrading the property could increase its profitability.
• Exploring Alternative Strategies: Short-term leasing, dual occupancy conversions, or repurposing the property for a different rental market could enhance returns.

How BISE Property Helps Investors Get Back on Track

At BISE Property, we specialise in helping investors maximise their rental returns and ensure their properties remain competitive. Our services include:

• Rental Appraisals: Ensuring your property is achieving the best possible rental income.
• Strategic Property Management: Reducing vacancy rates, managing maintenance, and improving tenant retention.
• Investment Reviews: Tailored assessments to align your property with your financial goals.

Time for a Property Review? 

If your investment property isn’t delivering the returns you expected, it’s time for a strategic review. Get the most out of your investment with a free property performance assessment from us at BISE Property. 

Contact us today to learn how we can help you maximise your returns.