Property News

10 Tips To Improve Rental Yield

A rental yield of approximately 7% is considered a good return, and this means that there isn’t always a lot of room for a reduction in your yield. Lose one or two percent and you may have been better putting your money in a high interest account rather than risking it in property investment. After all, being a landlord can be a tricky business, whereas managing a bank or savings account is considerably easier. With that said, if you own property and are looking for potential ways in which to increase the size of your annual yield, there are some tips and strategies that you can follow.

1 – Show Demand And Increase Competition

Don’t be afraid to show multiple tenants around the property at the same time. They are unlikely to come to blows, but the perception that a property is in demand will immediately improve the property in the eyes of some potential tenants. What’s more, if a tenant is interested and they see that others are looking around, they will be more inclined to sign quickly which means that you will suffer less time when your property is empty.

2 – Clean, Clean, Clean

One of the first things that most prospective tenants look for is cleanliness. They don’t want to see dirty walls, stains on the carpets, or half of the last tenants’ belongings still left in the bedroom wardrobe. Clean it yourself, if you have the inclination and the skills, or get professional cleaners to do the work for you. Consider replacing difficult to clean carpets, like those in the kitchen, with lino or other coverings because they are easier and cheaper to clean.

3 – Repair Easy Fixes

Some repairs are easy to fix yourself, and doing so can greatly improve the look of a room and a property. Get the wallpaper paste and brush out, reaffix any paper that is hanging off the walls. Sand and paint tired looking wooden surfaces, and give the garden and exterior of the property a bit of a tidy up before you start showing tenants around. Consider the type of tenants you are likely to attract with broken fixings, and determine whether these are the tenants you really want in your property. 

4 – Make Inexpensive Replacements

Similarly, you should consider replacing any inexpensive items that cannot be fixed, if they are likely to be putting some people off. The key to getting the most desirable tenants, and to ensure that they pay a reasonable price for your property, is to show the property at its best. Replace curtains, and even look for inexpensive replacement light fittings and washing machines.

5 – Carefully Consider Any Investment In Your Property

Always weigh up the cost against the potential gains or losses that they will make you. If you are considering making any major investment, do ensure that it will add genuine value to the building. A brand new kitchen may mean that you can charge a little more rent, or it may ensure that you get more reliable tenants, but it will cost thousands even if you undertake some of the hard work yourself. Your money may be better spent elsewhere. With that said, if the improvements need to be made in order to adequately market the home, then they need doing. 

6 – Test Higher Rental Prices

If you are looking to let your building for the first time, and have a specific rental value in mind, aim a little higher and advertise the property a little earlier than you were originally planning. If you get no, or very few, enquiries, then you can drop the rent to the amount that you actually want and you should still be able to get tenants in when you need them. Testing your rental price means, at the very least, that you won’t be left wondering whether you could be making more from your real estate.

7 – Utilise All Of Your Tax Reliefs

Rent is a taxable form of income, but there are some charges and cots that you can claim tax relief on. For example, if you pay a letting agent then you may be able to claim back the tax against these costs. Ultimately, you could save hundreds or even thousands a year, which should help ensure that you enjoy a positive rental yield figure from your investment.

8 – Accept Pets 

The key to getting the best possible return is to ensure that you don’t prevent interested parties from taking their interest further, unless it would seriously compromise your investment. By not accepting pets, for example, you are losing out on a massive potential target market. You can always demand a pet premium deposit, vet the pets that tenants want to bring, and you can keep part of a tenant’s deposit back if their dog or cat rips up carpet or causes other expensive damage.

9 – Look After Your Long-Term Tenants

Having long-term tenants means that you shouldn’t suffer long periods of empty property. These periods can seriously cut into your rental yield, and even having an empty house or flat for a month can lead to a significant drop in rental yields. Consider offering scaled improvements for tenants that stay longer. While a brand new bathroom may be extravagant for a one year tenant, it could be seen as a reason to stay even longer for a tenant that has been living in your premises for 5 years or more. The bathroom will need replacing over time, anyway, and you should never ignore your best tenants because you want them to stay as long as possible.

10 – Increase Rent

It may sound obvious, but increasing your rent will increase your rental yield as long as the new and higher rent doesn’t put potential tenants off. Raise rent fairly, increase prices between tenants if the market justifies it, and always track the performance of your properties and the payment history of your tenants.

Becoming a landlord can be challenge, but it can be a profitable one if you can fill the right properties with the best tenants and charge the optimum rental price. The Real Estate School can teach you how to invest property in order to enjoy the best rental yields.
 

Source: The Real Estate School, August 2016

Make a comment

Please use the comment box below. Please login first or create an account.
user avatar
Free Instant Valuation Instant valuation Check Affordability Check Affordability