Little And Large Ways To Increase Your Rental Yield
Buy-to-let investments are for those willing to play the long game. Whether you want to potentially see returns much greater than the amount you invested in the future or you’re looking to build an income stream, it can potentially be a great wealth builder. However, you’re at risk of getting caught up in the market, earning just enough to pay off the house if even that. Here, we’re going to look at how you make the most of your investment and increase your rental yield, so you can ensure your buy-to-let property remains a money maker.
From new kitchen worktops and bathroom remodels to new flooring, new plumbing, and new doors there is so much that you can do. Physical upgrade possibilities are countless. However, there are many other ways to increase you rental yields. Hopefully, we have covered these possibilites with a great deal of depth over the course of this article. If you follow through on these ideas, you are sure to have a winning property in the long run.
Reduce vacancy as much as possible
Naturally, the biggest risk to your property’s profit potential is having no-one in the house at all. While the property is vacant, you still have to pay the rent, utilities, and maintenance costs the come with it. The longer it stays vacant, the more likely it is to start becoming a financial loss. Working with a property management company, like mentioned at Listen Money Matters, could take a great deal of the strain off you, the property owner. Instead, you can partner up with a business whose mission it is would be to connect you with the rental market.
Know your market and market to it
Of course, the more you know about the market you’re trying to market to, the better. With vacation homes, you’re attempting to reach those making short-term, high-cost rentals at certain times of the year. With apartments, you’re often trying to market to young professionals or those in education who need close access to retail or college areas in a town or city. For larger, multi-room properties, you’re more likely to be renting it out to young families. By knowing your market, you can focus on particular aspects of the property first and foremost to make it more attractive. You can also change where you choose to market it, based on who you are trying to make the property most visible to.
Up your curb appeal
Unless it’s an apartment, you are also going to want to maximize the visual impact of the property on first viewing. Not only does adding a little curb appeal help your rental property grab a lot more attention when it’s vacant, but it can also justify increasing its price in comparison with other similar but less visually impressive properties. If it looks better, tenants are willing to pay a little more for it. DIY Network looks at a variety of ways you can up the curb appeal, from hiring a landscape gardener to simply giving the exterior of the house a new coat of paint and fixing up any of the little blemishes that might be giving viewers the wrong impression.
Claim tax deductibles
Moving on from the ways that you can decrease vacancies and increase interest in the property, now we’re moving onto how you raise the value of your tenants and seriously increase the money you make from the property. First of all, there are several tax deductions available to landlords that could help eat up some of the costs you deal with on an annual basis. Many landlords don’t even consider the possibility of claiming any tax deductions. As Nolo shows, however, you can get deductions for mortgage interest payments on the property, depreciation of real estate, the costs of repairs, travel you have to do in order to visit and look after the property, and more. Hiring an accountant to look at your year-end tax forms could help you see how many deductions you can safely make.
Raise rent strategically
Inflation affects everything in the market, and landlords should never forget that. Raising the rent from time to time, at least when during the lease renewal period, should be done as a necessity You have to make sure that you don’t fall behind the rising costs of maintenance, utilities, and any services you use to market or manage the property. If the demand for rental property is high in your area, you may be able to get away with raising the rent a little more often, too. Just make sure that you know how much notice you have to give tenants based on state law.
Maintain it yourself
Hands-off landlords are willing to eat the costs on regular maintenance and repairs of all kinds. However, if you consider yourself something of a handy person, could you save money by making more of the minor repairs yourself? Balance SMB shows some of the most regular maintenance tasks a landlord will have to deal with. Some of them, like exterminations, require a professional but there are several tasks that you might be able to carry out yourself.
You can also offer extra maintenance and services at an extra fee for your tenants. For instance, some landlords offer to clean the property or take care of the garden on a semi-regular basis. This allows them not only to raise their profits off the property, it also ensures that the property is being well-cared for. The importance of efficeint maintenance can not be overstated. For an empty house, you still have to pay the rent, utilities, fees for the empty property security, and maintenance costs that come with it.
Stay in the modern market
The older the property is and the more it shows its age, the less likely you are to get great rental yields from it. More modern house layouts, kitchen materials, and bathroom designs are able to pump up the amount that the tenant is willing to pay. Teams like Schemel – Tarrillion, Inc. could help modernize your home with renovations. Rental renovation companies specialize on getting the work done in occupied properties, as well, so you don’t have to worry about waiting until your next period of vacancy to invest in its profit potential a little.
Keep it furnished
Depending on what kind of market you’re renting to, you could see both more interest from tenants and increase the amount they’re willing to pay for it by furnishing it yourself. For some rentals, like luxury rentals or family home rentals, tenants may be more willing to furnish it themselves. However, for apartments and shared homes, having it furnished is a big selling point. What’s more, some landlords even choose to lease kitchen electronics like fridges, freezers, microwaves to tenants for an added fee paid on top of the rent. Just make sure that your stylistic choices aren’t so personalized that they risk scaring off potential tenants.
Add some space
The most direct way to add value to a home, whether it’s increasing its market value or getting more rental yield, is to add more livable space. If you can add an entire bedroom, you can increase the rent by a significant fraction, but even a conservatory or an added laundry room can be worth the investment. As The Spruce shows, there are plenty of different ways to add room to a house. You can build it on directly or you can renovate and finish existing spaces, such as the garage, basement, or loft. Naturally, you have to make sure that you have all the necessary planning permissions before you plan to make large-scale changes to the property of any kind, so don’t leap before you figure out what is required.
Offer peace of mind
There are other little additions you can make to the property that can act as extra selling points and help you increase the rent just a little. One feature is that of security. There are plenty of security systems you can install, from CCTV to alarm systems, that tenants are willing to pay for in order to ensure their peace of mind and feeling of safety in the home. Not only can this increase your rental yield, but it’s simply a smart investment in your property. You’re a lot less likely to have any damage done to the property while you have more security features acting as a deterrent to any criminal elements.
Appeal to their lifestyles
There are also lots of little smaller potential investments you can make. Not all of these will increase the amount of rent you can ask for that much, but they do make the home a little more marketable to certain kinds of tenants. The biggest one is renting to tenants with pets. This can mean biting the bullet and opening yourself up to the risk of more repairs in the future, but there are lots of tenants who have trouble finding accommodation that allows them to bring their furry friends with them, so it can be one way of fighting the problem of long periods of vacancy. Adding a coffee machine, providing cable TV, or installing high-speed internet in the home are other little lifestyle bonuses that can help your property stay competitive, too.
These are most of the most common strategies when it comes to increasing rental yield. If you can’t implement them, you will have trouble making real money from your property. Remember, when buying rental property, make sure you’re buying it in a market where rentals are favored over new property purchase.