Would-be landlords could be forgiven for thinking that all they have to do is purchase their property, install their tenant and then sit back and wait for the money to come rolling in.
But while it may be true that generation rent is on the rise and there is still a huge housing shortage, there are always things that landlords could be doing better. So for those who really want to maximize their ‘rental yield’ (the sum you’re left with once you’ve deducted all your costs from the rent, then divided the remainder into the value of the property), we’ve sourced the following expert tips:
1. Choose an up and coming area
People will pay more for a location. Many first-time landlords are tempted to invest in a property close to where they live themselves because it feels safer to them to know the area they’re investing in and be on hand to step in if things go wrong.
While the logic of this strategy is hard to fault, those looking to really maximize their rental yield would be better served choosing an up and coming area where they can get a better deal on their purchase price, then watch their rental premium increase as the area grows more popular.
Areas set to be included on the Crossrail train line or other transport developments are hot spots, while markers of an area on the up include coffee shops, the arrival of well known supermarket chains and investment in local schools.
2. Think about who your target tenant is and tailor accordingly
It may sound like a no-brainer but you’d be surprised as to how many landlords haven’t considered what kind of tenant profile they want to attract.
If you’re gearing up for young professionals, aim to appeal to them through an area with good transport links, decent bars and restaurants. If you’d prefer the family market, direct your search towards areas with green spaces and good schools.
3. Give your tenant what they want and they’re likely to pay more
Mod-cons such as dishwashers, microwaves and washerdriers all pay their own way. Every tenant is looking to have their lives made as easy as possible and including every possible mod-con is a sure fire way to ensure you attract the right kind of tenant – at the price you’re looking for.
The rise of Build to Rent schemes means that soon offering your tenants luxuries from wi-fi to wine fridges will rapidly become the new normal. Make sure you get in there first.
4. Regularly review the rent – and don’t be afraid to increase it
As your area improves, it’s appropriate that your rent reflects its change in circumstances. But be careful when it comes to prospective increases and remember that any tenant who pays the rent is better than no tenant at all.
5. Alternatively decrease the rent so your property doesn’t lie empty
It might sound perverse but every day your property lies empty costs you money. So if you’re not getting any takers at your current asking price, swallow your pride and look at whether you need to lower your expectations - and your rent.
Having someone in the property is more important than minimal rental fluctuations.
6. Lower your overheads and consider how hands on you want to be
When you can find a tool to save time, why wouldn't you utilise it? More and more lettings agents are investing in online services like Fixflo, which can take all the stress and strain out of interactions with tenants, saving you time, which in turn saves you money.
Instead of receiving phone calls about burnt out light bulbs, or fielding calls from contractors who haven't gotten the correct information for ordering parts, you can rest easy receiving detailed repair reports straight to your email inbox.
7. Consider a second bathroom
Putting in a second bathroom, often by converting an existing laundry area into a second bathroom is an expensive investment, but it’s worth its weight in gold. Every type of tenant – from high-flying professional sharers to young families will be attracted to a property with multiple bathrooms and you’ll increase the property’s value should you come to consider selling it later on down the line.
8. Rid yourself of all dead space – and consider how many bedrooms a house can handle
Many Victorian conversions have a double front room, with the back room or section traditionally used as a dining area, while the front is used an entertaining or living space.
With the rise of the perennially popular kitchen/diner and kitchen extension as a place to entertain and occupy in the evenings, at least half of the area that used to be the front room is wasted. Rather than just allowing it to sit as dead space, consider turning it into a bedroom and you’ll maximize your property’s appeal to sharers. Turning a traditional four bedroom house into a five bedroom house hugely increases your rental yield.
And remember when you’re rooming with friends, nobody’s fussed about a dining room, particularly if they can have a large double bedroom instead.
9. A place for everything and for everything a place
As we mentioned above, the key to increasing your rental yield is to take advantage of every square metre on offer. In addition to maximizing bedroom and bathroom space, don’t neglect your storage space.
Landlords looking to break into the family market should pay particular attention to storage opportunities to ensure that their properties are at the top of every tenant’s wish list.
10. Don’t forget man’s best friend
There are millions of pet owners across the country but many landlords won’t consider letting to them. Those looking to maximize their rental yield should definitely consider making their properties pet friendly as eager owners are prepared to lay down hefty deposits and are also likely to consider paying more.
When it comes to growing your income, your tenant’s dog or cat really could be your best friend.