If you are thinking about investing your money in something, buy-to-let is always a good option. The truth is that it’s the kind of thing you are always able to make a success with, but you will need to be aware of a few of the essentials that go into that, and this might be harder than you think to get right. One of the main ones is rental yield, which is a concept that you’ll have to work with and try to perfect if you are going to have the best chance at investing wisely.
Rental yield effectively refers to the amount of rent income you can get from a property. And of course, you will always be on the lookout for ways to increase it. In this post, we’ll take a look at some of those that you might want to consider, and ask how you might be able to make as much money as possible from your buy-to-let investments.
Choose The Right Location
This is obviously always important in property investment of any kind, but when it comes to renting out you need to make sure you are really thinking carefully, and not just opting for the flashy location that people are generally going for. Everyone wants to buy in a so-called hotspot, but high property prices often mean lower yields, so instead you might want to focus on areas where rental demand is strong but purchase prices haven’t yet peaked.
Such places exist, and finding them is a matter of doing some actual math work, rather than just going on hunches. That takes work, but it’s work that pays off – and you are going to find that you are much more able to get the yield that you are hoping for. Look for regional cities, commuter belts, university towns and the like. These are going to be the kinds of places where people want to live but can’t or don’t want to buy.
Add Value Through Smart Renovations
You’ll find that having a dated property very often drags down your rent, so it’s important to make sure that you are keeping it up to date as well as you can. All it takes is small upgrades, and these are going to help ensure that you are keeping your rents as high as possible. It can be as simple as fresh paint, better lighting or modern kitchen fixtures – just make sure that you are doing all you can to include these kinds of upgrades, and you are going to be so much better off for it.
It’s important here that you are renovating with tenants in mind, not just personal taste. That means keeping things generally quite neutral, and making sure that you are focusing on durability too. Low-maintenance wins every time, and it’s something that is going to help people to be happier to pay a higher rent, which is obviously what this is all about.
Furnish For The Market
Make sure you are aware of the impact of furnishing and how it makes a difference to the rent you can ask for. You’ll want to furnish the market as well as you can. That means that you need to think about how to approach it. Make sure the cost of furnishing is covered by the increased income within a year or two, and it is always going to make strong business sense. You can even use durable furniture packs designed for landlords to keep things hassle-free and compliant.
If you are specifically targeting professionals, students or short-term lets, this is the kind of thing that can bump up your rent by as much as 20%, so it’s definitely worth your while. And you’ll find that you are going to get so much more out of it as an experience too – as well as the fact you are going to have more assets, should you ever want to sell up and do something else entirely.
Find The Right Tenants
This is hugely important, and it’s amazing how rarely it is actually spoken about. If you are trying to improve your rental yield, having the right tenants is always going to be a major part of that. The better the tenants, the higher the rent you are likely to receive, so this is something that you should really make sure you are thinking about. What can you do to improve the quality of the tenants you are getting? There are actually a few things to consider which might help with this.
For instance, you may want to formalise the entire process by taking in your tenant applications online through a proper system. That will enable you to keep track of who is applying and what kinds of credentials and so on they have, as well as checking against any previous reports of what they were like as tenants in other properties. This helps to reduce waste and repair costs too, and generally means that your income potential is going to be so much greater.
Finding the right tenant in whatever way you can is absolutely the way forward, and could mean that you have a much higher rental yield in no time.
Review Your Mortgage
To help get your profit margin as high as possible, you will certainly want to think about checking your mortgage to ensure that it is working for you as well as possible. Your mortgage is usually your biggest cost, so if you can reduce it that is obviously going to be helpful. It may be that you have been on a standard variable rate for too long and are therefore overpaying, so it’s important to keep an eye on it and review it from time to time. You might be able to shop around for a better deal, and that could make a world of difference to the kind of income you are able to make.