If you are a landlord you would want your buy-to-let home to be a profitable investment. In many ways, the rent your home receives will be determined by local average rents as well as supply and demand. There are, however, ways to maximise your rent while reducing your outgoings. For an accurate figure you can get your free rental valuation done by an estate agent. Here are some basic suggestions on how to raise your rental property’s rental value.
How is Rental Yield calculated?
The annual rental revenue expressed as a proportion of the property purchase price is known as the rental yield. It is used by buy-to-let investors to calculate the level of return on an investment property.
You can calculate your rental value using this simple formula
Rental yield = (Annual rental income – Annual running costs) ÷ Property purchase costs) x 100
Subtract your annual operating expenditures, including mortgage interest payments, upkeep, and letting agency fees, from the total rent earned over a year. Subtract this from the price you paid for the house. This would comprise your deposit (or the full purchase price if you paid cash) as well as the purchase costs, such as stamp duty, survey fees, solicitors fees, mortgage arrangement fees, and furniture and white goods, to name a few.
Pay attention to the essentials
Rental properties have had a long standing impression of being unappealing. That might have been alright in the days when tenants only lasted for a few months, but nowadays, tenants typically stay for two years and want more. As a result, one of the cost effective methods for landlords to increase rental income is to ensure that their properties are adequately kept. In terms of signing and retaining tenancies, a fresh coat of paint in a neutral colour scheme, good quality rather than simple furniture, a modern and efficient heating system, and making the most of any outside space will pay benefits. During a tenancy, landlords must also keep their properties in good repair. This necessitates regular inspections and prompt answers when renters report issues. Part of maximising rental value is being a good landlord.
Ensure kitchen and bathroom are well-kept
Kitchens and bathrooms that are well-presented and well-maintained attract new tenants who are willing to pay top rent and encourage them to stay, lowering re-letting expenses and potential vacant periods between tenancies. Remember that kitchens and bathrooms in rental residences are more likely to get drab than other rooms, necessitating significantly more frequent remodelling or replacement than in a private home. The money spent will be well spent, as keeping these rooms in excellent shape is critical to maximising rental value.
Adding another bedroom
Adding an extra bedroom is a surefire method to increase your rental revenue. Consider constructing a loft extension to provide an additional bedroom, or converting one room into a bedroom if your property has a large living space. Not only would adding a third bedroom increase rental income, but it will also increase the property’s overall worth.
Niche markets should be targeted.
A thorough examination of the local rental market may discover niche groups of tenants willing to pay more for the amenities they require or desire. Pet owners are one of the easiest niche groups to accommodate. Most dog and cat owners will gladly pay a higher rent in exchange for the ability to have their pet with them. Of course, some landlords fear that pets will cause damage and will cost more in repairs and cleaning than the additional cash they will earn. Some localities have tenants that want multi-generational living and are ready to pay a higher rent for it, so building a granny annexe could be profitable. Corporate renters require high-end properties, which raises costs, but the rentals are quite high and can be collected up to a year in advance.
Consider including extra amenities
You can also raise your rental value by providing something unique to your market. If parking is scarce in your neighbourhood, for example, you could construct a private driveway. Installing fibre-optic broadband could help you boost your rental value because home-working is so popular right now. Modern appliances or security systems may entice tenants ready to pay a higher rent. We recommend that you double-check that your investment will generate enough additional rent to cover the higher costs and that renters in the area are willing to pay more for your property type.