If you’re looking to purchase your first investment property or build a property portfolio, cash flow can make or break your efforts. When you buy an investment property, it’s only natural to want to make sure that you are getting the best return on your investment. One way of doing this is to focus on increasing the rental yield for your property.
Increasing the rental yield for your investment property can be a huge difference to the size of the portfolio you can sustain, so make sure that you are doing everything possible to achieve this goal!
In this blog post, we will discuss some of the most popular strategies to consider.
You may not have a lot of money to sink into renovations, but even small changes can make a big difference to the rental yield for your property.
For example, if you are able to increase the number of bedrooms in the property, this will obviously have a direct impact on how much rent you can charge. Any way you can get more space in your property through clever design should increase the rent.
Other simple and effective renovations can include adding storage space or updating fixtures and fittings.
Even something as small as a fresh coat of paint can make a property more appealing to tenants and help you achieve your goals.
By carrying out regular maintenance, you can avoid larger and more expensive problems further down the line and also keep your current tenants happy and comfortable in the home.
Happy tenants are more likely to renew their lease, which means you can avoid the costs and hassle of finding new tenants regularly and may also be able to increase the rent without too much resistance.
Regular maintenance also helps to keep the value of your property high, which is important if you ever decide to sell.
Carpet and Flooring
The type of flooring you have in your investment property can also make a big difference to the rental yield. Flooring, particularly carpet can wear and become damaged and stained over time, making the property unappealing.
Damaged flooring can make your property less attractive to potential tenants and may mean you need to reduce the rent in order to attract applicants. Replacing old flooring with new, clean carpet or floorboards can make a big difference to how fresh and clean your property looks and can help you achieve a higher rental yield.
Carpets may be cheaper and easier to install but they may need to be replaced more often than other types of flooring, such as floating timber flooring, waterproof hybrid flooring or tiles. In your budgeting, you should factor in the replacement of carpets in your rental properties. Consider it a short-term investment to increase your cash flow in the subsequent years.
Another way you can ensure you get a higher rental yield is by installing quality appliances in your investment property. By quality appliances, we don’t necessarily mean top-of-the-line or designer brands but rather new, well-functioning appliances that will make the tenant’s life easier.
For example, if you install a new dishwasher on your property, you are not only making the tenant’s life easier but you are also increasing the value of your property. New appliances also tend to have a higher energy efficiency rating than older models which can help keep utility bills low for tenants.
Unfortunately, most gardens in rental properties become neglected by tenants. If you want to maintain a healthy rental yield, it is important to get the garden looking as best it can. A great garden can dramatically improve curb-side appeal for your property, making it far more attractive.
This doesn’t mean you have to spend hours in the garden yourself of course, but if you’d like to save some money, you can always DIY. Alternatively, you can hire a gardener to come in between tenants to get the garden back into shape.
By having a well-kept garden, you will attract higher-quality tenants who are willing to pay more rent. You might also attract tenants who appreciate gardens and actually take care of them for you.
With recent changes made it’s now become an expectation that tenants are allowed to have pets, therefore you should prepare your investment property to be pet-friendly.
Some landlords are hesitant in making their investment property pet-friendly as they think it will damage the property. However, you can easily avoid this by making sure your home is designed to be suitable for pets.
Making your investment property pet-friendly will not only make it more attractive to potential tenants, but it will make it more resistant to wear and tear that can be caused by common pets such as dogs and cats.
Many landlords forget about the importance of lighting in a rental property. Good lighting can make a big difference to how tenants perceive the property, and it can also make it more inviting and welcoming.
Investing in good-quality lighting fixtures will not only make your rental property more attractive but will also make it more energy-efficient. This is important because tenants are increasingly looking for properties that are more environmentally friendly.
Opening up your home to more natural light can also make a big difference. This can be done by installing larger windows or skylights if you have the budget for it, however simple changes to curtains or blinds may also do the trick.
The Bottom Line
If you’re like most people looking to purchase their first rental property, you probably dream of one day owning a portfolio of investment properties. By attracting a healthy rental yield you’ll be better positioned to service your loan and obtain finance for your next property.
If you’ve done your homework, crunched the numbers and found a property with strong potential growth that also brings in a healthy rental yield, well done. We trust updating the property with these simple ideas helps you maximise that rental yield to its full potential.
Making these changes to your rental property can make a big difference. By following these tips, you can make your investment property more attractive to potential tenants and grow your wealth.
If you have any questions about investing in real estate, and how to obtain the best finance to make it all possible, talk to one of our in-house property advisors.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.