Getting a high rental yield is the Holy Grail for landlords, but most of us consider ourselves lucky if we get more than four or five percent, which is barely enough to cover the mortgage interest and other costs. However, there are lots of ways to increase your rent and cut your costs, both of which will lead to better yields.
12 guaranteed steps to get a better rental yield
1. Property investment: Make sure you buy the right property in the right location at the right price. Check the rental value of a property on sites like Rightmove and Zoopla before you buy and make sure there is enough demand from tenants.
2. Auctions can be good places to find rental properties, but you must do your homework beforehand. Most properties go under the hammer for well above the guide price so you must be aware of the property’s maximum value before you bid and don’t get carried away.
3. Look for ‘properties with potential’ where you can increase the rental value, maybe by adding a loft extension to create another room or simply by adding a lick of paint.
4. Cut your marketing costs by dispensing with the services of a traditional letting agent, who will charge around 10% of your rental income just to find you a tenant. Around half of all landlords use online letting agents, like Upad, who can find you a tenant for just £100.
5. As landlords no longer receive a 10% wear and tear tax allowance for furnished properties and many tenants are looking for unfurnished accommodation, only provide essential items if requested.
6. Review your rent every year to make sure it’s in line with the market, but don’t be greedy and price out your existing tenants because voids cost money.
7. Consider renovating your property to increase the rent, sometimes you have to spend a little to earn a lot. Focus on upgrading kitchens and bathrooms, but don’t go over the top, and cost your improvements carefully.
8. For properties with more than two bedrooms you might a higher rent by letting the rooms individually, but check with your local authority to see if you need an HMO licence.
9. Think about dividing large rooms to add more bedrooms, turning a dining room into another bedroom or creating an open plan kitchen/living space so you can turn the lounge into an extra bedroom. Once again, check your local authority’s licensing laws.
10. Review your mortgage interest rate, you might be able to switch to another provider for a better deal, which could save you thousands over the term of your loan.
11. Make sure you’re claiming all your tax relief. Keep a record of all your expenditure and remember to include an allowance for managing your property from home, your travel costs to your rental property and phone bills.12. Get several quotes for repairs and build up a contact book of reliable builders, plumbers, electricians and handymen who you can trust not to rip you off. Try mybuilder.com and checkatrade.com for recommendations.
Remember that staying on top of maintenance issues and keeping your property in good nick will not only ensure it stays let for longer but should also mean that it will re-let faster and your voids – which can create the biggest dent in rental yields – will be shorter.