How to Maximise Profit on Rented Property
Turn up the profit on your rental property.
Six ways to maximise the yield on rental properties
For a Landlord a rental property should be a grey box that makes money.
That might mean some emotional detachment, especially if the property was previously the landlord’s home. However, in our opinion, it does not mean simply spending the least possible on maintenance, charging the most possible rent and treating tenants badly.
In this article we’ve suggested six ways to maximise the yield / profit from a rented property. Some of these may reassure landlords who find it hard to be cold hearted about the property. To those we’d suggest to think of the property as a child who might support them in retirement; treat it fairly and it will, treat it badly and it will always be a problem child.
1. Avoid voids (and tenant changes)
- Keep to a minimum any period of time when the property does not have paying tenants in it.
- Don’t hold out for a few £s more per month rent if it means a void period
- Do what you can to encourage good tenants to stay for a long time
- Students’ returning for a second or third year saves money.
2. Treat tenants as guests.
- We’re not saying take them breakfast each morning!
- Respond quickly to their communications and maintenance requests
- Treat them professionally but courteously
- You want them to:
- Stay as long as possible (to minimise voids)
- Treat the flat well (to minimise maintenance costs)
- Leave the flat in a state ready for new tenants to move in immediately
- Of course some tenants can be overly demanding. All that needs to be done is stick to the terms of the Tenancy Agreement.
3. Conduct regular inspections.
- Inspections are not intended to catch tenants misbehaving.
- They are to catch maintenance issues before they become big and expensive to fix.
4. Invest in the property.
- Don’t do the cheapest fix possible. Take the long term view.
- Better still set aside an amount each year and have a long term maintenance programme.
- Treat the property well and your tenants will too. (Saving you money…and probably time)
5. Use a letting agent.
- Sure, they cost money but they:
- May get a higher rent for the property;
- Steer efficiently through regulatory requirements;
- Save landlords time (time is money) and stress;
- Have access to tried and tested tradespeople.
6. Increase rent annually.
- Not by much. Try to keep rent (and the increase) below the “average” for the area.
- Justify the rent increase to the tenant. Be fair and show tenants that you are being fair.
- Keep in mind that new private rental agreements have a long notice period for rent increases. Also rent increases are permitted just once every 12 months.
Missing from this list is, of course, “secure the highest rent you can”. We’d argue that this is secondary to the above points. If these points are adhered to then market forces will ensure you get the best rent you can.