Achieving a good rental yield is important for any Landlord. It covers the cost of mortgage repayments and maintenance costs, as well as indicating to the success of an income-producing asset. A net yield is the annual income from the property, after deducting any outgoing costs, divided by the purchase price. This figure is then turned into a percentage to give the net rental yield.
Student housing can provide some of the highest rental yields available when compared to other property types. A well managed, multi-let property could achieve a yield of up to 20%. To increase the rental income of a property, landlords can make changes that reduce their outgoing costs. Additionally, they can make their properties more attractive to potential tenants.
Reducing costs
Reducing outgoing costs will improve the yield of a property. This can be achieved by conducting regular inspections of the property to identify any small issues and rectifying them. If a tradesman is required, ensure they are reliable and efficient. This will reduce the cost of the repair whilst also minimising disruption to the tenant.
Redecoration and upgrading of household appliances is a cost-effective way to increase the rent rate of the property. Choosing hard-wearing furnishings and flooring will reduce costs further. This change can be done during void periods to ensure no income is lost. Students now expect technology such as high-speed wifi, TVs and modern appliances such as dishwashers and smart fridges. Including these in the property can make it unique and allow for a higher rent rate.
Improving the digital offer
Improving the quality of property photographs can better illustrate the property and its benefits, it will give potential tenants a better understanding of the property and more trust. This is especially important if tenants are unable to view the property before agreeing to the tenancy. Virtual tours and 360-degree photographs are now readily available for a relatively low cost. This may make the property stand out from competitors.
Considering market rates
Reviewing rent annually, or at the end of the lease, will ensure that the property is let at the market rate. Analysing the current market will provide the best evidence and allow the property to be let at an appropriate rate. Letting at a below-market rate will negatively impact the yield, however, this should be considered as the university term approaches to avert void periods. On the other hand, letting at an above-market rate may increase yield in the short term, but will increase the chances of tenant turnover potential void periods, whilst also possibly causing tensions between landlord and tenant.
Knowledge is key for landlords to make the most out of their rental property, and ultimately increase their rental yields. Knowledge of your property, the local property market, target market and tenant plans will allow landlords to make the best decisions when it comes to rent increases, maintenance and marketing activities. This should result in a better return on investment and make the letting and management process a more simple process for both landlord and tenant.
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References
Property Me. 2018. Accessed 23rd October, 2019, from https://www.propertyme.com.au/blog/property-management/help-landlords-boost-rental-yield
No Letting Go. 2019. Accessed 23rd October, 2019, from https://www.nolettinggo.co.uk/blog/increase-rental-yield-tips/
Easy Property. 2019. Accessed 24th October, 2019, from https://easyproperty.com/increase-rental-income-in-six-easy-steps/#update
