Top 10 Ways to Increase Rental Property Returns
Are your rental property returns saturated? Increasing the rent with time is not the only way out.
Rental yields across the major cities in India have remained static for years now, a study shows. Net rental yields in India are one of the lowest in the world, says another report. This is due to the high loan rates that reduce the yields. Rents have also not increased in proportion to the rise in property prices over the years.
Making a few additions to the property and implementing better property management strategies are great ways to earn some extra cash from your property.
Want to know how?
Ways to Maximize your Rental Property Returns
Furnish your Rental Property
A furnished house always has an edge over the house with empty walls. If you rent a furnished property, it always attracts higher rents. You can increase the average rental return on investment. From the tenants’ perspective, a furnished house reduces its furniture expenses. It also reduces the costs and burden of moving heavy furniture from one house to another.
Tenants always look for a house that brings a sense of belonging. So, fully or even semi-furnished properties are the tenant’s favourite even if they come at a slightly higher cost.
Modernize the Property
With the changing demands, there is a need to groom your rental property for higher developments and the latest techniques. If you want to make the most out of your property, you can always go for modernizing it. It brings a brand new look to the house resulting in higher income.
You can go to an open kitchen, or change the tiles and decor of the house. Ask the tenants if they wish to have a reading corner in the house or space for their interests in the arts.
Also, please give them the liberty to use the premises with an additional charge. It could increase the average rental property return on investment.
Supplement New Amenities
You can include white goods like electric ovens, toasters, air heaters, and air conditioners. You can make a menu of the goods and charge them based on their needs. Please give them the choice to use the goods of their wish.
You can also provide them with amenities like parking lots, building storage spaces. This lures the tenants, and you can price the amenities to earn higher returns.
Allow Pets With a Premium Charge
There is a great need for homes in the market that permit pets. Some societies have barred pets. So, pet owners face the difficulty of finding a home that allows pets. You may hence consider this as a potential reason to charge the tenants and earn higher rental income.
But, you should always have a regular inspection to check on any property damage. Please agree with the tenant about the property damage well in advance.
Have Strong Leasing Policies
Vacancies can be seen as a potential loss if it extends beyond a specific period. To reduce your vacancy period, have a leasing policy where the tenant intimates you a couple of months before vacating the property. So, you can start your hunt for the next tenant, thereby reducing the vacancy period.
You can include the fixed tenure in the leasing policies. This ensures the minimum period during which the property is occupied. It reduces the vacancies, and therefore rental property return on investment increases.
Increase the Security Standards
Installing a CCTV camera on the premises ensures the safety of the tenants and the property. It creates a win-win situation where both you and the tenants benefit from it.
If your tenants have toddlers or kids, you may go for customized doors and windows that have an upper lock and two way opening systems for doors. Remember, nothing is done for free. You may charge them but not exorbitantly.
If you have an independent property, check on the fence, gates, and maintain them.
Get the Final Touches Done
Repairs are like freckles on flawless skin. Tenants look into the repairs with the magnifying lens. So, it could become a factor of rejection.
There may be repairs that you need to look into before and after renting the house. As an owner, It is your responsibility to maintain the house. Tenants might not like to move into a house with repairs. Hence, you should get the work done before you display the house. At the least, promise the tenants that you will get them done before they move-in.
If you maintain the house regularly, you would have a say to increase the rent periodically. Ways to increase rental returns on commercial property.
Although all the strategies mentioned above work for both residential and commercial properties, the following are additional tips that work best for commercial properties.
Offer additional services
If you own a commercial property, offer additional services like regular maintenance or cleaning services that you state during the lease agreement. They might be willing to pay an extra amount for skipping the responsibilities.
Plan the workspace and storage space according to the requirement. Tenants do not like to pay more for a less utilized space. So, adjust the space according to the need and charge accordingly.
Reduce Potential Losses by Fixed Leasing Tenures
Implement good leasing policies that have fixed leasing tenures and renew the contract accordingly. This increases the credibility of the tenants.
You incur fewer vacancy losses as the fixed tenures ensure the minimum time for which the property shall be occupied. It reduces the losses created by uncertain vacancies.
Provide Smart facilities and energy-efficient systems
It is a world of smart gadgets that we are living in. Smart facilities use an automated process to automatically control the building’s operations, including heating, ventilation, air conditioning, lighting, security, and other systems. If you install the smart facilities, it reduces energy consumption and also increases sustainability. It helps you to improve asset reliability and performance. It also optimizes how space is used and minimizes the environmental impact of buildings.
You can charge them based on the facilities you are providing. Tenants would also love to pay you extra for such facilities. Ensure that your charges for the facilities are not more than their earnings through the energy-efficient systems. Else, the purpose of providing the facilities is lost.
These are some of how you can increase your rental income on your investment property, whether be residential or commercial property. You may consider one or a blend of the above tactics as per your need. I am sure you might have come across the one that suits you!
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Rental Property Returns FAQ's
If you stand in the shoes of tenants, you may understand that bagging the best amenities, living in a furnished property with the security standards are some of the concerns. You can satisfy the customers by providing them all and charging them to increase your average monthly profit on rental property.
All the ways of increasing rental returns on the residential property apply to commercial properties. There are ways specific to get a good return on commercial renting property. You can always go for smart facilities and energy-efficient systems and charge them for providing the amenities. It creates a win-win situation as the tenant would get reduced bills for the energy-efficient systems.
Though the rental market shows signs of growth, the rental yield stands static. It is because the loan interests stand at a high rate which reduces the yield. Rental norms also have too much to give tenants and too little to the owners.
Renovation gives the property a brand new look that attracts the tenants. Modernizing the property with the latest trends welcomes higher returns as you can charge for the amenities provided.