9 Ways to Increase Rental Yield

When it comes to residential property investment, the term 'yield' is a crucial concept that relates the annual rental income a property can produce to its initial purchase price. 

Essentially, a property's yield signifies the annual return on your investment - the higher the yield, the more profitable the investment.

Why is understanding yield so important? Property experts and industry commentators often utilise yield figures to gauge the potential and performance of investment properties. Sound knowledge of how yields function can empower you to make well-informed investment decisions.

You can check our previous article to learn more about how yields are calculated and what is considered a good rental yield. In this post, we'll focus more on strategies to maximise your rental yield so you can optimise your investment return.

How to Improve Rental Yields

To start, keep a keen eye on the fluctuation of vacancy rates, as they are a key indicator of competition in the rental property market. 

These rates not only highlight the demand for investment properties but also suggest that finding tenants in a particular region might be challenging. 

In this context, a 3% vacancy rate is considered 'balanced,' representing an equilibrium between landlords and tenants. However, the advantage shifts to the landlord when these rates decline towards 1.5% and lower. 

In this scenario, landlords benefit from a wider selection of potential tenants. As the demand for rental properties surges, you can also anticipate an increase in the rent you can charge. 

Increasing the yield becomes the next objective once you select a suitable property. The primary way to do this is by enhancing your property's appeal to tenants. 

One effective strategy is renovation. It may enable you to ask for a substantially higher rent, increasing the yield beyond the initial purchase and renovation costs. This tactic is particularly beneficial if you own an older property with substantial room for improvement.

9 Ways to Increase Rental Yield

Increase Façade and Kerb Appeal

Enhancing the exterior appeal of your rental property can greatly increase its desirability among potential tenants. Maintaining a beautiful and well-kept property can indicate safety, reliability, and quality, enticing tenants willing to pay a premium for such a living environment. A fresh coat of paint, a well-maintained garden, or even small touch-ups like replacing old numbers or light fixtures can significantly boost your property's kerb appeal.

Better Photography

High-quality photography can play a pivotal role in marketing your property effectively. Clear, well-lit, and professional photographs can showcase your property's best features, creating a positive first impression that can entice more prospective tenants. They can effectively highlight the property's charm and potential, attracting more applications and potentially higher rental rates.

Property Staging

Property staging involves employing professional stylists to add furniture and furnishings to your property, enhancing its appeal and potential functionality. A well-staged property can have a strong emotional impact, helping prospective tenants envision living there and justifying a higher rental price. It can turn a vacant property into a warm, inviting space, demonstrating its full potential.

Add Off-Street Parking

Off-street parking can significantly increase your property's appeal, especially for tenants with multiple vehicles or those who value the security of their vehicles. It also provides convenience and peace of mind, elements that many tenants are willing to pay extra for.

Increase Storage

Making optimal use of unused spaces within your property by converting them into storage areas can add immense value for tenants. This could involve converting an attic, using the space under the stairs, or creating new cupboard spaces. The more storage space available, the more attractive your property becomes, as tenants often struggle to find adequate storage in rental properties.

Create an Outdoor Entertaining Room

Developing an outdoor living space can provide additional appeal for many tenants. Whether it's a courtyard, a part of the backyard, or even a balcony, a well-designed outdoor space can serve as an entertaining area, a relaxation zone, or a children's play area. This increases the property's overall usable space and perceived value, justifying a higher rental yield.

Landscaping

A well-landscaped yard can be an attractive feature that differentiates your property from others. This doesn't necessarily mean a grand, professionally designed landscape; even simple additions like soft outdoor lighting, maintaining a neat lawn, or adding potted plants can create a pleasant environment that resonates emotionally with potential tenants.

Allowing Pets on the Property

Being pet-friendly can significantly widen your customer base to include tenants with pets, who often find it challenging to find suitable accommodation. This can be an attractive feature for pet owners, and given the limited number of pet-friendly rentals, you could potentially charge a higher rent.

Update Appliances

Updating the appliances in your rental property, such as washing machines, dryers, and air conditioners, can greatly increase tenant satisfaction and allow you to charge a higher rent. Modern, energy-efficient appliances provide tenants with a more convenient and comfortable living experience and save on energy costs. These appliances also typically require less maintenance in the long run, easing your property management tasks.

Also, once you have a tenant in place, plan rent reviews. This will also give you space to plan, but remember to seek market comparisons to ensure you are charging in line with what the market is willing to pay.

Key Takeaways

Knowing how to maximise your rental yield is an important factor in successfully optimising the return on your investment.

Out of the nine strategies outlined in this blog post, hopefully, you have found at least one or two suggestions that have been helpful and could make a difference to your profits. 

Of course, these strategies' success depends on factors like location, timeframe, and budget, but understanding yield can help you manage these aspects effectively. 

If you're interested in investing in residential property and would like to learn more about what it entails, I’ve written this easy-to-read guide that provides a thorough overview of the process of investing in residential property.

"Residential Property Investing Explained Simply" covers a wide range of topics, from understanding the factors that can impact the value of a property to the ins and outs of property investment. 

Whether you're just starting to explore the world of property investment or are looking to deepen your understanding of the subject, this book is a valuable resource that can help you make informed decisions and maximise the value of your investments.

Alternatively, if you want to know how I’ve helped investors acquire a range of residential properties, feel free to reach out today.