The Covid-19 pandemic has taught us one thing for sure – that we cannot rely on a single income source. Should we lose our main source of income, at least we are able to have a steady passive income to help us with our expenses and daily needs. Rental yield measures the income you gain from your rent annually as a percentage of the total price you paid for the property itself.
If you have an extra property on hand which you are not living in, it is a good idea to think about renting your property out to generate a regular income. However, how should you go about to maximize and max out your rental income?
Here are 7 tips you can consider to maximise your rental income:
1. Renting your home on a short-term basis
Instead of signing on a full fledge two- or three-years contract, why not consider renting out your home on platforms such as AirBnB? You will be able to command higher income depending on the location of your property. On top of that, you have more flexibility with your rental as well. However, it does not come easy as more work is needed. You will need to communicate with potential renters and more management work is needed from your end. Also, do make sure if you are leaving in a stratified property that the development allows short-term rentals. Otherwise, you might get into trouble with the house rules.
2. Invest for the long term
The upfront cost of making your property stand out from the rest may be daunting but it pays to invest earlier on to ensure less headache in the future. This also takes care of your relationship with your tenant. Making sure everything in the property is working as it should and there are no major issues such as leakages will save you money and time down the road. It is cheaper to get one or two professionals to come once and fix everything than having them come once a month.
3. Screen your tenants
Make sure to look into their background and get proof from them that they can afford to pay the rent. Do not rush and agree to the first potential deal that may come on hand. The last thing you want is a tenant that thought they will be able to make the rent, but actually cannot. Also, ensure that there is some sort of chemistry between you and the tenant. At the first signs of any red flags or deals that are too good to be true, it is better to turn down the potential income than to regret later on.
4. Be accommodative but also be firm
Always remember that renting a home is a business deal. Payments have to be made on time according to the rental agreement, and it is your job to make sure they are. Use your judgement on delayed payments as different circumstances call for different decisions to be made.
5. Don’t exaggerate the rental price
Many landlords often exaggerate with the price of their rental home. Remember that if people are paying for a premium, they expect premium quality items and services. If you are unable to justify the premium you are commanding for, then do not shoot yourself in the leg. You don’t want your tenant to feel like they are overpaying for what they get. Be fair to your potential tenants, and you will have a much better experience renting out your home.
6. Make a thorough calculation of costs
Always list down all the items you have to fork out for because landlords often tend to forget certain costs such as specific taxes or association of owners’ contributions. Make sure that you have taken into account all utilities and bills and make sure to distinguish between fixed costs and variable costs.
7. Preparing for rainy days
Remember that as much as you can take care of the property, every property requires some maintenance at some point. There is no avoiding a broken washing machine, chipped tiles or a leaking tap. Thus, if you calculate for those things in advance, they will not surprise you and your rental income will remain steady throughout the rental agreement. Do not wait until the last minute before the items break down and a huge bill awaits you after.
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