Many investors are concerned that their properties are not currently going up in value and wondering how to increase their return. With capital growth currently running in the low single figures we advise them to try and improve the cash flow on their properties.
To do this you have to do one of three things:
- Increase your rental income
- Decrease your expenses
- Decrease the length of your vacancies.
So, how do you go about doing these? Let's have a look at a couple of ways.
- Increase your rent
In the current climate of lower purchase demand we are seeing an increase in rental demand. In general when demand increases prices tend to increase and so we currently have a situation of rising rental values. Good news if you want to increase your rent.
- Decrease the rent
It sounds almost frivolous to say this after the previous point, but we see many landlords having long vacancy periods because they are asking unrealistic rents. Any gains they would make by charging a higher rental are soon lost by the few extra weeks of vacancy. Tenants are currently very aware of market rentals and we will often suggest that landlords set their rental say £10 below the market just to get a choice of tenants quickly.
- Consider pets
With more than half the population interested in having a pet you will broaden your market by allowing your tenants to have pets. If you consider this option it is important to inserting a special pet clause in the lease to protect your interests.
- Make you property more attractive
During periods of vacancy take the opportunity to spruce up your property. A quick coat of paint inside is probably the most cost effective improvement you can make in order to attract tenants and to increase your rent. Stick to neutral colours, off whites or creams which will appeal to the majority of tenants. If your carpets are getting tired, update your carpet or pull it up and polish the floorboards.
- Install a dishwasher:
While a dishwasher may only cost you £250 it will probably increase your rent and make your property more attractive to potential renters. Having a dishwasher or other luxury fittings will always attract a tenant to your property before another similar property without these.
- Keep your property looking smart:
Every 5 years you should give your investment properties a good overhaul and every 10 years you should give them a full refurbishment. This keeps them attractive to tenants and means you minimise your vacancies.
As you can see most of these suggestions will cost you little but will ensure that your property remains tenanted at the optimal rent, therefore increasing your investment return. This will keep you and your tenant happy.