The average landlord in the UK earns around £15,000 per year before taxes. And (94%) of all landlords operate as private individuals rather than working as part of a company or larger organisation.
Renting out your property can be a difficult business. Rent collection, maintenance and repairs, and setting the rental rate needs to be managed.
Are you a landlord looking to increase your income? Knowing how to maximize your return can not only help you earn more money every month but make the stressful rental process worth it.
Keep reading for 9 quick tips on some small changes you can make that will have a big impact on your monthly income.
1. Remortgage
If you have a mortgage on your rental property, now might be the best time to remortgage. Check with your lender to see if you're up for renewal.
Remortgaging your property can help put extra cash in your pocket now and may even save you some money. Depending on your circumstances, a remortgage could reduce the size of your current loan and help you secure a cheaper rate.
The average saving for homeowners varies greatly depending on the size of the mortgage, length, and your current financial standing. It also depends on whether you have a fixed-rate mortgage or a standard variable-rate mortgage. Your lender can help guide you through the process.
2. Hire a letting agent
Being a successful landlord requires a lot of moving parts. It takes a lot more work, time, and knowledge than simply buying a rental property and handing the keys over to tenants.
While some landlords are hesitant to hire a letting agent and cut into their profits, many argue that the letting agent fees they pay are well worth the time and stress it saves them. That’s because letting agents have inside knowledge and experience with how the rental process works.
In addition to working knowledge of referencing tenants, drafting contracts, and performing evictions if needed, they also have access to a pipeline of reliable tenants and other local agents. Find a professional that’s an expert in your local area (or the area where your property is located). This way, they can help you set a competitive yet reasonable tenant rate and avoid long vacancies.
Don’t let the prospect of letting agent fees scare you off. While some agents charge a flat fee for fully managed services which include everything from tenant referencing and viewings to inventory checklists, rent collection, and maintenance and repairs, others offer individual services as well. That way, you can pick and choose which services to pay for and which tasks you don’t mind tackling yourself.
3. Sell the property
Sometimes maximising your return on investment when it comes to the property market means striking while the iron’s hot – or should we say, selling? If it makes financial sense for you to sell your property, now might be the time.
The average price of properties in the UK is currently up nearly 11%. Over the last 2 years, some homeowners have seen their home’s value increase as much as £50,000. Sit down and crunch the numbers.
If you can make money selling your property in today’s explosive market, do it! You can always take your earnings and invest in a better, more lucrative rental property.
Just be sure to calculate estate agent fees into your figures. Hiring a local estate agent to sell your rental property is in your best interest. Similar to using a letting agent for rentals, estate agents know how to market homes, attract serious buyers, and negotiate to get you the best possible price.
4. Enhance curb appeal
According to the National Association of Realtors, 97% of professionals believe that curb appeal has a major impact on attracting buyers and renters. The outside of your rental property is the first thing people will see when driving by, looking at your listing online, or showing up for in-person viewings.
You want to make a good first impression, which means investing some time and resources into the exterior of the home. Start by upgrading the property’s landscaping. Keep the lawn well-manicured and fix up the garden (if there is one). Landscaping can provide a 100% ROI.
Add lighting along the drive or walkway and tucked into some of the bushes and shrubbery to create a welcoming feel. Make sure that the steps and railings are in good condition to prevent injury. Repainting the front door a bright color can also help catch people’s eyes and make the property look more inviting.
5. Renovate or redecorate the interior
Once you attract potential renters from the outside, it’s time to give the interior of your property a little TLC. If you want to charge more for rent, you need to make it worth it for the tenant.
Home improvement repairs and upgrades are one of the best ways to maximize your return on investment. Here are a few figures to chew on:
● A minor bathroom remodel – 102% ROI
● A major bathroom remodel – 93.2% ROI
● A minor kitchen remodel – 98.5% ROI
● A major kitchen remodel – 91% ROI
● A basement remodel – 90.1 % ROI
The more you put into your rental property, the more you can expect to get out of it by charging tenants more. Most reliable renters will have no problem paying a little extra each month for a property that’s beautifully updated and functional.
6. Add an addition
Tenants come in all sizes from single professionals with roommates to families with children and retired couples. But if you think your rental property needs more room to accommodate larger groups, you may want to consider an addition.
Extend your rental property by converting a basement or garage into a living space. You can also turn an office into a bedroom.
If you’re really limited on space, it may be worth it to add an entire addition to the property. Considering adding a second floor or extending the current property outward. You can expect to pay between £627 and £1,567 per square meter for large-scale home additions.
7. Convert the property Into an HMO
Converting your property to a house in multiple occupation (HMO) is another viable option for increasing your earnings. An HMO is a property that’s rented out by at least 3 different tenants that are not related or don’t come from the same household. Instead, these are single renters sharing the same space, including facilities like the kitchen and bathroom.
HMOs are also referred to as a “house share” agreement and a popular choice among young singles, including students and professionals. Converting your property into an HMO allows you to rent the rooms on an individual basis. Instead of needing a large family to rent the entire house and pay a high rental rate, you can find individual tenants looking to pay less for a single room. Multiplied by 3 or 4 bedrooms, and you’ll still make your necessary monthly income – if not, more!
8. Enhance your tenant referencing process
Tenant referencing is one of the most important steps in the rental process. This is probably why it’s the one service most people hire a letting agent for. Finding reliable tenants means getting paid on time and reducing the risk of property damage or the need for eviction.
It also creates less turnover and fewer vacancies, ensuring that you receive consistent payments every month. Too many vacancies in a row can cause your monthly bills and expenses to pile up, putting you in debt and cutting into your return.
Paying letting agent fees for tenant referencing is well worth the investment when you secure reliable renters who pay on time, maintain your property, and even renew their tenancy agreements.
9. Avoid raising rent for good tenants
Speaking of good tenants, it’s in your best interest to value and appreciate them when you find them. Sometimes, this means not raising their rent, even when the market allows for it.
Even though you’re looking to maximise the return on your rental property investment, it’s better to retain loyal tenants that pay on time than to deal with short-term tenants that pay more but cause you more aggravation.
When you find a good thing, hold onto it! Try not to raise your quality tenant’s rent too much and if you do, talk to them about it first.
Increase your earnings while reducing your stress
It’s no secret that being a landlord can be stressful. But, when done right, it can also be extremely lucrative. By implementing some of these quick tips, you can maximise your return and make the landlord's life worth your while.
