The keys to maximizing rent yields at your investment properties

Whether an investor has one property or a substantial portfolio of rental properties, the goal of maximizing the rent yield is always priority number one. There are a number of different strategies an investor can employ to ensure they are doing everything possible to boost their rental income. However, there is fine line between charging the right amount for rent that will attract numerous tenants and charging too much, which will inevitably turn prospective renters away. An investor that takes advantage of these strategies and understands the balance of what to charge is one that is positioned for long-term success in the industry. Let’s get into the best strategies for maximizing rent yields for an investment property.

Renovations Leads to Higher Rents

The most straightforward way an investor can take advantage of their property and maximize their rent yields is by renovating it before they put it on the market to rent it out. Investors can often rent out a property just for the sake of starting to see a return on their investment, and as a result, they are actually leaving money on the table. There are a number of different ways an investor can approach a remodel, and they mostly come down to experience and budget.

Investors should always look for lenders that cover 100% of a renovation budget, but in a case where they don’t have that option, smart financial decisions must be made. There are minor changes that can actually make a big difference as it pertains to giving a property a “facelift” to ultimately charge more rent. A new coat of paint can go a long way to giving any room in a property a new, refreshing look. Neutral colors are preferred as it can attract the highest number of potential renters. Modern light fixtures are another option for investors looking for an affordable renovation project. Another quick alternative could be getting window treatments or switching out blinds which can increase a property’s natural light and make a major difference as it pertains to appeal from tenants.

For investors with a bigger budget, adding square footage in the form of an office, an extra bedroom or a dining room separate from the kitchen are all attractive additions for potential renters. There’s also the option of adding a garage or a back patio and pool area as a luxury feature. Again, these are pricier and involve hiring a general contractor barring previous experience from the investor, but these are lucrative changes that can take a property to the next level in terms of maximizing rent yields.

Plan a Well Thought Out Property Showings

When an investor arrives at the stage where a property is ready to be shown to attract renters, a thoroughly planned showing goes a long way. What this can do for an investor is attract attention and competition to an investment property. With more people taking a look at potentially living in the property, rent can increase based on the demand.

Showings that offer complimentary food and drink, clean floors, tables and windows and an opportunity to see the highlights of the house as well as the work the investor has put in are all ways to ensure a property is memorable for a potential tenant. Property owners should always want to be engaged with a potential renter. Ask them questions pertaining to their interests and what they are looking for in a home. If their answers align with features that are available in the property always make sure to take them to that location in the property and expand on why this is exactly what they’re looking for.

Local knowledge is another aspect that potential renters appreciate from a house showing. Questions such as:

• How good is the school system?
• What’s the nearest park or area for outdoor activities?
• Are there local shops, grocery stores or gas stations?
• Is there an area nearby with restaurants, bars, movie theaters, entertainment, etc.?

These questions come up frequently during a showing and having the answers at the ready makes a renter’s decision much easier. Also, trying to learn anything possible about people coming for a showing can add a personal touch that will not be forgotten. Based on who is coming to a showing, the potential questions they want answered can change significantly.

Comparative Market Analysis

Aside from renovations and showings, there is one more step an investor can take to give them assurance about maximizing rent yields at their investment property. A Comparative Market Analysis, commonly referred to as a CMA, is a report that analyzes properties in a certain area and can estimate Fair Market Rent within a neighborhood or town.

There are a number of factors to consider if investors want accurate results. This list may seem a little long, but every facet of a property is important when talking about maximizing rent yields. Data points for a CMA include type of unit, neighborhood, size, number of bedrooms and bathrooms, age, style, views, condition, and lot size or acreage. This is another reason why renovations are such a crucial aspect of ensuring that investors are maximizing their rent because renovations can positively impact the results of a CMA.

In an article written by Gemma Smith titled, “How to Effectively Carry Out a Rental Market Analysis in Your Local Market” from Azibo, she sums up why a CMA is such an appealing asset for investors to take advantage of, “This analysis ensures pricing strategies are responsive to market conditions, balancing the need for competitive rental prices to attract tenants with the goal of maximizing rental yield. Furthermore, ongoing CMA enables investors to adjust rent prices in accordance with market trends, ensuring the investment remains lucrative over time.”

A final piece of the puzzle when it comes to maximizing rent yields at investment properties is the investors’ ability to raise rents every year. Aspects of the housing market such as supply and demand, overall economic health, inflation and operating costs are all well within the right of the landlord when it comes to incrementally raising rent for a tenant each year. These incremental increases are much more preferred by tenants than the possibility of having to move and pay significantly more for rent in another unit or property. Investors could rely on a comparative market analysis to provide sound reasoning for that slight rental increase.

In Conclusion

Maximizing rent yields is a key to succeeding as a real estate investor. If an investor is not taking full advantage of every property within their portfolio, struggles can occur. Using the three methods of a well thought out renovation process, multiple showings that highlight the best aspects of the property and surrounding area and performing a CMA that supports the rental price an investor is looking to set are surefire ways to get the most money possible out of a rental property. By themselves, these are all viable strategies that can help an investor, but when used in conjunction with one another, an investor is setting themselves up for long-term success in the industry across all of their properties.

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