How to Get the Maximum Returns From Your Real-Estate Investment

When you invest in a property, whether it’s your first investment or you have an established portfolio – you want to make sure you are getting the best ROI at all times. 

The reality with real-estate investments is – it takes time and effort to ensure you generate the best ROI. To get the best out of your investment you have to make sure you are constantly keeping track of your property and what’s happening with it – even when it’s occupied. 

Here are some effective ways you can increase your rental yield and maximise your profits on your property investment. 

Calculate your rental yield 

Rental yield is essentially the final profit you are making from your investment. When a tenant pays you rent, the whole rent does not go straight into your pocket – there are various other costs and bills to foot. Some of the costs associated with your property can be:  property management fees, repairs, property maintenance and taxes. 

You can calculate your rental yield by: calculating your rental income minus any costs and expenses you incur. This number you get can help you figure out how much you actually make from your investment property.

How do you calculate rental yield?

There are two steps to this process: 

Gross rental yield 

  1. Figure out how much rental income you earn over a year
  2. Divide your annual rental income by the value of your investment property 
  3. Multiply this by 100 to get the percentage that represents your gross rental yield

Net rental yield

  1. Figure out how much you spend on expenses for your investment property each year
  2. Calculate the annual rental income your generate from your investment property
  3. Subtract the total expense from your annual rental income 
  4. Divide this figure by the value of your property and multiple by 100 

How to maximise your investment property’s rental yield 

Set the right rental rate for current market conditions 

Setting the right rental rate based on current market conditions, type of property and locality of the property need to be thoroughly analysed to ensure you set the right rental rate for your property. 

To make sure your property is occupied at the earliest and also at the rental rate you have to be able to strike a balance between getting strong returns from your rentals and finding good tenants promptly.

If you set your rental rate too high, you will have fewer tenants interested in the property and if it’s too low –  you will end up losing out on good ROI. 

Therefore, setting the right and best rent will determine how successful you secure a good tenant. 

Based on the locality and the type of properties in that locality, you can set a higher rent. However, if your property is in a fairly remote area you might need to set a lower rental rate. 

It’s important to be aware of the market trends and conditions to make sure you don’t end up with vacant property. 

In addition to this, you have to be sensitive to market conditions like the Covid-19 pandemic, during which as a landlord you may have to slightly reduce your rent to avoid long periods of vacancy and maintain a consistent stream of rental income.

Ensure you’re following smart real estate marketing strategies

Where you list your property and how you advertise it will determine how fast you get a tenant and the type of tenants you get. 

You have to make sure you plan a good marketing strategy that will make the best first impression on potential tenants to ensure you can secure a tenant quickly and generate consistent rental income.

Make sure that you’re:

  • Attending to and investing any necessary renovations and tenants queries 
  • Get clear professional images of your rental property 
  • Keep your property maintained and make necessary upgrades 

Hiring a professional property management company is also a good investment to ensure your property is maintained to its best to get you a good ROI. 

Make small, cost-effective improvements that will add value to your rental

Keeping your property maintained is essential to make sure you can get a good ROI on the property. 

It’s important to make small effective investments at the right time to make sure your maintenance bills don’t build up in the long run. 

Here are some things you can focus on when it comes to maintenance and repairs: 

  • Focus on the bathroom and kitchen
  • Repaint your property 
  • Clean and maintain any outdoor spaces
  • Replace worn-out flooring
  • Repair and fixtures 

Be proactive with maintenance 

Tending to any repair and maintenance issues raised by your tenants is important to keep your tenants happy and also to prevent big costly problems. 

Another key part of the maintenance of your property is regular routine inspections of your property. 

If you are not in the same city as your property, you can consider hiring a property management company that has dedicated property managers who will carry out regular inspections on your behalf. 

By hiring a property management company, you have a team that will be proactive in property maintenance. 

Being an NRI who is overseas you may not have the time and bandwidth to promptly address all the issues raised by your tenants and also keep up with changing local market trends and conditions.

Investing in a property management company will help you save time and also ensure you get the best returns on your property investment.

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