How to generate a good rental yield.

Closeup of contract of house sale ready to be signed

The rental yield is the crux of any buy-to-let property. Landlords want to generate the highest possible one to receive the best return on their investment.

Calculated by dividing the annual rent by the purchase price will produce the yield, a figure you want to be higher than the return you may receive an on an alternative investment such as parking your money in the bank.

 

How do you generate a good rental yield?

But how do you generate a good rental yield? Well, the process starts before you even buy the property as you need to make sure you pick one that lets well. A vacant unit is one that does not produce an income.

First, you need to decide on your target tenant and buy a property to suit their needs. For example, if you are aiming for young professionals, then pick a location with a quick commute to popular workplaces or an area that is a fashionable hang out for this demographic of society.

If you are buying a two-bedroom property, then remember that two sharers are going to want similar sized bedrooms so consider this before you part with your cash. And, if you are wanting to the buyer a larger unit suitable for families then a short distance to educational institutions is a must. 

By buying the ‘right’ property means that it will let quickly. You want minimal void periods between tenancies as this will influence your yield. Speak to your local agent to find out what property is most in-demand and which lets the quickest. This will help you work out the best property for your investment. 

Once you have secured the property, think about the presentation. Many tenants are time short and will quickly scroll through potential listings on their smartphone on the way to work, so if your property looks good it will photograph well too. The more people that view the property, the quicker it will rent and the sooner the rent will start coming in to boast that yield.

 

Property in a popular location

If your property is in a popular holiday location, you may even consider short term lettings suited to holidaymakers. Short term lettings warrant a higher rent, but they are also more labour intensive and could experience longer void periods between lettings. Take time to work out what the best strategy is for you and your property.

Once you have good tenants: keep them! Having long term happy tenants is key to keeping any investment property ticking over. It will reduce any reletting costs and any losses in rents in between tenancies. If they want to paint, put up shelves or have items of your furniture removed, consider all of these requests. Tenants who want to put a mark on a rented home are more likely to stay longer which is a win for you as a landlord too.

 

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