Your rental income is always at risk to events outside of your control – such as interest rate hikes, increasing taxes, or market fluctuations in the rental rate. But if you take steps to maximize your rental income yield, you can maintain or even increase your property investment’s profitability.
Here are three ways you can maximize your rental profits:
- The Hard Way: Raising your tenant’s rent by even 10% will be difficult if you can’t justify why it’s necessary. You can do this by researching the rental market rate for your area or hiring a property agent to run a rent appraisal. Alternately, if you don’t have a tenant yet, you can spend modestly on simple renovations or furnishings to raise the rental value.
- The Somewhat Difficult Way: Lowering your tenant’s rent may seem laughable at first, but if factors like construction are hurting the rental market in your area, charging less rent could be a lifesaver. So if you drop your normal rate from say, $4,500 to $4,000 and land a tenant, you’re only losing $6,000 for the year instead of $9,000+ if it’s vacant for 2 or more months.
- The Easy Way: The easiest way to maximize your rental profits is to look into ways to lower your overhead costs. Refinancing your home loan for a package with either a lower interest rate or a longer tenure will help increase your monthly profit. Lowering your maintenance costs will also help, such as using paint instead of wallpaper, or larger tiles instead of wood flooring or carpeting. A contractor or interior designer can help you with these choices.