While Ireland (Dublin in particular) has one of the top rental yields in Europe, most Landlords struggle to breach the average of 3.9%. Here are our 5 tips for landlords to help maximise their rental yield.
Property Value & Rental Yield
Rental yield, or the annual return on investment that a landlord will make on a buy to let property, is calculated by dividing the rental income by the value of the property. This is then expressed as a %. Therefore an expensive property must charge a high rent to make the investment worthwhile.
How to maximise your Rental Yield
1. Think outside the Box
When considering which location to invest in, it can be tempting – if within budget – to focus on more affluent areas with higher property values. While the reasons behind this are obvious, one must also consider inflated property values and a competitive market which could actually lead to you making a lower yield on your rental.
Consider instead more up & coming areas with high demand where property values aren’t quite so high, which in turn will leave more room for profit from your investment.
In Dublin City Centre property prices are the third highest in Europe. Even though these rental opportunities are a sure thing, even with premium rental prices, the initial outlay leaves little room for yield.
Instead look to invest further afield in commuter towns for example, where rental prices are not that far behind the city, but properties can be snapped up at half the cost leaving ample room for yield on your investment.
2. Buy For Your Ideal Tenants
Landlords looking to maximise their profits will also want to consider what type of tenants they plan to rent to. For their ideal property, most tenants are willing to pay premium rates. You should tailor your choice in investment to meet your ideal tenants needs. This will help to maximise your rental profits.
For example, if you plan to rent to professionals, you should aim to provide a high spec property, near local transport lines to the city centre. Alternatively, a large garden, close to schools, a dishwasher and a washing machine would be more valuable to families.
Another tried and tested method of improving your rental yield is through renovations. Despite the obvious challenges this can add considerably to the strength of your investment.
More and more often, particularly in city centres, young professionals are adapting to smaller accommodation. The opportunity to purchase one bedroom properties and convert them to 2 bedrooms with open plan living space can be very lucrative.
Other opportunities would include converting attic space to bedrooms or transplanting the kitchen to a smaller box room, creating space for one or possibly two more bedrooms.
More common renovations can include rejuvenating old bathrooms and kitchens and new flooring. All tenants appreciate these improvements and are likely to pay premium rates for it.
4. Fresh New Decor
If the thought of a full scale renovation puts you off or is simply not within budget, then simply put what you can in to freshening up the decor. Properties that are freshly decorated are more desirable to quality tenants. Remember however, this isn’t your Sistine Chapel, don’t go crazy with colours as it’s best to appeal to the widest range of tenants, so choose neutral shades for walls and flooring.
A newly decorated property can command higher rates and it also means that tenants are more likely to look after the property during their stay. From a property management perspective this is also a prerequisite as no company wants to take on run down, unattractive properties.
5. Quality Furnishings
With quality furniture outlets like IKEA now on our doorsteps, it isn’t a huge cost to provide quality matching furnishings. Quality furniture will attract quality tenants which in turn will reduce wear and tear throughout their stay. All of this in the end will help maximise your profits in the long term.
If you have any questions at all we here at KPM are happy to help. You can contact us on +353 1 844 2400 or simply mail us at firstname.lastname@example.org