What can bring down your property's rental yield?
Rental property investment has always been a huge attraction in the real estate market. Whether it is a new entrant to the game or a seasoned player, buy-to-rent investment opportunities are a big draw on the numbers table.
Rental property investment has always been a huge attraction in the real estate market. Whether it is a new entrant to the game or a seasoned player, buy-to-rent investment opportunities are a big draw on the numbers table. Every investor is aiming for a high rental yield that will offer high ROI’s. However, there are certain hidden costs that can catch you unaware and decrease the rental yield of your property.
What is a Rental Yield?
To those less familiar with the term, rental yield is the return a property investor is likely to achieve on a property through rent. It is a percentage figure, calculated by taking the yearly rental income of a property and dividing it by the total amount that has been invested in that property.
Rental yields really matter for investors as they determine the level of income you receive compared to your investment. Maintaining a strong rental yield is critical to most investment property owners as it affects the income received from an investment property.
Here are the factors that are unassuming but can tank your rental profits -
1. Associates you cannot trust
Engaging with people whom you can trust is paramount in any business but a golden rule of the real estate trade. Stay away from people who are only interested in catching hold of your money as soon as they can. Instead, surround yourself with
A trustworthy and efficient real estate agency with strong market knowledge and stronger ethics
A trusted Property Management Company that can provide high-quality professional services to manage your rental properties as well as put their focus on keeping tenants staying and paying. They must have a genuine interest in keeping tenants satisfied and timely paying rent
A maintenance company you can trust with those elusive but necessary repairs
A good attorney in case you need to solicit legal advice
A good accountant to help you structure your real estate investments and help you avoid unnecessary expenses and manage taxes
2. Maintenance Issues
Before you take handover from the developer of your newly brought property, always make sure you give it a detailed inspection. Choose a highly professional snagging and inspection company that uses the latest tools and techniques to inspect every nook and corner of your property and provide a detailed report. This will save you hundreds and thousands in future repairs you never knew the property needed in the first place.
3. Bad Tenants
Treat your tenants as your business partners. After all, they play a great role in the success of your real estate endeavors. You need to do everything in your power to keep them staying and paying. Remember, your paying tenants allow you to have cash flow, live life on your terms, and be financially free. Although, there are cases when you might get stuck within a situation where your tenant might become a liability more than an asset. To avoid this -
Make sure a background check is part of your tenant screening process
If there is an eviction history, tread carefully
Verify income and financial flow
All of this can be handled easily and more efficiently by an expert real estate agent who knows what he is doing and more importantly, what he is not supposed to do. Stay away from fraudulent individuals who will make you pay heaps in commission but deliver a shoddy service.
