Cashflow is king and when it comes to being a landlord having a solid rental income is paramount to ensuring you don’t stumble at the first unforeseen expense.
So what if I were to tell you that there are landlords out there, who started with the same property as you, who are now making 50-100% more rental income. Too good to be true? Well it may come with some upfront expense however the following 5 scenarios are being played out daily by savvy investors and landlords.
Let’s get the obvious out of the way first. If you have a dive your rental return is going to be the first thing to suffer. Take this example of two different apartments minutes away from each other. Both two bed one bath with the same total floor area, fetching very different rents. Let me know if you can see why:
Apartment 1 (un-renovated) £900 pcm
Apartment 2 (Renovated) £1,750 pcm
It may seem obvious why these two apartments attract different rents however all too often as Landlords we get stuck in the “don’t spend a penny” mindset. In this instance new floor coverings, a coat of paint and even a surface level improvement to the kitchen like new cupboard doors (which can be done yourself for ~£400) could all be paid back from the increased rental return within the first month or two.
Do the sums and your next changeover of tenant could be a great time to invest in a refresh.
Here is one of my personal favourites which is often overlooked by landlords. Creating a second dwelling on or within the same property.
Often referred to as a granny flat, they can take a few different forms which may not be immediately obvious:
a. Conversion – as the name suggests, making internal changes to the existing structures such as new entrances to create a self-contained dwelling.
b. Extension – extending the existing structure to create new spaces which will form the self-contained dwelling.
c. Detached Flat – the classic granny flat situation of building a new structure separate from the primary house.
Now you are probably thinking that these sorts of major improvements or extensions are way outside of your budget and scope. Think again.
From experience the most expensive exercise is an extension. When you start to extend outside of the existing roof-line things do have a tendency to get pricey. A conversion of an existing portion of the house is usually the cheapest option and the erection of stud walls and adding of additional services can often be undertaken for a lot less than you would think.
Surprisingly the creation of an entire new dwelling is becoming extremely affordable. There are kit homes being pumped out of China with an astonishing quality and design spec. There has been a boom in these types of kit homes and granny flats production making this option more viable than ever before, especially if you’re willing to roll up your sleeves and undertake some of the labour yourself.
Furnish and Lease Individual Rooms
If you’re currently leasing your property unfinished it may be worth exploring the potential by stacking your place with some half decent furnishings (not necessarily expensive – you would be amazed at what people sell on Gumtree).
Outside of the set-up costs furnishing a property has a couple of downsides. You will be narrowing you potential tenant audience substantially so it may take a few weeks to transition from leased as one unfurnished premise to multiple rooms.
The plus side comes when you look at the extra rent that can be released. Not only will you attract a higher total rent from breaking down rooms into individual leases, but you can also open up more rooms.
Particularly attractive in areas close to universities and colleges is the conversion of living space or study rooms into additional bedrooms.
If your close to amenities or attractions in your area this could be just the ticket to double your rent. The world wide web has brought down the barriers to holiday renting and you can now get on sites like air bnb or 9flats in a matter of minutes.
Investing in some high quality images and a few extra perks like “coffee every morning” can grab your listing a lot more attention.
You do risk longer portions of vacant time, however if you invest in creating a truly compelling and eye catching ad in multiple places and you are located in a popular area the rental return can often be more than double that of renting to long term tenants.
So there it is, four undeniable methods that people are using to get more juice from the squeeze on their rental properties. Have you tried any of the tactics above? Let us know in the comments below.
About The Author: Harry Laos is the founder of Australia’s largest market place for Granny Flats and secondary dwelling constructions GrannyFlatFinder.com.au.