5 Ways To Increase Your Property Rentals
Property investment has always been deemed as one of the best and safest investment choices that one can make. Primarily because they’re tangible and are likely to appreciate in value with time (depending on the location and neighbouring developments), and best of all, you can lease it out to generate a fixed income over time.
Some investors are in the property game simply for capital gains while others are in it for the rental business because it provides them a consistent cash flow. However, rental yields have started to moderate lately. According to Global Property Guide, the gross rental yields in Malaysia have moderated to the range of 5% to 7% in 2013 compared to rental yields in 2011 where they were between 4.75% and 6.27%.
As the property rental business gets more competitive here, landlords are gradually losing their negotiating power when it comes to rental. Investors can no longer just rely on pricing and location alone to get tenants. Instead they’ll need to look at other aspects to win renters. It’s a renter’s market and here are some way you can please them:
1) Renovate wisely
Of course, the first thing that any landlord can do in order to raise property rentals is to ensure that their property looks new and refurbished. However, not all types of renovation can bring in the cash. Only with the right renovations can the landlord hope to raise his rental income.
Focus on the most essential renovations that provide the basic things that your tenant may need. Don’t spend unnecessarily on interior designs that are less tangible and doesn’t guarantee an increased rental.
Allocating a budget to recondition that old-fashioned kitchen or the squatting toilet can do wonders on prospective tenants’ impressions on your property, thus raising the chances of you successfully negotiating a higher rent.
2) Furnish tastefully
A furnished property will certainly attract higher rent compared to an unfurnished property. Basic furniture such as wardrobes, beds, sofas, dining table and chairs should already be available when you bring tenants in for a look at your property.
Always remember that your tenants are your customers and that you should always put their needs first. Considering how hot and humid Malaysia is, a landlord that installs ceiling fans or even air-conditioning will definitely score brownie points that will translate to higher rental. Other appliances such as a laundry machine or a refrigerator will not only tempt a possibility of a higher rent but will help you secure a tenant in a jiffy!
3) Split and lease
You can also rent out your property to multiple renters to make maximum returns. This not only maximises your potential income but also opens up your potential customer base with the reduced rental requirement per tenant.
Instead of renting out the whole unit for one person, why not try segmenting it to be able to house more renters with minimal compromise on their privacy. Indeed, you’ll need to make some changes here and there, add more furnishings and manage even more tenants, but in the long run, you’ll be able to realise your returns more quickly.
Try to optimise the capacity of your property to maximise your income. You can always negotiate a better rent deal to cover your costs. This is very ideal for properties in close proximity with educational institutions or office spaces.
4) Make your property pet-friendly
Now, this may be a little tricky and messy to allow your tenants to bring with them their beloved pets too. You would have to ensure your furnishings are pet-friendly and you may want to set clear rules with your renters to make sure that their pets are trained and to always keep your unit clean without creating problems to neighbours or future tenants.
For pet-loving tenants, paying a little more every month for the comfort of their pet is money well-spent. Sure it’ll cost you a little more to make changes to your property such as choosing grilles that prevents animals from running out and getting scratch-proof furnishings but in return you will be opening up your property to a wider market of tenants. Most importantly, ones who would be open to paying a premium for a place designed for them and their pets.
5) Make short-term lets
According to an article in The Star, one new lucrative property rental business has emerged lately, which is known as the short-term rental tenancy. In other words, instead of the usual monthly or yearly tenancy periods, you’ll be renting out your place just for a couple of days.
This is most suitable for properties in popular tourist areas like the city center. With the Visit Malaysia Year 2014 campaign kicking off recently and Malaysia naturally being a hot spot for vacations, short term tenancy can be one viable alternative that you can consider to increase your property income.
Shorter term tenancy will allow you to charge a higher daily rent compared to a longer term tenancy arrangement. If you can manage to secure consistent occupancy (perhaps your property is in close proximity with hot and happening tourist spots), you may consider this option as your profits will certainly be higher at the end of the day. Best of all this opens up your market internationally. Services like AirBnB make it easy for you to get your property listed and to acquire tenants quickly through the magic of the internet.
With these easy and practical ways, every landlord can optimise their rental income and make the best out of their investments!