The 3 key components to optimising your profits
Whether you're a seasoned buy-to-let investor or an accidental landlord, ensuring maximum profits from your rental property is crucial. Regularly assessing your expenses and income can significantly impact your bottom line. Here are three key components to consider:
Rental costs
Just as you would when running any business, highlight all the things that you spend money on, noting whether they are monthly or annual costs.
- Track all expenses meticulously, including mortgage fees, agent fees, insurance, maintenance, and utilities, to identify areas for potential savings.
- Review and renegotiate recurring expenses like mortgages, insurance, and general costs. Our mortgage partners, Mortgage Scout, recommend you review your mortgage annually, as new products are being released onto the market all the time. If you use an agent to manage your property, did you know you could potentially get an improved deal, as LRG offers NRLA members 1/3 off the published rates for our three service levels, Fully Managed, Rent Collection and Let Only*?
- Invest in quality appliances and fixtures to minimise repair costs and enhance tenant satisfaction.
- Budget for void periods between tenancies to mitigate financial gaps.
Maximising income
- Maintain your property in top condition. Those that are freshly decorated, have good quality appliances and fixtures and fittings, and are clearly well looked after will attract quality tenants willing to pay higher rents.
- Consider amenities like fast Wi-Fi, pet-friendly policies, and parking spaces to enhance property appeal and command premium rents.
- If you’re re-mortgaging for any reason, a well-maintained property is likely to have a good market value. And if the property is worth more now than when you last took out a mortgage, that might mean a lower loan-to-value and better interest rate, which could reduce your mortgage payments.
- Regularly reassess rental rates to ensure they keep pace with inflation and market trends, thus preserving the value of your income. You may think you’re helping your tenant by keeping their rent at the same level – and, of course, they’ll be glad they’re not paying more! But in some ways, you’re doing them a disservice, because they’re likely to get a shock when they eventually move on and see the price they now have to pay for a similar property.
- Whether it’s redecoration, renovating a kitchen or bathroom, or installing some new technology, continuously improve your property to meet evolving tenant demands and stay competitive in the market.
Enhance property value
- Maximising rental income is one way to profit from your rental property. The other way is through an increase in capital value. Prioritising regular maintenance and redecorating will safeguard and increase the capital value of your property over time.
- Remember that you don’t have to sell to benefit from an increase in the value of your property. If you have a mortgage, you may be able to remortgage onto a product with a lower loan to value and a better interest rate, which could reduce your mortgage payments and boost your monthly profits. Or you may be able to release some of the equity to either reinvest or just enjoy!
In summary, effective asset management involves balancing costs, optimising income, and continual property upkeep and improvements to enhance its value. By focusing on these three aspects, landlords can ensure sustained profitability and long-term success. For personalised guidance on rental property management, consult our experts at Leaders.
Want to know more about the lettings services LRG can offer you? Call us on 01344 753100 and quote that you’re an NRLA member to find out more about the exclusive discount* we can provide.
*subject to T&Cs, for newly instructed properties only
