You can calculate the gross rental yield on an executive property by dividing the price you paid by the total annual income. Based on that calculation, the more you make from rental income, the higher the yield, so it makes sense to avoid any periods of tenancy downtime.
Even if you have high tenant turnover, you can still minimise downtime if you learn from the experts and manage your property investment in the right way. Push your rental yield to the limit with these five simple strategies.
If you're renting your property to executive clients, it's vital that you understand your target market. Any advertising must focus on the key selling points of the property, and it's unwise to gloss over areas that may disappoint your clients. For example, if you want your home to appeal to families, it's important to focus on the available facilities, including proximity to schools, availability of public transport and outdoor living spaces.
The executive leasing market is an increasingly competitive space, and prospective clients will often make up their minds after a quick glimpse at your advert online. Make it easy for them to see how many bedrooms you have, how many bathrooms and how many parking spaces.
You can waste considerable time dealing with prospective tenants who really aren't suitable for the property, which, in turn, means your property could stay empty longer than it needs to. Every unoccupied month eats into your yield.
Dissatisfied clients will often decide to vacate your property if you don't get things right, and unresolved maintenance issues will quickly cause dissatisfaction. Delaying or ignoring problems in the property may delay cash outlay, but if you alienate your tenants, your property will quickly become empty.
Agree with tenants that you will deal with issues within a prescribed period. You can scale issues based on the severity. For example, you may decide to resolve simple issues within 24 hours, with a five-day window on more serious problems. In any case, it's vital that you keep tenants informed of progress, and make sure you are willing to offer compensation to apologise for any delays.
A lot of executive landlords forget to ask their tenants why they have moved on. While many clients will simply need to move location because of their employers, other tenants may have problems with your property, so it's important to ask for feedback. If you know why your tenants are moving on, you can take relevant action.
Consider different ways to collect feedback. You could ask outgoing tenants to complete a comment card, but that may come too late in the process. Make regular contact with your tenants, and take every opportunity to ask if everything is fine. Executive tenants may not want too many interruptions, but they'll also appreciate your interest and concern.
Expert property management
If executive leasing isn't your primary occupation, it's better to pay an expert to manage the property for you. Property management is often complex and experienced managers generally have a wealth of contacts they can call on to help find new tenants or deal with maintenance issues promptly. Executive leasing companies generally work on a small percentage margin. For busy professionals, this investment can reap dividends when it comes to a rapid turnaround in tenants. Consult resources like Joyce Property Investments for more information.
It's often tricky to get a new tenant in your property immediately after the last one vacates. One or two days may seem like a short period, but if that downtime takes place every couple of months, the impact on your overall yield may become significant. Shrewd landlords can often negotiate terms to minimise downtime.
For example, a tenant may want to move in or out of your property a few days earlier or later than their original planned dates. This can minimise downtime and may even help your client's arrival or destination. Make sure you can offer something in return. For example, you could agree to return a security deposit within 24 hours or offer a slightly discounted rental rate in return. A small loss or discount could help you avoid a more sizeable loss in rental income due to tenant downtime.
To maximise the rental yield on your executive property, you need to eradicate any time when you don't have tenants. With a few simple steps, you can make sure your property is rarely empty, allowing you to sit back and watch the rental income top up your bank balance.