How to Maximise Rental Return and Maximise Your ROI as a Landlord

As a landlord, you know that one of the most important factors is maximising your return on investment (ROI). But what is rental return and how can you ensure you are getting the most out of your rental income? In this blog, we’ll explore the concept of rental return, the factors that affect rental return, strategies to maximise rental return, and how rental ROI calculators can help you maximise your rental return.

What is Rental Return?

Rental return is the amount of money you make on a rental property after deducting costs such as property taxes, insurance, maintenance, and any other expenses associated with the property. Put simply, it’s the amount of money you make after all of your expenses are accounted for. Rental return can be expressed as a percentage, which is a useful way to compare the performance of different properties.

The higher your rental return, the more money you’ll make on your rental property.

Factors that Affect Rental Return

There are several factors that can affect your rental return. The most important factors are the rental price you charge, the location of the rental property, the condition of the rental property, and the rental market.

The rental price you charge is the most important factor in determining your rental return. If you charge too much, you’ll have difficulty finding tenants. If you charge too little, you won’t be making enough money to cover your costs. It’s important to research the local rental market and find out what other landlords are charging for similar properties.

The location of the rental property is also an important factor. Properties in desirable locations, such as close to public transportation, good schools, and parks, tend to have higher rental returns than properties in less desirable locations.

The condition of the rental property is also important. Properties that are in good condition tend to have higher rental returns than properties that are in poor condition. It’s important to keep your rental property in good order to maximise your rental return.

Finally, the rental market can also affect your rental return. In a hot rental market, you can typically charge higher rental prices and get a higher rental return. In a slow rental market, you may have to lower the rent or offer incentives to attract tenants.

Calculating Your Rental Return

To calculate your rental return, you need to know your total rental income, total expenses, and the amount you invested in the property.

Your total rental income is the amount of rent you collected from tenants over the course of the year, minus any unpaid rent or late fees.

Your total expenses are the amount you spent on property taxes, insurance, maintenance, and any other expenses associated with the property.

Finally, the amount you invested in the property is the amount you paid for the property initially.

Once you have these figures, you can calculate your rental return by dividing your total rental income by your total expenses, and then multiplying that number by 100. This will provide you with a percentage figure indicating the ROI.

Strategies to Maximise Rental Return

Now that you know how to calculate your rental return, let’s take a look at some strategies to maximise it.

One of the most effective strategies for maximising rental return is to keep your rental price competitive. It’s important to research the local rental market and make sure you’re charging a fair price for your rental property.

Another strategy is to ensure your rental property is in good condition. A well-maintained property will attract more tenants and help you maximise your rental return.

Finally, ensure you are placing quality tenants with good references that will not only care for the property, but also pay on time each month. Consider the job market and whether you have a dual income couple for example.

The Benefits of Maximising Rental Return

Maximising your rental return has a number of benefits. The most obvious benefit is that you’ll make more money on your rental property. This can help you to cover your expenses and increase your ROI.

Maximising your rental return can also help to attract more tenants. When tenants see that your rental property offers a good value for their money, they’ll be more likely to rent from you.

Finally, maximising your rental return can also help to improve your reputation as a landlord. When tenants see that you are offering a good value for their money, they’ll be more likely to recommend you to others.

Investment Property Calculators

Investment property calculators are similar to rental property calculators, but they are designed for investors who are looking to purchase rental properties. These calculators will help you to determine the potential return on your investment, as well as the risks associated with the property.

Investment property calculators can also provide you with valuable insights into the rental market and help you to identify potential areas of improvement. They can also help you to compare different properties and determine which one is the most profitable.

Conclusion

As a landlord, maximising your rental return is essential to running a successful property portfolio. In this blog, we’ve explored the concept of rental return and the factors that affect it. If you would like to find out more and how to get started in property investment, the Property Guru team are on hand to help. Contact a team member today.