How do you increase rental yield?

Rent increase may be the simplest but not the easiest e.g In Dubai any increase in rent must comply with rent increase controls. In other instances there could be rent locks within the agreements. Many property owners who set lower rents during the pandemic can only increase by permitted percentage keeping the rents still way below the current market. One way to address such an issue when a discount is warranted is not to refuce the rent in the agreement, instead keep the rents in the agreements on the higher side and give discount/ credit / rebate that applies to that year only. Subsequent year rent is then not affected by the one off discount.

Increasing rental yield involves several key strategies: First, regularly review and adjust rental rates to align with the market. Minimize operational costs by being efficient with maintenance and management. Foster tenant satisfaction to reduce vacancies and turnover costs. Invest wisely in property upgrades that can command higher rents. Consider short-term rentals if suitable for the location. Optimize marketing efforts with appealing listings. Keep up with preventive maintenance to avoid unexpected expenses. Diversify your portfolio to spread risk. Maintain a keen focus on financial management. Lastly, cultivate a professional network for valuable insights.

After 25 years of managing properties we have dialed in the process and taking advantage of ancillary fees. When it comes to our personal rentals and giving advice to investors understanding the market, procuring well qualified tenants, making wise updates and improvements, having a team that understands and focuses on maximizing your profit and minimizing your losses. Too often home owners go it alone and quickly discover, the hard way, they've lost their shorts. Many want to be property investors, few truly want to be landlords.

Add Amenities: in Lagos real estate market, we have seen property owners comparing their properties with lower facilities to another property within the same neighborhood with higher facility. Location and situation are good indicators for rent review. The property might be well located, but the situation of the property determines the kind of rent obtainable. Offering amenities like laundry area, adequate parking spaces, gym, even the size of the accommodation matters. At the design stage, the developer should consider the above factors. Tenants now want to live in properties that can afford them the luxury to live, work and play.

The process of raising rent can vary in complexity depending on the method chosen. One straightforward approach is to include an escalation rate clause in the rental agreement, typically tied to the current rent amount. Alternatively, the clause might stipulate that the rent will be adjusted based on the prevailing market rates for comparable properties. In this case, conducting a comparative market survey becomes necessary to determine the updated rental price.

In commercial real estate (#CRE) the exit sale price is the NOI divided by the cap rate at that time. If you are only boosting your topline revenue but not tracking your underlying expenses then you are setting yourself up for disappointment. The best exits we have had are when we had all our expenses in line or better than the market. A great example is property taxes right now. Property taxes have exploded over the last few years. But with interest rates skyrocketing, cap rates have expanded meaning the value of the property that you might have purchased a few years ago, on paper could be lower today due to the formula of NOI/Cap Rate. So you have to be aware of your expenses & and which items can be adjusted to serve your NOI.

Our team only focuses on value add assets. Meaning if we are buying a 100-unit apartment complex we want to have about 50% of those units needing some renovation work. The reason is that a unit might cost us $10k to renovate, but the completed unit then rents for $300/month more. That leads to less than a 3-year ROI, and an increase in the value of the property for each unit renovated by $72k. If you multiply that across all 100 units being renovated then that is $7.2M in value-added and only $1M in extra expenses incurred. The best parts to renovate are a kitchen and bathroom, along with a new paint job and flooring.

I didn't know how much money I could make incrementally on extra services until I got my first property. I was finding that I could charge $50/month for a pet, charge an extra $150/month to include internet and cable, charge another $100/month for the convenience of digital keypads, and another $200/month for an in-unit washer and dryer. I have a laundry list of all the amenities I have built into my properties, but the key is finding what the tenant wants and then providing those amenities at an incremental profit boost.

One of my first real estate investments was a house hack. I built the house as a 3-unit multi-family. I then rented out two of the units and personally lived in the 3rd. However since my unit was over 2 floors and had a second means of entry through the patio, I was able to legally create an Airbnb on my other floor that generated 2x more income than my long-term renters. Thus I was not only living for free, I was able to generate $150k/year in revenue between long term renters and Airbnb. This is just one way you can be creative in your real estate deals, but the more you look the more opportunities you can find to unlock your wealth potential.

Renovations and upgrades: investing in property renovations and upgrades can increase its value and allow you charge higher rents. The best way to do this is to focus on improvements that allow a good return on investment. In Nigeria, if the property owner embarks on property facelift, the best thing to do is to start negotiating for concessions and discounts, surely rent review is on the way.

Know your customers / end users, the rest falls into place! If you don't understand your market in the first place the rest is all 'just words'. Talk to people, build relationships - not done through Excel or appraisal software, that is a bi-product.

Here are several strategies to increase rental yield: 1. Raise Rent 2. Improve Property Efficiency 3. Tastefully Furnish the Property 4. Renovate and Upgrade 5. Reduce Vacancy Rates 6. Consider Renting Out Extra Space 7. Target Niche Markets 8. Short-Term Rentals 9. Reduce Expenses 10. Refinance or Purchase Wisely 11. Regularly Review Expenses 12. Professional Property Management Remember that increasing rental yield often involves a combination of strategies and a careful analysis of the local market conditions. Additionally, it's crucial to strike a balance between maximizing rental income and maintaining a property that attracts and retains quality tenants. Always consult with professionals, such as a good real estate agent.

The absolute BEST ways to improve rental yields (residential & commercial) post pandemic is by the strategic implementation of: 1) Energy Efficiency 2) Green Space People are woke! People of all ages are more aware of, and invested in sustainability. They actively search out environmentally conscious options and are more selective in their purchasing. Climate change is high on the agenda and people want to be part of the solution, not the problem. Providing outdoor green space for tenants adds a huge return on investment. We actively convert concrete courtyards to green outdoor living space. Couple this with efficient appliances and you're on to something! We now provide inhouse gardening/landscaping as part of our PM service.

In a particularly saturated market the best way to increase revenue is to have a staff that provides world class customer service. This starts by hiring a person who fits the job not just a warm body. Next is education it has to be on going. Then teach supervisors how to support their employees. Lastly teach that while it is important that the client be happy when they move in it is more important for them to be happy when they move out. This provides the best advertising because it is free. The client will tell people about their experience.