For a landlord, finding a quality tenant and earning a continuous rental income is the ideal motive. But how to maintain a steady inflow of funds. Industry stalwarts suggest keeping a tab on the market trends and minimising the vacancy periods are the best ways to maximise the rental income from a property.
While a property utilised for generating a continuous rental income might be an attractive proposition, the consistency of the income depends on many factors, ranging from a good tenant to the optimum utilisation of online technology. In today’s fast-growing competitive property market, having an online presence is crucial for sustenance in the long run. Real estate portals and social media platforms not only help you reach a wider target audience but also earn improved rentals. Moreover, a knack for negotiation and good communication skills may also come in handy in striking a profitable deal.
Here are a few smart hacks to maximise your rental income.
A long-term tenant might be the most clichéd way of ensuring steady rental income; but, it is actually the simplest one. To retain a timely paying tenant, you might also offer some price concessions on a one-time payment or reduce the monthly rentals marginally. However, tenancy is a temporary arrangement and comes to an end eventually. In this case, it would be better to reduce the turnaround time. As soon as the present tenant informs you about the notice period, you must start advertising and shortlisting the prospective renters without much delay.
Statistically, a month of vacancy will reduce the annual rental income by more than eight percent. For example, if the rent of a concerned property is Rs 10,000 per month, it will amount to Rs 1.2 lakh per annum. A month of vacancy will result in (10000/120000=8.33) over eight percent reduction in the annual accruals.
When it comes to filling the vacancy, the rentals remain the most crucial factor of discussion as both parties want the best prices for themselves. Hence, while searching for a new tenant, stay clear about the price expectations in advance and communicate it to the other party well in time. This will save you from wasting time on superficial leads.
In addition to this, a psychological trick is to keep the rent just below the hundreds. For example, the price tag of Rs 9,999 looks more attractive than Rs 10,000 per month. Moreover, it is better to quote a higher price as after negotiations; the amount would only reduce.
Renovation and tax breaks
Repair and renovation is an essential part of the home renting process. Though it might cost a decent amount, it will help you quote a higher rent and gradually recover the expenses. Getting a new coat of paint, fixing the wear and tear of flooring, and sprucing up the ambience might go a long way in getting and retaining a quality tenant. Moreover, the leverage of tax breaks for repairing and maintaining a property can reduce the overall expenditure. In India, a flat 30 percent deduction is allowed for repairs and maintenance from the gross rental income, irrespective of the expenditure incurred.
Keep track of the prices
A smart landlord would keep track of the rental trend in the market as this ensures that the quoted price is in line with the prevailing rates. Online property listing portals can be beneficial in this regard.
Amit Gupta, Chartered Accountant and MD, SAG InfoTech, says, “Renting a property has become easier nowadays and by keeping some crucial things in mind, owners can maximise their income. The owner can fix the price of variables such as electricity and water charges beforehand so as to take some margin on every unit price. In addition to this, the provision of rent revision can be kept in the rent agreement for better earnings every year. However, there are rules and laws governing tenant-owner agreement and both parties are expected to adhere to the laws. In addition to this, net banking or online money transfer are increasingly becoming popular and one must take their help for efficient management of financial records. If the owner has more than one tenant, he can make a social media group for dispensing common information to the tenants.”
Use of technology and social media
In addition to the online real estate portals, make extensive use of social media to advertise your property. This helps in reducing the vacancy period and getting new leads. A skillful listing and reasonable pricing can make the property stand out among the crowd. There are several localised groups for potential flat owners and homebuyers. You may join such groups on Facebook, Instagram and Whatsapp, among other platforms.
Moreover, promote online payments to keep track of the rent schedule and history of payments. This will reduce hassle for both parties. You can use Unified Payment Interface (UPI) and Net banking for online fund transfers.
In addition to the above hacks, some psychological tricks might be useful in converting a lead. For instance, place some temporary furniture in the room so that it does not look empty or try to create a personal touch by putting a painting on a blank wall. It will help the potential tenant to envision himself living on the premises. Last but not least, a dusted and cleansed premise is more likely to be rented than a shoddy one.