With the raft of new regulations and changes in the taxation rules for Buy-to-Let, it’s a fair assumption that the margins of Investors are being hit from almost every angle. However, there are still ways to maximise the return of your investment(s) depending on what type of property you own with a combination of creativity and commercial awareness. Below are my top tips on how to unlock the hidden potential of your property and increase your revenue streams.
- Rooms– If you own a freehold house with say 4/5 bedrooms then it may well be worthwhile renting it on a room by room basis. This will maximise the income potential and will appeal to single persons/young professionals/students who cant afford to rent a self contained flat in your local area. This can be helpful in keeping your occupancy rates high, especially in a slowing market where demand from families or groups may be low. Operating the building in this way is more management and administration intensive as the trade off for your commitment. In case of any issues that may arise, do check with your mortgage lender that its permitted and that you have sufficient insurance. Tenants that rent this type of accommodation like to have access to a well equipped kitchen and living room with space to dine that will enhance their living experience. Other sweeteners would be to include some utilities like Council Tax and water rates or even a weekly cleaner for the common parts.
- Size Matters – The classic loft extension is the epitome of “Cash in the Attic”, depending on the size you could add a further 2 bedrooms and another bathroom. In Hampstead for example, a room in a house share will average at around £1000 per calendar month, therefore the addition of 2 bedrooms and a further bathroom can add up to £24,000 per year to the rent roll. Nowadays, a decent loft conversion of this kind will cost around £50,000, almost 50% return on the initial investment makes it attractive. With the relaxed planning regs of most local councils consent can be granted under Permitted Development. There is also the possibility to do this on a top floor flat with sole access to the attic, though check that it’s in the demise of your lease.
- Renovate and create– Making improvements to key areas of your property such as the kitchen and the bathroom will add the most value if you don’t have the resources or scope to extend. Apart from the location, these are the two main points that tenants will judge a property on. For example, a decent kitchen and bathroom could cost £10,000 to replace, though it’s also likely to add £250-£300 per month to the rent roll, you’ve clawed back the cost over a say a 3 year period. The other benefit that is often overlooked, is that you are more likely to attract a better quality tenant who is likely to stay for a longer period giving you the benefit of the continuity. In cases where your tenant does move on – an aesthetically pleasing property wont hang around for long and the rentability increases five fold, thus minimising your voids. There is strong competition for good tenants in today’s market, keeping up appearances will keep you on top of your game.
- Joint Ventures– Some aspects of investing may seem daunting and costly. Networking with colleagues and associates by pooling your resources will not only help you to embark on certain projects, but to mitigate the financial risks. The sharing of knowledge and ideas with other experienced investors can create lucrative opportunities for all.