How To Make Money From A Rental Property

For many people, when investing in property they will choose to become a landlord and own one or more rental properties, also known as buy-to-let properties. There are numerous benefits to choosing this type of property investment and because of these benefits, lots of people take the time to learn how to invest in rental property. Arguably, one of the biggest benefits is that you have the opportunity to make money in more than one way. 

If you have been considering investing in a property and you’re wondering how to make money from a rental property, keep reading today. Our team experts here at Fielding Financial have looked into the two different ways to make money from a rental property and things that you can do to increase this profit as much as possible. 

making money from a rental propertyRental yield 

This is the most obvious way to make money from a rental property. Rental yield is the money you will make from your tenants paying rent. The true value of your rental yield will be the rent minus and maintenance and running costs, such as repairs or mortgage payments. There are some things you can do to increase your rental yield; 

  • Buy the property without a mortgage – Obviously, this may not be an option when investing for the first time, but if you’re able to then it will make a dramatic difference to your monthly outgoings. 
  • Rent the property furnished – You can charge more rent for a furnished property and the fact that the property is furnished may also increase the interest from potential renters too.  
  • Redecorate/refurb the property – Similarly to furnishing the property, you may be able to charge higher rent for a newly decorated property and you will be surprised just how much people will pay for what looks like a new property. 
  • Work with an accountant – Whilst this isn’t necessarily to do with your property, it can make a big difference. An accountant can assist with things such as your tax bill and ensure that you’re not paying more than you need to be. 

Whilst the majority of things you can do to increase your rental yield will cost you money upfront, you can guarantee that in the long run, they will go on to be financially beneficial. As soon as the profits have covered your upfront costs/additional expenses, the rest of the money will go towards increasing your rental yield. 

Capital growth

This is often the way of making money that people forget about when they’re investing in a rental property. The capital grown is the profit that you will earn on the property if you sell it for more than you paid for it. Whilst you may plan on owning the property for a long period of time, it is worthwhile considering some of the different ways you can aid this profit; 

  • Sell at the right time – Even if selling isn’t the first thing on your mind, it is important to know that the value of your property may change depending on when you choose to sell. So it may be worthwhile looking into market conditions and trends. 
  • Extend the property – It is no secret that increasing the size of a property will likely increase it’s value, just ensure that any work you do undertake is worthwhile in this regard and still profitable. 
  • Increase the energy efficiency – These days, energy efficiency is important and if your property is considered ‘green’ it will boost its value. It is likely that this will continue to be the case for the future too. 

When choosing your rental property, if you keep capital growth in mind and think carefully about factors such as location, it is likely that you will automatically benefit in this regard. So, whilst the things above many increase the profit you make, don’t worry too much if you’re unable to make big changes. 

Making money from a rental property 

With so many different ways you can aid your profit when investing in a rental property it is no surprise that it is such a popular investment choice. Hopefully, you will now know how to make money from a rental property and if you’re interested in this type of investment you will go on to make a sustainable profit. Of course, many landlords own multiple properties too, so if you’re able to invest in more than one rental property you will double, treble or even quadruple your profits. 

If you’re interested in finding out more about how to make money from a rental property or property investment in general before you go ahead and invest your money, visit the Fielding Financial website. We have a range of information available for you to read and also lots of different courses that may be of interest to you, such as an Introduction to Property Investing Course and a Serviced Accommodation Course. If you have any questions at all, please don’t hesitate to get in touch today. 

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