Making real estate investment is a smart decision to gain profit for many people. In fact, earning from a second home is a good option post-retirement however the rental income witness fluctuations and this is due to multiple reasons. Hence, this blog post suggests you the best ideas to earn higher rentals from the second property.
1. Assess the Locality
A buyer must carry out research about the locality before doing a site visit. This is important as you can shortlist the areas that fit in your budget and also offers the rental income according to your wish. The locality plays a deciding role in yielding a rental income as the building layout, connectivity, security, urban and social infrastructure are things a tenant looks for. Hence, investing money in any property without understanding the locality is a bad idea.
2. Figure Your Expectations
Every landlord has a rental income in mind when he/she decides to rent a home. But, the rental amount varies due to various reasons like the rental trend of the area, living conditions, unit size etc. Hence, you should figure your out the rental expectation as it makes renting easy. The clear idea to yield a particular amount helps in decision making like whether to rent or not and to whom.
For example, a property owner named A wish to keep a small family as a tenant at a monthly rental of Rs. 20,000. This is the personal expectation and then the search begins around the said criteria as it saves time and unnecessary site visits.
3. Rental = Current Unit Value
Another tip to yield high rental income from the second property is that the rental amount should be three percent of the current unit value. For example, if your unit cost is Rs. 1 crore then Rs. 25,000 per month should be the rental income.
Here it is important to know that that the complete rental amount is not your income as the maintenance of the property is also important. The property maintenance charge can be fixed or can be drawn from the monthly rental as and when required. So, don’t count the entire rental amount as the income as the partial amount goes into maintenance which is important to keep the unit in a good condition.
4. Hire a Tenant
It is essential to know that the rental amount for a property comes down if it is vacant for two or more months. So, the landlords are suggested to hire a new tenant before the old one leaves. Remember it is not easy to get the same or increased rental income in case the property lies vacant as various apprehensions revolve around a property once it is vacant.
5. Scope for Development
This is another important factor to consider as the locality should have growth prospect so that the resident can experience smart connectivity to various places like schools, hospitals, banks, workplaces and more.