How to Maximize ROI When Expanding Your Rental Property Portfolio

As a landlord, you may be considering whether now is the right time or not to grow your portfolio. With rental prices soaring and demand continuing to outstrip supply, it very much is.  

Despite external pressures and issues, from political uncertainty to the cost-of-living crisis, the rental market remains buoyant, and the chances of achieving a good return on investment are high. What’s more, capital appreciation continues to boom, which improves your chances of getting good capital gains if you ever come to sell.

But it remains important, when investing, to think about it carefully and make sure you’re doing it for the right reasons. There are a number of steps you can take to ensure you are making the very best investment.

Below, we take a closer look.

The best ROI

For the best chance of ROI, landlords should be on the lookout for the best possible locations that offer safe and easy living for future tenants. Things such as accessible transport links, connectivity with the community, and convenient outdoor spaces that offers unique amenities should all be taken into consideration when you are considering making an investment in a specific neighbourhood. 

Green spaces are often prized, especially since the pandemic, while Covid-19 also introduced the race for space, with more tenants now spending more time, and working, from home. Good nearby restaurants, bars, pubs, shops, farmers’ markets and street food venues are all likely to be a big draw for tenants of all ages, and could improve your ROI over time. It could also lead to strong capital gains if you ever come to sell.

Assess the area

Chat to locals in the neighbourhood about the area and see if they have any insights that might be helpful about the property and the area itself. Spend some time in the surrounding area, separate from the viewing, to familiarise yourself with the locality.

When it comes to the day of the viewing, the excitement of the viewing often results in key elements not being discussed, therefore it's advised to write down a list of questions beforehand and take them with you.

Also, consider the quality of local schools if you’re dealing with family-sized homes. The overall value of your rental property could be boosted when you eventually come to sell if good schools are located in the neighbourhood, along with universities.

Lastly, be on the lookout for future developments; if there is a lot of construction going on, then it’s probably a great growth area. It would be a good idea to just be mindful of new developments that could hurt the price of surrounding properties as additional new housing could also compete with your property.

The bottom line

When you have a good neighbourhood narrowed down, look for property with appreciation potential and strong market rents. These properties are likely to attract tenants who can pay higher rents and will also raise the value of the property if you choose to sell it after a few years.

Ultimately, it takes a lot of footwork and research, so when you do find your ideal rental property, keep your expectations realistic, and make sure your finances are healthy enough that you can wait for the property to start generating cash.

Now remains an excellent time to let homes, with supply continuing to outstrip demand and rental prices rising. But it’s also important for landlords to consider carefully where they are investing, and why, and to carry out all the usual due diligence and research.

Here at Fraser & Co, we have the experience and knowhow to help you get the most from your rental properties by letting in the right way.

You can find out more about what we offer here. You can also find out how much your rental home could be worth on the current market by checking out our free and instant online valuation tool.