8 Tips to Maximise Your Rental Property Income

If you are a landlord renting out your property, typically, your end goal is to see a profit at the end of the year. With the high cost of purchasing a home in Singapore, it’s no surprise that Singaporean landlords are always on the hunt for new ways to optimise their rental properties.

Refinancing your mortgage, renovating, and more: we outline some of the top ways you can optimise your rental property to achieve higher returns.

Ways to Improve Your Rental Yield

First, you should look at your current rental yield to see where it lies compared to the market average.

The average rental yield for HDB rental flats in Singapore in Q1 2024 ranged from 5.29% for executive flats to 8.10% for 3-room flats. Meanwhile, condominiums in Singapore can have rental yields of as high as 5.3%.

If you find that your rental yield is lower than you expected or is lower than your district average, renovations could be a good way to increase your rent. While there is no exact formula that determines by how much renovations can feasibly raise your rent, we recommend focusing on quality renovations and investments followed by getting a professional to reassess your property.

Focus on a Few Key Renovations and Upgrades

One of the best ways to make money is to spend money—wisely, of course. This is especially relevant in the real estate investment sphere where prospective renters are willing to pay more for more premium amenities.

However, before running to a bank and applying for a renovation loan, you should be aware of what types of renovations will actually help increase your property value, and in turn, let you charge a higher rent. First and foremost, prospective renters will tend to focus the most on kitchen and bathroom fixtures. This means faucets, showers, toilets, cabinets and appliances. Renovating these two areas will give you the greatest return on investment and help your rent by at least S$50-S$100 per month.

When doing renovations, however, you should invest in a well-reviewed professional who has a track record of success. Renovations are not an area where you should be cutting costs drastically, as they can become very costly if done incorrectly or poorly (imagine an incorrectly installed toilet and all the headaches that will follow). This is especially true if you purchased an older resale condo, as renovations may need to be more thorough.

Related: 6 Hidden Costs of Home Renovation & How to Avoid Them

Know Your Demographics

Knowing the kind of people who want to live in your investment property’s neighbourhood can be the key to optimising your investment property. When considering your renovations, for instance, you should take note of the kind of residents that have shown interest in the neighbourhood and what kind of things they are looking for in a rental.

If you notice that the majority of inquisitive customers are looking for furnished rentals, you can try furnishing your flat. If the majority of renters are looking for brand new appliances or top of the line fixtures such as showers or faucets, you should focus your renovation expenses on those things.

If you can perfectly cater to your demographic, you have better leeway for charging higher rent, and in turn, they won’t mind paying a premium for convenience. Knowing your target demographic can make it easier to know where your flat improvement funds should go and you won’t waste money on useless expenses that are not needed or wanted by the people who may end up paying you rent.

Related: 4 Costs to Consider for a Home Renovation as a Parent

Figure Out Which Neighborhood Has the Best Return on Investment Potential

Neighbourhood trends come and go, but it would be in your best interest to keep track of which direction your investment property’s neighbourhood is headed.

If you are seeing a lot of new development in it, your property value may increase along with demand over time as people want to live near malls, parks and other amenities. If you are still looking to purchase an investment property, you can look at the Urban Redevelopment Authority’s website to see how the government plans on developing each neighbourhood.

Ideally, you want to purchase a property at a low price in an up-and-coming neighbourhood as it can end up increasing greatly in value once development finishes. If you currently own a flat and it’s generating low yield, you can consider selling it and purchasing a property in a neighborhood that is experiencing growth.

Find Ways to Minimise Expenses

Whether it’s reducing the amount of time your flat is vacant or paying less on your monthly mortgage payments, there are several things you can do to minimise your recurring expenses without cutting corners.

Consider Classic Long-Term Trends for Renovations & Furnishings

When it comes to renovating or furnishing your rental property, you can save money by styling with classic, contemporary renovations and furniture that won’t go out style by next season.

While contemporary and modern styles are not the cheapest, they are the safest bets as their neutral colour palettes and styles appeal to the majority of the market. You should be careful about renovating your flat in very niche or trendy styles because they tend not to retain their appeal to majority of potential tenants over time.

Lastly, to help you out with your renovation and furnishings, you can research interior design color psychology to help guide your renovations—the gist of it is that darker colours like navy, deep reds and emerald greens present moodier, darker atmospheres; yellows and oranges create happier atmospheres (though these colours may not appeal to everyone); and white, neutral and cool tones create calm and tranquil atmospheres.

Related: Want To Live In A Muji-Inspired HDB Flat? 5 Affordable Renovation Ideas

Minimise Vacancy by Offering Free Utilities

Vacancy is one of the biggest costs for landlords, since sitting on an empty apartment for months means forgoing thousands of dollars of income that you could have earned.

If you find yourself without tenants for a while, you can offer to throw in free utilities as an incentive to entice potential tenants. To offset the impact of this cost, you can furnish your apartment with appliances and features that can save you money through reducing energy consumption. Additionally, while the costs saved may seem small individually, together you can save almost S$1,000 per year by switching out your appliances to energy efficient models. This tactic could also allow you to increase your rent slightly as well.

Find a Home Insurance Policy Catered to Landlords

Purchasing home insurance is a given, but some insurance policies are better for landlords than others. When you are looking for your policy, some insurers will have landlord specific plans where you can customise your renovation coverage (this helps keep your costs in check by not over-insuring), as well as have benefits like loss of rental income and rebuilding costs coverage.

A good home insurance policy will also provide coverage for emergency expenses for maintenance, saving you from paying out for unexpected costs which can decrease your net rental yield. Additionally, if you rent out a furnished condo, your home insurance should also provide ample coverage for your furnishings as well.

Read More:

• Home Equity Loan vs Personal Loan – Which Should You Get?
• Can’t Afford Your Mortgage Payments? Here Are 4 Things You Can Do
• 5 Interior Design Trends That Are Shaping Homes In Singapore
• HDB Loan vs Bank Loan – Which Should You Choose?
• 6 Things You Didn’t Know About Your Home Insurance Coverage

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