BUYING A PROPERTY FOR PASSIVE INCOME CAN BE A LUCRATIVE DECISION, GIVEN THAT YOU MANAGE IT WISELY A ND TAKE STEPS TO MAXIMIZE YOUR RETURNS.
The real estate sector remains a lucrative avenue for investors seeking profitable returns. While price appreciation increases a property’s value over time, these gains can only be realized when the house is sold. However, rental income provides an immediate return on investment. That said, rental value depends on several external and internal factors. While little can be done to an area’s surroundings, property owners can certainly upgrade their homes to attract higher rental yields. Let’s explore how this can be achieved.
WHAT TENANTS PREFER:
With changing lifestyles, tenant expectations have evolved significantly. “Today, residences have transformed into multi-functional spaces, serving as home offices, recreational areas, and gyms. In response to these lifestyle changes, demand for upgraded residential features has risen. Previously, property enquiries were largely limited to essentials such as the size and configuration of a flat. Now, tenants are also interested in amenities such as modular kitchens, spacious bathrooms, and laundry rooms.”
Sharing some insights on what tenants look for. “Most people in the city seek affordable rental homes. Their top priority is an aesthetically pleasing home in a well-connected area. Key expectations include spacious rooms and a good location with access to essential facilities.”
Additionally, many young professionals seek luxury living and are willing to pay a premium for it. High-end apartments in gated communities with amenities such as clubhouses and gyms command higher rents than stand-alone buildings.
“Today’s tenants prefer plug-and-play apartments that require minimal effort to move into. Furnished flats are in high demand, along with facilities such as car parking, 24/7 security, a tenant-friendly managing committee, long-term agreements, and nearby schools, hospitals, and convenience stores.”
PASSIVE REVENUE STREAM:
Several factors are driving the demand for rented apartments. “Employers today are offering higher house rent allowances. This has increased the demand for rental homes with better living conditions. In fact, some families opt to live in rented apartments despite owning a home in the city. In cases of financial strain or space constraints, many choose to rent homes in prime locations and move to more affordable areas on the outskirts.” For investors looking to earn rental income, acknowledging evolving tenant preferences and offering sought-after amenities is crucial to securing higher rent.
Ideally, a property should generate at least three per cent of its market value in annual rental income. While the location’s value influences rent, proactive upgrades that enhance comfort an functionally make a space more desirable and increase its rental potential.
