How to invest in property for rental yield

Factor in the cost of maintenance

For a residential property, you will be responsible for paying maintenance charges that the building or society levies, even though your tenants are staying there. You will also have to take care of major repair work. While this is true for commercial properties too, the cost of maintenance is much higher. So, depending on how much you will be able to spend year-on-year, choose between investing in residential or commercial properties.

Consider the location of the property

The right location will increase the demand for your property and will allow you to charge a higher amount as rent. Residential properties must be in the vicinity of schools, hospitals and other amenities. Commercial properties, on the other hand, must be located in an industrial hub of the city, with good connectivity and access to transport. Considering these factors will help you pick a property with higher rental potential even if it is slightly more expensive. You can consider an affordable home loan to make your purchase.

Additional Read: Factors That Impact Your Home Loan Interest Rate

Look at the larger picture

Whatever the property type, the original value of the property will depreciate with time. But, its value will also get a boost when the area develops. This is further affected by policy changes or additions to infrastructure in the form of metro stations or airport. So, don’t forget to look at the larger scheme of things before selecting a type of property and the locality to invest in.

The gross rental yield on your property can be calculated by dividing the price of your annual rent income by the price of the property. To get the maximum yield, make sure that you follow these 4 steps when making your investment.