Looking to make the most of being a landlord? Hoping to be more efficient while reducing costs?
There are many ways this can be done! We’ve outlined them for you to help you maximise your opportunities.
Here’s how to get the most from your portfolio in 2019.
Always Run a Tenant Reference Check
If your properties are your source of income, who you let to can make or break your success.
There are a number of consequences that can arise from letting to an untrustworthy tenant! This could be anything from damage to your investment to a costly legal battle.
The result? You may be unable to let out that particular property for some time, causing potentially severe financial consequences.
The solution? Always run a tenant reference check with a professional company!
Meet Your Legal Responsibilities
From insurance to health and safety, landlords have number of requirements to meet. Failure to do so will make your property less desirable to live in.
So, if you’re looking to get the most from your portfolio – never cut corners when it comes to being a good landlord.
Inspect the Property Regularly
Landlords inspections are key for ensuring that your property is being maintained as agreed. As well as this, you’ll appear hands-on and attentive to detail.
When visiting the property, ensure you’re thorough. Keep a record – this will make it easier to determine fair wear and tear from recent damage.
Treat it Like a Business
For many, bricks and mortar aren’t seen as a source of income. However, if you’re a landlord, the opposite is true.
This means you should treat it as such! While being approachable will help you form a strong relationship with your tenants, you should have a business mind.
Here – a structured and organised approach is key:
- Who’s dealing with your finances?
- Which Tenancy Deposit Scheme are you using?
- If you’re unable to look after your property for any reason, such as a holiday, who will take your place?
- If you’re using an agent, are their fees covered?
Keep Researching the Market
Research shouldn’t stop once your properties are let out! The local area, and what people want from it, is constantly changing.
Always have a target tenant in mind – for example a one-bed flat is unlikely to appeal to a market where many families rent.
Work to Reduce Void Periods
All landlords want to prevent void periods! However, this can be easier said than done.
If you keep coming up against this issue, it’s time to start taking it more seriously. Here are some solutions you may not have considered:
- Think about a HMO (house of multiple occupation)
- Be more open minded
- Advertise earlier
- Market your property differently
Maintain the Property Regularly
In 2019, resolve to see property maintenance not as an extra expense – but an investment. Often, what you put in is what you’ll get out.
This doesn’t just apply when trying to attract new tenants. For existing tenants, regular maintenance is key also. It can help you form a good relationship with them, as well as help justify reasonable rent increases.
Remember – it pays to look after your tenants!
Have Set Processes for Dealing With Issues
What procedure do you follow if something goes wrong?
For example, if a tenant falls behind on their rent, what do you do? You should already know the answer to this before it happens. Part of getting the most of your portfolio is understanding that problems can arise – and knowing how to deal with them.
Ideally, if you’re organised enough, you’ll take a proactive, rather than reactive approach.
Keep a Paper Trail
If you’re meeting all the safety requirements, ensure you have proof of this. From legionella risk assessments to smoke detector installation, it’s handy to have a paper trail.
Have a Detailed, Thorough Inventory
One way of ensuring your investment is secure? Have a comprehensive inventory.
This shouldn’t be just a collection of pictures, but a full and thorough report. The key here is clarity – so no issues can arise. Remember, simple facts aren’t enough; details are necessary for determining a weak inventory from a strong one.
This has multiple benefits to all parties, such as reducing the risk of deposit disputes.
But, many landlords struggle to put these together themselves. There’s lack of time and know-how for example! What’s more, even when landlords do put together DIY inventories, they’re often insufficient.
Luckily, we have a solution. Our professional, comprehensive property inventory services will take the hassle out of the process for you. From check-in to check-out, your investment will be protected!
Looking to invest in rental property? There are many things to consider before getting involved in buy-to-lets.
Whether you’re trying to increase your portfolio or you are just getting on the ladder, it’s worth keeping these key principles in mind when choosing a rental property to invest in.
Here’s a comprehensive guide to rental property investment.
Is Investing in a Rental Property a Good Idea?
In short, yes. Rental properties are very attractive to landlords as mortgage rates and interest rates are low and rental return is high. The current housing market means that there is a great demand in tenants looking to rent.
As a landlord, you need to have a business plan for rental property investment. It’s worth familiarising yourself with how much mortgage interest you will be able to claim and what income tax you will need to pay. By 2020, landlords will get a 20% tax credit on their mortgage payments which may push some property owners up a tax bracket.
Before investing in property, you will also need to consider stamp duty, how much maintenance costs will be and whether you need landlord insurance.
Once you’ve decided you will buy a property, there are some significant factors you need to take into account.
Choosing the Right Area
This is the most important thing to consider in real estate. You need to perform market research to work out whether you will get a good return on your investment.
It may sound simple but choose an area that renters would like to live in. There will be a price growth for properties bought in up and coming areas. You will get a higher return by investing in a developing area. Consider:
- Transportation links
- What are the local schools like? (if renting to families)
- Are there enough shops, restaurants and businesses?
- Is there a university?
- What are the other properties in the area like? Do the neighbours correlate to your desired tenants?
This needs to be an area that your tenant will be able to afford.
Carefully consider how much rent to charge. Ideally this will be competitive for the area.
If you’re renting to students or younger tenants, they will be unlikely to afford high rent prices. You need to calculate the percentage of rent return compared to your mortgage rate.
What is the neighbourhood like for insurance premiums? Is the house likely to be broken into? Will you need to pay excess? These are all questions you must ask regarding your property.
Do you want to buy a rental property that is close to where you live or work? Being close to your property will allow you to monitor it if your tenants need assistance. However, there may be better areas further afield. If your property is not in a convenient location, you can hire a property manager to look after it.
Decide which cities to invest in by researching average rental yields. Invest in Manchester or areas surrounding London. Colchester, Essex had the second best rental yield after Manchester.
Choosing The Right Tenant
Deciding who you will rent your property to will inform what kind of property you will invest in.
It is important to choose the right tenant. These are some factors you need to consider about your tenant:
- Their age
- Is it a family? (E.g. single family or two income family)
- What is their financial situation?
- What do they want out of a rental?
The type of tenant you rent to will affect decisions you make about decorating your property, where the property will be located and the type of property you choose. To secure the best tenants, perform a tenant reference check.
Is it worth renting to students? If you decide to rent in a student area, you need to be aware of the benefits and pitfalls of this. There will be a consistent turnover of tenants who will keep your property from sitting empty and generate cash flow. However, students can be unreliable and do not always treat the property well. Maintenance of the home may cost you more in the long term.
The Type of Property
The type of property you choose will dictate what kind of tenant you will have. If you invest in a HMO (house in multiple occupation) property, it will likely be occupied by tenants aged between 22 and 30. A four bed house will be well suited to families or, you can convert a house into several flats and have multiple tenants.
This depends on what kind of landlord you want to be. Do you want to be hands on or would you prefer to outsource to a letting agency? Consider your schedule and your expertise.
What is the Condition of the Property?
You need to think about how much upkeep your property will need. If you want to invest in a property that needs renovating, you need to take into account the amount of time and money a renovation will take. In the long term, you may be able to charge a higher rent which will be a better investment.
Choosing to buy a home that needs little upkeep will be better for landlords who wish to receive a passive income. Tenants will not require as much assistance and you will not need to be too hands on with your property.
The Tenancy Agreement
Creating a good tenancy agreement is fundamental to your investment. Seek legal advice before choosing a rental property. This contract will set out what is expected from your tenants and how you will be expected to act as a landlord so it’s important to get it right.
For a standard tenancy, ensure your agreement covers the following:
- A full inventory of the home
- Clauses regarding the deposit and when it can be withheld
- How you expect the tenants to treat the property
- When the tenancy can be terminated
If it is a HMO property then you may need a license from the council. Your property may fall under the general definition of a HMO but might be exempt from licensing laws. Seek legal advice if you are unsure if this applies to you.
Seek out a tenancy template that will help you draw up your contract and familiarise yourself with the relevant bylaws.
It is important to prevent void periods. Choose trustworthy tenants who will occupy the home for long periods and try to be an organised and efficient landlord. If a tenancy is coming to an end then be sure to advertise your property as soon as possible.
How to Market Your Property
Once you have bought a rental property, you need to be able to market it successfully. You will find the best tenants by thinking about how to market to them.
- Advertise the area your property is in and the benefits of that location according to what your desired tenant would be interested in. For example, a group of professionals are likely to be drawn to somewhere with good transport links for commuting
- How is your property decorated? Is it furnished? What kind of facilities are there?
- What is the length of the tenancy and how much will the rent be?
- Describe the property as accurately as you can
The easiest way to market a property is by using a letting agency. They will be able to do the work for you, such as arranging newspaper advertisements and showing prospective tenants round the property. Agents will also be in charge of collecting deposits and rent payments and drawing up tenancy agreements.
Using a letting agency does not mean you won’t be involved with the management of your property. You can choose how much work you want to delegate to an agency and how much you want to do yourself.
It is important to look after your investment. For help with your property, use No Letting Go inventory services. We can conduct full reports on your properties so you can be confident that your investment is secure. Browse our full list of services to find out more about how we can help.