Becoming a landlord is a big and important decision that can have many implications. It can be a worthwhile endeavour, but there are several things to consider before making the leap to managing a property. We’ve pulled together 10 things to consider before making the all important decision.
1. Listen to the Experts
Where possible, arrange meetings with letting agents and current landlords to pick their brains and listen to what they have to say.
Consider what questions you can ask them, including what are the main good and bad points of becoming a landlord.
You can also consider joining one of the many forums available for discussion, such as the National Landlords Association.
2. Research the Market
Research your market and see what the uptake of the property rental market is. Are people renting in the area you’ve either got or are hoping to have a property in? What’s the going rental price for a property of your size? Are you planning on having a letting agents manage the property for you, or will you manage it yourself?
You should also research whether unfurnished or furnished properties are more popular and how long in general are people renting for. These are all key questions and considerations that should form the beginnings of your online research.
3. Establish Some Aims
As you’re completing your research and gathering information, you need to start putting together some aims. These can include desired rental price, whether you’re going to furnish the property and how you intend to do it, and who would be your ideal tenant.
Having these aims will help you to plan how to market the property, although you may still need some flexibility despite what you originally hope to achieve.
4. Consider the Travel Implications
Where is the property you aim to rent out? If you are able to find a fairly cheap property to buy it will offer a better rate of return on your investment, but you still need to consider the properties location for both you and your tenants.
Is your property going to be close enough to where you live to be convenient for you to get to it if there’s an emergency? Does it have close transport links for the potential tenants? These are worth considering.
5. Look at the Finances
Ideally you want a competitive buy-to-let mortgage offer with a reasonable rate of interest plus equally good arrangement fees. That’s unless you can afford to buy outright. You also need to consider the cost of your Landlord Insurance to ensure that you and the property are protected against any eventualities.
You should also think about how much profit you’d like to generate per month from your property rental. What is that money for? Are you planning on having the property as a long term investment or as an investment for later life dependency.
All of the above have financial implications that you need to consider.
6. Consider All Scenarios
Consider how you will manage if your tenants lose their job, or if they leave the bath running and flood the house. This is definitely where having a comprehensive Landlord Insurance policy comes into play, but you also need to consider how you would deal with potential scenarios should they arise. You can never predict what’s going to happen, which is why it’s important to try and be prepared come what may.
7. Decorate Appropriately
Rental property decoration is not how you would like it, rental property decoration is for the attraction of tenants, so it’s often best to keep it neutral. Magnolia walls allow for tenants to make the place their own, plus it’s easier to do touch-up jobs in between tenants to keep it fresh.
8. Be Reasonable
From your research, you should have a good idea of the standard rates of rental to charge. Don’t over price but also don’t under charge so not make an a profit from to monthly charges. You should be asking for a reasonable rental price for the quality, location and standard of the property you own.
Remember to also take into consideration your management fees if you are with a lettings agency, as they can charge around 10% of your monthly fee.
9. Don’t Be Greedy
Once you have reliable tenants, go easy on the rent increases. There’s nothing wrong with increasing rental prices to match the market, but be careful not to drive away away reliable and trustworthy tenants as it could cost you a lot more money in the long run. What will be the most important thing to you in the long run: reliable tenants or maxing out on the rent?
10. Maintain Your Reliability
It’s important to maintain a reliable and trustworthy relationship with your tenants that works both ways. Often, tenants will have no issues, but they will expect support if things go wrong. Your tenants need to be able to rely on you to resolve any issues promptly so that they continue to experience the standard of living they’re paying for. Are you going to be able to cope with these demands that come with being a landlord?
If you have anything to add to our list of handy hints and tips of any experiences you may have had, do let us know over on Twitter @TheInsuranceOct.