Investing in Rental Property
Buy to Let
If you have any savings, where do you put them to invest and make some interest? A bank account with a poor rate of interest is not a good investment. So why not invest in rental property. Prices of property are lower at the moment but many people still cannot secure a mortgage to buy a property outright. The demand for rental property is, therefore, increasing. So, it is a good time to buy to let.
If this is a new venture for you, then you need to research the pitfalls and the advantages before you take the plunge. If you expect your investment in rental property to be a success then you need to put in the hard work beforehand.
Here are some Top Tips to help you join the growing number of first time landlords.
Top Tip 1
If you are buying to let then do your research to make sure you find a property that is in demand in the local market. Compare rents with similar properties in the same area. Take into account any differences in the properties you are comparing, such as proposals for new roads or new housing in the area or ease of access to the property.
There is a trend developing for long-distance landlords so if you are unfamiliar with the area then a thorough check is important so that you set realistic rental levels. Also check for any precedents regarding length of tenancy and whether the property will be let furnished or unfurnished.
Top Tip 2
Find a Licensed Agent
Look for an agent who knows the area well and abides by the code of practice. Is there a scheme of redress that will protect your money?
Top Tip 3
Be Realistic about Occupancy Levels
Take void periods into account when budgeting. There are likely to be periods during the year when your property is vacant at times, for instance, when there is a changeover of tenants. Calculate for 8 weeks of tenancy free property when you will receive no income.
Top Tip 4
Make your Property Appealing to a Potential Tenant
Take time to decorate the property in simple, pastel colours. Decorating and doing renovations are important. You’ll be surprised at the difference a coat of paint will make. If you are renting the property furnished, then make sure the furniture is in good condition. It doesn’t have to be new or expensive. Paint old chairs to refresh them.
It is vital that you comply with Health and Safety regulations, for gas and electricity as well as furniture and furnishings requirements.
Top Tip 5
Make Sure You Get Reliable References
Check up on your tenants. Get references from previous landlords to make sure your new tenant can pay the rent. Also check their employment status. A little research before occupancy can help you avoid future stress of unpaid rental fees.
Top Tip 6
Insurance Against Risk
Insure against risk. Make sure you have specialist buildings and contents insurance covering the items you own in the property. Also, investigate insuring against a tenant defaulting on their rental payment. This insurance usually covers both the rent and legal expenses.
Top Tip 7
Make a Full Inventory
Prepare a full and detailed inventory including a schedule of the condition of all the contents as well as walls, ceilings, doors and all other fixtures and fittings. A professionally prepared independent inventory service is available. Take photographic evidence throughout the property of the condition before occupancy and make sure that you have joint approval with your tenant about the inventory.
Top Tip 8
Make Yourself Available
You will want to hold on to your tenant, especially if they respect the condition of your property and treat it as if it were their own home. But they won’t stay if they don’t get good service from you. Be pro-active and remember, you are a caretaker of the property and need to service it when required.
Build a network of trusted local maintenance workers. This is crucial if you are a long-distance landlord. Long-distance landlords are now beginning to dominate the private rented sector in the UK. But being available is also important if you are local. Some of the general maintenance will probably be within you skill level but you are still likely to need specialist help like plumbers or electricians.
Top Tip 9
If your property is to be used by sharers then you may need a licence from your local authority. It’s important to check out the legalities very carefully.
Top Tip 10
In the UK it is mandatory for landlords to comply with Tenancy Deposit Protection legislation that requires all deposits to be held by a third-party and not by the landlord.
Top Tip 11
Spare Keys and Security of Your Property
Try to leave a spare set of keys with a letting agent or someone you can trust. You may be away when an emergency arises and access needs to be immediate. If access is not for an emergency then the landlord is not entitled to enter the property without 24 hours notice to the tenant.
Top Tip 12
Keep in Touch With Changes in the Law
There is no excuse for ignorance and you don’t want to make such vital mistakes. Your tenant will lose faith in you and what might have been a long-term let may turn into a short-term let or even a moonlighting.
Taking on a Buy to Let is a serious responsibility. You should take your time deciding if it is the right way to invest your money. It is a long-term project and should be viewed as a business as a professional venture. You want to protect your financial investments, don’t you?
Keep in touch with your tenant, respond to their questions and complaints. They are the customer. They deserve your attention. And if you respond to their worries immediately it should make for a smooth relationship for both tenant and landlord and you have done everything possible to make your Buy to Let a success.