Buying a property to let isn't the same as buying your own home.
My Top Tips are here to guide you and avoid the many pitfalls:
1. Buyer Beware (caveat emptor) – The property you buy should allow for sufficient profit margin. ‘Bargain’ properties may provide immediate pitfalls, AND a money pit straight away. Major repairs take time and effort and paying more for a property which is in better condition can be a wise move.
2. Budget – Budget, budget, budget – and make sure you don’t overrun. Create a simple spreadsheet with all the items you need to provide, and double-check regularly that you’re not going to run out of money, or max out on your credit cards!
3. Decor – keep decorating and furnishing the property simple, with clean lines, and allow your tenants to make it their own – put your self-indulgence aside. You are buying as a business, and to make money out of the property, so be mindful of your market. You can spend £2000 or £20,000 on a kitchen!
4. Demand – your initial check is to make sure there is a rental demand in the area in which you are looking. Is there a saturation already of the type of property you’re considering investing in? Do your sums – and remember - fast profits are the exception.
5. Finances – Ask yourself whether you’re in the market for capital gain when you sell or simply monthly rental income. This will help you decide what to buy and where, and the type of mortgage you need to apply for.
6. Lettings Agents – it is certainly easier nowadays to advertise your property on line, but knowing how to vet your tenants and the kind of lease you should use can be tricky if you have no experience. Landlords have full time responsibility, 365 days a year and is best not left to friends or family. Check out local agents who are affiliated to NAEA Propertymark and/or ARLA Propertymark who will find tenants, do background checks, draw up the lease, collect rent, and inspect the property, thereby relieving you to get on with your daily life.
7. Market fluctuations – markets go up and down, and this applies to rental incomes too! You may have to lower your rent in order to stay competitive, no matter how desirable your property. If you are in it for the long term this should not matter, as the important thing is that your property continues to generate a fee for you.
8. Regulations - New and updated regulations should be taken seriously, as there are heavy fines and sometimes prison if you fail to comply with the law. The best way to make sure you are kept up to date is to use an NAEA/ARLA Propertymark agent who can make you aware of them, while also ensuring you comply.
9. Research - Buy-to-let can be a legal, practical and financial minefield, and doing your homework is an absolute must. Research the market, with the help of your local NAEA Propertymark / ARLA Propertymark residential sales and lettings agents, who are able to advise on demand and any other issues in the area you are considering.
10. Responsibilities - You, your letting agent and your tenant have different responsibilities, and it is important to know what these are. As Landlord you will be expected to pay buildings insurance, ground rent and service charges and insure any items you leave in the property. Your letting agent will be able to advise on others' responsibilities as part of your contract.
11. Safety – The law states that you must make sure that the property you are letting complies with various safety regulations, like furniture and furnishings fire safety, gas safety, electrical equipment safety and that it contains a smoke detector and carbon monoxide detector (if relevant). Window blinds look very attractive, but there are regulations covering them too. You'll also need certificates to prove certain ones of these regulations have been met.
12. Void Periods - Your property may be empty and not generate any income for periods of time, and you need to be ready for this. Advertising for new tenants, painting walls and replacing carpets can take months off your lettings calendar. Budget and plan for if this occurs.
Callaways provide a comprehensive lettings service for Tenant Introduction, Rent Collection or Full Management Service, which includes Property Maintenance.
Contact Callaways' Letting Team at firstname.lastname@example.org for details of our services.