Property TV shows and magazine articles often portray the life of buy to let landlords as a dream come true – running your own business, doing up properties and letting them for a high rental yield. But whilst sometimes this can certainly be the case, it’s by no means a given and is usually obtained as the result of a lot of hard work and dedication. If you’re currently a buy to let landlord, or are thinking of becoming one, then we’ve put together some of our top tips to help you survive – and hopefully, thrive – in the property investment business.
Professional Buy to Let landlords always do their research
Before you leap in and buy the first property you see, remember to always do your research. As well as looking at the property itself and any survey results available, look at the area too. Check what prices other properties in the area have achieved, find out what the typical rental values area, consider what types of tenants the property would attract and who you’d market it to. This is especially important if you’re buying in an area you’re not already familiar with.
By doing your research first you can help reduce the risk of any unwanted headaches further down the line. Getting to know local estate agents can really help with this, plus in time they might be able to give you the heads up on investment properties as they come on the market.
Buy to let landlords can find themselves juggling many hats – maintenance manager, handyman and letting agent, to name a few. If you’ve only got the one property, then it might be manageable, but as you build up a portfolio of properties, the chances are it won’t be.
Don’t try and do everything yourself and instead hire experts to handle it for you. Yes, it costs money, but the amount of time, effort and stress it can save you is very much worthwhile in the long run. If there are sudden problems at the property – and needless to say they always occur at the most inopportune of moments – it’s a lot less stressful if you know you have a dedicated expert who’ll sort it out for you.
If you hire a letting agent, do check that they’re reputable. Find out if they’re registered with professional organisations such as ARLA Propertymark (formerly the Association of Residential Letting Agents) and the National Approved Lettings Scheme, as they can help should anything go awry.
Keep a contingency fund
It’s well worth keeping a contingency fund on hand from the outset to pay for unexpected repairs and bills that occur, as well as future refurbishments, council tax and mortgage repayments. If you lose a tenant and have difficulty re-letting, it’s very reassuring to know you’re covered. Plus, as a buy to let landlords business, you’ll need to pay tax on your earnings. As a guideline, aim to put at least 10% of all your monthly income into a separate savings fund that you can use for contingency purposes.
Don’t overlook the need to have landlord insurance – it’s essential for buy to let landlords, even if you’re using the services of a letting agent. A good policy should include coverage for the building, the contents (even if it’s unfurnished) and landlord liability, for example if an accident or injury occurs to your tenants or any visitors to the property.
Other insurance policies are available too, such as rent guarantee insurance, and these can be useful to consider if you’re concerned about having tenants that don’t pay.
Know when to sell
Keep an eye on the market and don’t take your eye off the ball. The property market inevitably has its ups and downs and even if it’s buoyant for a while, you can’t guarantee it will stay like that on a long term basis.
Property values can change for a number of reasons. It might be due to general slump in the property market, or for a more specific and accountable reason. For example, the area in which your property lies may fall out of favour, there may be an excess of rental properties available so it gets harder to get tenants, or if it’s an area popular with employees of certain big firms and they suddenly close, your key target market may disappear.
Whatever the underlying reasons for a change in the market, it’s beneficial to know when to sell. There’s no financial gain in keeping a property that isn’t meeting your desired rental yield, or one that’s costing you money.
If you find that you need to sell your property, and want to do so quickly and efficiently so you can move on to your next investment, then a specialist company like Molae Properties, where you can sell your house fast, could be the answer. No lengthy hanging around and you can move onto your next deal.