Increasing numbers of Brits are choosing to invest in property. The private rented sector is booming, and many people are attracted by high yields and the freedom that being a landlord can bring.
But buy-to-let is full of pitfalls. Landlords face a range of important challenges every day, and for those new to the sector this can be challenging. So what are the key mistakes that new landlords should avoid?
1. You haven’t researched the area
Comprehensive research is a vital consideration before you invest in property. You need to make sure that you know the prospective area intimately. You should understand the potential rental yields, and you should also know the market rate for the sorts of property for which you are looking. Until you know what you should be paying and what you can expect to receive, you can’t hope to make a sensible investment decision.
2. You haven’t considered using an agent
Agents can be enormously helpful to new landlords. Whether or not you eventually decide to use one, you should definitely make sure that you consider their potential. In a recent live discussion aimed at new landlords we spoke to Lucy Morton from the Association of Residential Letting Agents, who explained the value of regulated agents.
3. You haven’t made a proper inventory
A comprehensive inventory is amongst the most important weapons in a landlord’s arsenal. Your inventory is a crucial way in which you can protect your investment, and it pays to do it properly. If you contract with a regulated letting agent they will be able to carry out this work for you, but if you choose to manage the process yourself you may wish to use some simple inventory software to help you build a watertight document. During our live discussion Property Tribes co-owner Vanessa Warwick explained some of her favourite landlord software.
4. You’re not vetting tenants properly
It is vital that you properly vet your prospective tenants. Unless you perform comprehensive checks you simply cannot make an informed decision about whether or not you should trust them to pay the rent. Referencing and vetting are not foolproof, but they can help you make better choices. At the very least you should seek a reference from a previous landlord, but you should also consider performing a credit check and asking for bank statements. Again, a letting agent will be able to perform this work for you.
5. You’re not insured
Finally, you should remember the importance of landlord insurance. Although there is no obligation for landlords in the UK to take out insurance, it is highly likely that your mortgage lender will stipulate that you must have a policy. There is a range of insurance types that you might choose, including buildings insurance, landlord Liability insurance, and contents insurance. With Simply Business you can combine a range of different insurance types into a single policy.