Becoming a landlord can be exciting and daunting in equal measure, and entering the buy-to-let market is a decision that shouldn’t be taken lightly.
From selecting a property with a profitable yield to taking care of your tenants, it can be a difficult – if ultimately rewarding – challenge.
Still sound like buy-to-let is for you? We’ve highlighted some of the key steps on how to become a landlord below …
Step one: deciding where to buy-to-let
One of your first decisions to make will be where to buy-to-let. Whilst the temptation can be to purchase in an area that you’re familiar with, this won’t always be the best decision.
Do your research; find out where the best (and the worst!) areas are for factors such as average yield and likelihood of property damage or arrears.
You’ll also be wise taking a peak at the local competition, be that in person, via local lettings agents or by using online property sites.
Step two: what type of tenants should you rent to?
Depending on where you’ve decided to start your portfolio, choosing the type of tenant to rent to may be a simple task. If you’ve purchased in a town with an ever-expanding university, for example, student rental may be the obvious option.
There’s still caution amongst some landlords when it comes to renting to students. However, follow our dos and don’ts of student rental and you won’t look back.
Along with students, you may also look to target young professionals, working couples or even families. All will have their pros and cons, but be sure to sift the fact from the fiction when making your decision.
Step three: use an agent or go it alone?
Once you’ve found your ideal property in a great location, and decided who you’ll be targeting, next comes the decision on how to market the property.
Will you manage your properties yourself? And if so, how will you make sure your property is being viewed? Popular websites such as Zoopla and Rightmove can be great for attracting prospects, but weigh up the cost first.
Or perhaps you’d prefer to let through a letting agent. They’ll make sure legalities are adhered to, find you tenants and collect the rent. Or at least they should!
Keep in mind that the letting agency industry is unregulated, and like anything there will be good and bad companies. There’s no guarantee that an agency will find you great tenants or make sure they pay on time.
Step four: staying legal
So you’ve decided where to rent, who to rent to and how to rent. All set, right? Wrong. Landlords have a number of legalities, obligations and responsibilities to adhere to.
From tenancy agreements and deposits to gas safety and immigration checks, a landlord’s responsibilities stretch further than many first think. Check out this government rundown on landlord responsibilities for the ins and outs.
Your mortgage provider will also most likely require you to have a tailored landlord insurancepolicy. Quite different from a standard home insurance policy, this could cover you for things such as property owners’ liability, loss of rent and accidental damage.
You’ll also want to stay right up to date with the latest legislation changes and landlord news, and you can do just that with our dedicated landlord Knowledge section.
Have you got any other tips for becoming a landlord? Share them in the comments below.