Being a landlord can be difficult, especially for those who fall into it by accident. Here are our top tips to help you succeed.
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1. Location, location, location
This applies just as much when you’re looking for a buy-to-let property as when you’re looking for somewhere to live yourself. The difference is that with buy-to-let you’re looking at different issues - so instead of considering whether you can envisage living at a property, you’re looking at its yield and whether the figures stack up in the area you’re considering.
Another important consideration regarding location of your property investment is whether it is easily accessible. Even if you have a letting agent managing the property, you may still need to visit it and that may be a struggle if it’s six or seven hours away.
Check out our guide on the best buy-to-let areas in the UK to find out more.
A budget is key to the success of your buy-to-let business. If you’ve never opened an Excel spreadsheet, now is the time to learn - even if it only contains a simple list of incomings and outgoings. This is the best way to keep a check on your on-going costs as well as the purchase ones.
Don’t forget to factor in the amount of tax you’re due to pay as this is changing - with a cut in the amount of tax relief you can claim - and you’ll need to be aware of how this affects your bottom line. If you’re not up to speed with the incoming buy-to-let changes then now’s the time to brush up.
3. Legal responsibilities
Know your legal responsibilities (as well of those of your tenants), whether it’s having smoke alarms in the correct places or making sure your tenant isn’t subletting the property if your contract forbids it. A full list of tenant and landlord responsibilities is available via the Gov.uk website and it is worth familiarising yourself with these as some carry charges for failing to adhere to them.
4. Make friends with your estate agent
They’ll know the area and be able to advise you on everything from the most popular rental areas to putting you in touch with the best tenants.
5. Choose your market
What type of tenant are you seeking? This will affect how you approach your strategy and where you buy a property as you want to maximise your audience. For example, are you targeting students (and so need to be near a university) or families (and so need to be near good schools)?
6. Read your contract
This is an easy one to overlook, but it’s essential that you’re familiar with the contents of your tenancy agreement as it helps to outline the rights and responsibilities of both you and your tenants. You don’t want to be spending time or money on items that are your tenants’ responsibility.
Make sure you know what you’re trying to achieve from the outset. Is it capital growth, income or a mixture of both - and what is your long-term strategy for achieving them? Identify these from the beginning and you can work towards making them a success.
In a Simply Business poll this summer, landlords told us that rental yield is the priority when investing do you agree?
Have you got any other tips for fellow landlords? Let us know in the comments below.