Thinking Of Becoming A Landlord? Here’s 5 Things You Must Know.
Let’s paint the scene. You’ve acquired or scouted some property that’s perfect to rent out. You’re ecstatic at the opportunity, despite having no experience as a landlord prior to this. As far as you can tell, everything seems good - but this is a big undertaking. You’re looking for some advice before you take the leap, just to make sure you’re doing the right things.
Smart thinking. That’s exactly what you should be doing. So, here are 5 things you must know before you go ahead and take the step to be a fully-fledged landlord.
1. Know Your Property
Before jumping straight into the exciting world of being a landlord, it’s important to take proper stock of everything your property has to offer (and perhaps more importantly, what it doesn’t).
Create a detailed inventory of all the various appliances, furniture and amenities you have available. This will help you keep track of what should be there, what shouldn’t, maintenance issues and everything in between. It’ll also help with setting the rent values for your property.
Your property must also meet a certain level of safety standards if you want to be a landlord. There are a number of legal responsibilities and regulations to consider both before advertising your property, and during the time it’s inhabited by tenants.
For instance, you must provide an energy performance certificate (EPC) alongside your property advert. Failure to do so can lead to fines of up to £5000 – not a great start to a budding property enterprise.
2. Know Your Rights
Landlord rights in the UK are constantly developing, and not knowing them can land you in some serious trouble. Staying up to date with the latest legislation is key to ensuring not only the safety of your investments but the safety of your tenants as well.
However, what if the tenants themselves are a problem? Thankfully, there are a number of options available to you in these tricky situations. Key points include making sure your tenancy agreement is airtight and that your property is up to standard with all the relevant.
Taking the time to be well-informed on this will greatly reduce the chances of your property venture being sullied by any legal issues or “nightmare tenants” that may come along.
3. Know Your Rental Market
Remember when we talked about taking an inventory of your property’s assets? This is one of the reasons why. Understanding what your property has to offer compared to others in the market is crucial when it comes to deciding what you can hope to charge for it. Under or overpricing your property can, of course, lead to disastrous financial consequences.
Conducting research on properties with similar sizes, locations, rooms and amenities on offer will all help in figuring out where your value is. If you have a good understanding of this, placing yourself competitively in the market will become much easier. Subsequently, so will attract potential tenants. If your property has a particularly attractive feature that competing properties in your area don’t, you will be able to charge a slightly higher price. Alternatively, if your financial position allows it, you may consider dropping your prices slightly, thus making your property more attractive to potential tenants.
Know Your Tenants
Tenants are the bread and butter of your income as a landlord. Therefore, it’s important to know them well before they come to live in your property. Doing proper background research and obtaining their references can be the difference between a smooth tenancy and a rocky one.
Understanding the kind of tenant you want is also very important. Are you looking to nab students from the nearby university? Perhaps you want young professionals or a couple with a young family? Or is it retirees?
Knowing the answers here can help position your property to attract the right kind of tenants and filter out the ones who wouldn’t fit.
Prepare for What You Don’t Know
As a landlord, there are numerous “hidden costs” that, perhaps small in nature individually, can easily rack up and become a much larger problem together. Letting agency fees, maintenance, cleaning costs and more can all become financial sore spots if left unchecked and unprepared for.
Of course, even the most well-prepared person can’t expect the unexpected. Accidents do happen. Whether it’s because of tenants, previously unidentified property problems, neighbouring property issues or the good old British weather giving your property a bash, there’s a whole host of situations that you simply can’t predict.
Therefore, it’s so important to make sure you have a good insurance plan for you and your property as this will give you the trusted protection you need for your residential property investment. There are several insurance options available, and they don’t have to break the bank either. Once you’ve found the right one for you, you’ll have peace of mind knowing your investment’s safe and secure in almost any eventuality, and your tenants are covered should anting happen in your property,
These tips will prepare the budding landlords amongst you with a little extra knowledge going forward into your endeavours. Don’t forget – do your research, consult the right experts, and you’ll be on your way to a property empire in no time!
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