With property prices and rental values both at an all-time high, more and more of us are looking to maximise the income from one of our most significant assets by becoming a landlord.
From part-time room rentals using Airbnb to taking the full step and purchasing a buy-to-let property, the dream of an income stream outside of salaries is a goal for many of us. Getting into the game as a first-time though, there are plenty of pitfalls that are lying in wait. Here’s what landlords wish they had known before they’d started renting out:
Vet your tenant well
It’s only common sense, but it’s surprising how many people delegate tenant interviews to lettings agencies, who often tout it as a time-saving service for their landlord clients. But you’d do well to remember that lettings agents have no emotional attachment to you or your property and just want to fill available rentals as soon as possible. If you are renting out a former home or a house that you see as a future investment to give to your children, you should seriously consider interviewing personally to get a better feel for who will be living there. Don’t underestimate the emotional impact it can have if you do get untrustworthy tenants who dodge rent payments or damage the property – and you’ll be the one dealing with the emotional fallout and stress. Meeting tenants in person gives you a chance to establish a good relationship with them from the off. Putting a face to a name has great value and makes it clear to them that there’s a real person behind the monthly direct debit. Protecting your investment starts with being sure of who will be living there. Factors such as time of year can play a big part in who comes through the doors – check a site like vpmpropertymanagement.com for advice.
Establish a good relationship
There are many reasons to want to establish a good relationship with your renters. Not only are they less likely not to take good care of your house if they know you personally, but feeling that they can approach you easily often stops minor problems escalating. For example, if a small repair is needed and your tenants feel comfortable to approach you openly, you can catch it before it turns into a major fault. And similarly, if they’re going to struggle to meet the rent one month, it is far better to know about it in advance. If they do decide to move on, a tenant you have a good relationship with is likely to recommend you to other potential renters, which will make finding a replacement far easier as well. Small gestures of goodwill like making sure everything is deep cleaned before new tenants arrive and even leaving a bottle of wine in the fridge can go a long way and may pay dividends later on.
But don’t cross a line
Although having a good relationship with your tenants is desirable, be careful about becoming too friendly. You are in a business relationship only, and you should aim to keep it that way. If it’s a couple moving in together, be aware that relationship may break down, and you don’t want to be caught in the middle. Similarly, if you cross the line and become an actual friend, certain types of tenants may then feel more justified in paying rent late or asking for favours. There’s the potential for a whole host of awkward scenarios.
Sort the financials
It’s not just finding the best buy to let mortgage deal; you will also need to find comprehensive landlord’s insurance to make sure you are covered if anything went wrong. On top of this, make sure that you have ready cash in an easily accessible account saved in case of any urgent repairs. Things like boiler failures are guaranteed to happen when it’s least convenient, and you have to be able to fix them straight away. Delays can damage your property and your tenant relationship, so make sure you side-step any nasty unexpected costs.
Expect the unexpected
One thing for sure, and that’s that unexpected incidents will occur. Prepare yourself to see your property in a less than ideal condition when tenants depart and expect some wear and tear – even the most cautious tenants are probably less careful with your carpets than they would be with their own. When you’re making repairs, you need to balance making the property attractive and rentable with economising where necessary. It’s not always desirable to go top-spec with all the fittings, but if you’re leasing out a former home, sometimes it’s tempting. Unless changes will justify a sizeable rental increase, learn to be cautious about what you spend.