A landlord’s success can be measured in a myriad of ways – from the number of properties in a portfolio, to the profits predicted and yields achieved.
But how can we make sure we get it right and what common mistakes do we need to avoid along the way? Belvoir have produced this guide to the dos and don’ts of becoming a landlord…
Getting it right…
“In my opinion a successful landlord is someone who understands the market and understands their duty of care towards the tenants,” explains proprietor of Belvoir Swansea Ben Davies.
“A successful landlord will appreciate the value of a good tenant and will look to keep them by carrying out repairs promptly and trying to accommodate their needs, within reason.
“With the standard of rented accommodation increasing year-on-year, a successful landlord will also need to recognise that if they want to keep achieving – or indeed increase – the rent they receive, they will need to spend money on their investment property from time to time.
“As each property is a mini business in its own right, landlords do not want to spend what they will not recuperate but finding the correct balance is vital to your success.”
Proprietor of Belvoir Bury St Edmunds Patsy Day agrees.
“A successful landlord is often considered to be someone who is financially successful but, while this is true, the following are also key indicators of long-term success,” she says.
“It’s important to understand the local market and knowing what purchase prices, rents and yields are achievable is key. Purchasing the right property, in the right location, that will appeal to the right market is crucial – this will ensure minimum void periods while helping to ensure that maximum rents can be charged.
“To be successful as a landlord it is also important that your property is smartly presented and well maintained; it is essential to look after your investment. A lick of paint can make all the difference and updates such as this will go a long way to attracting the best tenants at the highest rents – as well as encouraging them to look after the property for you.
“It’s necessary to understand the value of retaining a tenant too. Retention is king and the longer your tenant stays the better – you pay less fees (i.e. agent ‘tenant find’ fees), you eliminate the risk of void periods where no rent is being paid and long-term tenants are more likely to treat the house like ‘home’.
“Successful landlords also understand that a regular review of their property or portfolio will ensure that the amount of rent being charged is in tune with the local market,” continues Patsy. “This is even more important in a buoyant and dynamic rental market such as the one we are currently enjoying.
“In addition, a successful landlord considers the health and wellbeing of his tenants – the boiler is checked and serviced annually, any signs of mould and mildew are dealt with and the electrics are safe and tested regularly.
“Tax efficiency is also imperative. Do you know what you can claim for and what you can’t? Make sure you find out. Anything a landlord doesn’t claim for that they should, will affect the investment.
“And, as always, it’s about having a comprehensive exit plan. You won’t know how successful you’ve been until the end – and if you make mistakes at that stage you could lose some of the gains you’ve made along the way.”
Getting it wrong…
“There are many reasons a person may not succeed and this could be down to the type of property purchased,” explains proprietor of Belvoir Liverpool West Derby Adam Rastall. “If the property is not attractive to your target market it could be left empty, causing long ‘void’ periods. Also, a property purchased that has several maintenance issues will inevitably cause problems for your tenants, as well as affecting your income.
“Some unsuccessful landlords purchase properties without consulting experts and go on instinct rather than researching the property and market carefully.”
Ben agrees and adds. “Often the mistakes can happen at the very beginning and this is usually down to misunderstanding the facts and figures.
“Landlords need to ensure that they look at the worst possible outcome and not just about how much rent they will have in the bank each month. Gross yields are very pretty to look at but it’s the net yields that are vitally important.
“New landlords should factor in costs such as maintenance and repairs, ground rents, compliance, insurances and agents fees. Do not buy a property if the figures don’t stack up as there will always be another property better suited to you financially.”
Other common mistakes include becoming too friendly with your tenants, cost cutting and not viewing the property as a business. Pasty explains…
“Some landlords think that Buy to Let is a get rich quick scheme, but Buy to Let is a medium to long-term investment and should be entered into with this in mind,” she says.
“Mistakes happen when a landlord doesn’t approach it as a business – they buy a property that they’d like to live in and furnish it or decorate it to their personal style and/or they allow themselves to become over-friendly with tenants.
“Along with this they may not understand the impact of legislative changes and get into hot water – the law is constantly changing and it is vital to keep on top of this. Additionally, some landlords do not keep abreast of market dynamics and therefore fail to maximise the property’s potential.
“Penny-pinching and cost cutting can also cause problems,” she continues. “Short-term financial short-cuts can cause extra expenditure long-term. Not fixing problems immediately and ignoring essential repairs is likely to cost you more in the long-run.”
Finding out more…
There are plenty of ways to find out more about how to become a successful landlord.
“Join a landlord forum or network,” suggests Patsy. “Sharing advice and learning from other people’s mistakes can save you making mistakes of your own.”
“Read up on the subject too,” recommends Adam. “Read several books on how to succeed with investment properties. This will help you avoid any pitfalls that could potentially happen.”
“And always seek advice from your bank, a financial advisor and a regulated letting agent,” adds Ben.
Patsy agrees and says, “A professional agent will be able to guide you and help ensure you get the most out of your investment, from making the right purchase, to managing the property, tenant and tenancy along the way.”
Adam explains further…
“The best way to find out more about becoming a successful landlord would be to contact your local lettings office,” he says. “I always try to give potential landlords as much information as I can because if they were to purchase a property and then ask me to market it for them, I would want it to be one that would let quickly and attract the best quality tenant possible.”
The dos and don’ts at-a-glance
– Understand the market
– Recognise your duty of care towards your tenants
– Carry out repairs promptly
– Purchase the right property in the right location that will appeal to your target market
– Focus on retaining your tenant
– Regularly review the property or portfolio
– Keep the property well-maintained, as it is important to look after your investment
– Understand your tax responsibilities
– Have an exit plan
– Carry out regular inspections
– Be approachable
– Keep abreast of local market dynamics
– Join a landlord forum or network
– look at the net yields as well as the gross yields
– Read books on property investment
– Seek advice from your local letting agent
– Buy the wrong property in the wrong location
– Fail to research opportunities carefully
– Ignore important facts and figures
– Become over-friendly with your tenants
– Decorate or furnish the property in your own personal style
– Ignore the impact of legislative changes
– Cut corners and costs when it may cause extra expenditure in the long-run
– Avoid essential maintenance and repairs
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