Want to get involved in the landlord business? While the market can fluctuate, investing in bricks and mortar is always a smart move.
Since the prices generally accumulate year on year, it’s something you can make money from both now and in the future. Whether you want to revamp run-down properties and sell for a profit or build up a portfolio of houses which you rent out, this career path can be very lucrative. If you’re thinking of buying an investment property and getting into the landlord business, here are a few things to consider.
Find The Right Property
Buying a property to rent out is a lot different to buying for yourself. First of all, it’s easier since you don’t have to agonize every detail. If the area isn’t exactly what you want, or the bathroom isn’t the right size or the garden isn’t quite what you want it doesn’t matter. Providing it’s in a clean and tidy livable condition, someone will want it. Since there’s a massive shortage of private houses in most areas, tenants are often lining up to get into homes so you’ll never be short of someone to rent it. Generally anywhere close to a town or city center will do especially well since they are in high demand by those working nearby. Anywhere with a decent school or transport routes will be popular also.
Decide If You Will Offer Furnished or Unfurnished
There are pros and cons to each of these, so it’s important to consider it carefully. If you know you are mainly going to be renting to students, for example, offering furnished is a good move. It makes it more convenient for them since students don’t tend to have a ton of furniture and means you can charge a little more too. If you are renting to young people, who are just starting out, again a fully furnished property is likely to appeal. If you’re going to be renting to families, especially those with a slightly higher income chances are they will have their own furniture and things already. If the tenants don’t want the furniture included, you then have to foot the bill for moving and storing it. One option you could consider if you are going to furnish is to choose pieces that are designed for the rental market. They tend to be more robust and will last for longer. You could have furniture built in, meaning it will be sturdier and less likely to get broken after years of use by numerous tenants.
You don’t need to spend thousands doing up a rental property to the nines. However, you do still want it to look modern and appealing. Laying down wooden or laminate floors might be a cost up front, but will last far better than carpet and won’t need replacing between tenants. They stay clean and don’t harbor any smells. For walls, go with a light neutral paint shade. This will turn the property into a blank canvas, make it look more spacious and will appeal to the most amount of tenants. Plus it’s cheap and easy to touch up between tenants. If you don’t want the wall colors changing, be sure to put a clause in the tenancy agreement. If you want to make your rental property a little nicer, you could have a new kitchen fitted (or just replace the doors) update the bathroom suite, tiling or add a fireplace. It all depends on what kind of people you will be renting to and whether these touches will get you an increase in rent.
Make Sure It’s Safe
As the landlord, you are responsible for ensuring that the property is safe. You need to have a smoke alarm on every floor, and depending on the kind of heating system you may need a carbon monoxide alarm too. The gas should be checked annually, and you need to make sure the plumbing and electricals are all up to scratch before renting to tenants. If any appliances are included in the property, these need to be maintained too. Window safety is another one to consider if you have an older property especially the windows might not meet current safety laws. Be sure to look into this, and make sure all windows can be opened and closed properly. From a home security point of view, you could consider having a burglar alarm fitted. This can help to give tenants piece of mind, and also ensures thieves aren’t getting in and damaging your investment.
Get The Relevant Insurances
There are different levels of cover you can get as a landlord. It can cover things like unpaid rent, damage to the property, plus there are often deals if you have multiple properties. You should also look into landlord liability insurance- if your property hurts a tenant or a visitor you could end up seriously out of pocket. As with any kind of insurance, it’s always worth shopping around. Don’t just go for the cheapest quote, but find out the best price for all of the different kinds of cover you are after.
Consider a Letting Agent
If you’re new to property or work another full-time job, you might want to think about having a letting agent manage your property. There will be a fee for this, but they will be responsible for finding tenants, sorting background checks, collecting rent, making sure the property is left in good condition at the end of the tenancy and generally be a point of contact for any queries or concerns the tenants have. If you want to make property your full-time job and you are considering purchasing more properties either to rent or sell, you could look into setting up your own website. Companies like RealSpace offer different packages to suit your needs. A website is useful since it helps to show prospective tenants that you’re legitimate, and also what you currently have available.
Find The Right Tenants
If you’re going to be managing the property yourself rather than enlist the help of a letting agent, this is an important thing to get right. Every landlord’s nightmare is ending up in a legal battle with tenants or end up with a destroyed property. Ask for references and follow up on them, positive feedback from a previous landlord is a good sign. For students or those who don’t have a good credit score, getting a guarantor is a good idea. That way you can ensure the rent is covered even if they can’t or won’t pay. If you’re able to legally do a criminal background check, this can be useful too. The laws will depend on the country you live in so do some research and find out what you’re able to do.
Being a landlord isn’t all easy work, there’s a lot more to it than nice big rent checks landing in your bank each month. You have to make sure that the law is being followed and tenants are kept happy. You have to chase up and sort out any problems and make sure everything behind the scenes is all up to date. However, if property is something you love, it can make a fantastic and well-paid career path, and having a number of properties can give you a lot of stability in life too.
Are you a landlord, or is this something you would ever consider doing? What aspect of renting to tenants appeals/ worries you most in the landlord business?
This is a collaborated post.