Buy-to-Let 101: The Most Important Rules To Live By
With demand for quality rental properties exploding up and down the United Kingdom, there really has never been a better time to consider getting into the buy to let industry. And indeed, that’s what tens of thousands of plucky newcomers are doing – diving into property investment opportunities and looking to let them out to make a profit.
Unfortunately, it isn’t always quite as easy as it appears on the surface. There’s quite a lot more to this particular industry than meets the eye, which is why jumping into things headfirst and making it up as you go along really isn’t a good idea. By contrast, take into account the most important rules and guidelines from the professionals ahead of time and there’s nothing to say that a buy-to-let venture cannot be extraordinarily successful.
What follows is a brief overview of perhaps the most important rules of all, as shared by industry leaders:
Never Make Assumptions
First and foremost, the importance of checking the rental potential of a property way in advance of buying it really cannot be overstated. Just because the property looks fantastic and appears to be in an area of high demand doesn’t necessarily mean that this is the type of property tenants are looking for. Needless to say, this means undertaking extensive research and perhaps working with a professional letting agency along the way.
Consider Software Suites
Regardless of how many properties you intend to add to your portfolio, it is always worth considering investing in property management software. High quality software suites exist for the sole purpose of making life as easy and straightforward for landlords as possible. They take care of a variety of menial administration tasks, allowing landlords to focus on more important matters. What’s more, they can also keep watch over essential financial transactions, in order to ensure that important payments and debts are never overlooked.
Realistically, there is absolutely no such thing as ensuring your rental property too comprehensively. The simple fact of the matter is that you have absolutely no way of predicting when and where accidents and emergencies may occur further down the line. Which in turn means that you have no way of accurately predicting when you might need a rather enormous chunk of cash available to carry out the necessary repairs. In order to protect yourself from heavy losses, including losses associated with loss of rental income, it is crucial to ensure you are comprehensively ensured.
Never underestimate the complexity of keeping track of your own costs of the counts in general when it comes to being a landlord. From minimising outgoings to maximising profits and ensuring that you do not find yourself in a position where you accept the taxman, keeping the books balanced and in good order is mandatory. Once again, this is another reason why investing in quality property management software can be a highly beneficial decision.
Is it Legal?
Now more than ever, there are so many regulatory boxes that need to be ticked when it comes to letting out a property legally that you have to check from top to bottom that all such matters have been considered. From tenancy deposit protection schemes to energy performance certificates and more, there’s a lot you need to do to make sure your property is legal before you let it out.
Detailed Tenancy Agreement
The tenancy agreement signed by you and the occupants represents both the binding contract of the terms and conditions by which all of you will abide going forward. As such, if there is anything you expect of your tenants, it is your responsibility to ensure that it is included in the tenancy agreement. You cannot make assumptions with regard to their knowledge as to which responsibility falls with them and which are your own. Instead, if there is anything that is of even a shred of importance, it needs to be listed comprehensively and clearly in the tenancy agreement.
Last but not least, one of the most important rules of all is that of not falling into the trap of assuming that if your tenants are not reporting any problems with the property, it must be in a good state of repair. The simple fact of the matter is that when you are living in someone else’s property, you are inherently less inclined to notice (or show any particular interest in) the kinds of maintenance issues that could spell trouble if not addressed promptly. As such, it is your responsibility as a landlord – not to mention in your best interests – to carry out regular inspections, just to make sure the building is in an excellent state of repair.