13th Aug 2016
While it may sound easy enough – buy a home, make a few renovations and rent it out for more than the monthly mortgage payment – to truly successfully manage your own BTL property requires the mindset of a business professional. Without experience, it can be easy to quickly lose money, time and sleep by making these common new landlord mistakes.
- Location, location, location
This mistake is made by many landlords, particularly those wishing to make their first steps. That thatched cottage in the countryside might be great for homebuyers who want to settle down in their dream home, but remember that tenants in their 20s-30s with an active social life are dependent on public transport.
If you choose a spot that has a bad reputation, or is in the middle of nowhere, you will struggle to charge a decent rent and find good tenants, regardless of how appealing you have made it.
- Viewing it as a hobby
Although the hands-on nature of buy to let make it an enjoyable investment for many, it’s important to remember that it is an investment. As with any investment, if you fail to give it the care and attention it needs, chances are it’s going to cost you a lot of money in the long run. The process of being a landlord doesn’t stop as soon as you’ve handed the keys over. If you’re unable to find the time to market, maintain and look after your property, it may be time to reconsider your priorities.
- Hidden costs
Remember you will have to spend money to make money. While you know about mortgage repayments and agent fees, there will be lots of extras you haven’t thought of; buildings insurance, contents insurance and even landlord insurance to cover any rent arrears or damages. You will also need to provide a gas safety and pay for annual checks. In addition to these initial costs, you will be expected to maintain the property to a reasonable standard.
Costs like these add up. Failing to factor them in could derail your carefully planned budget.
- Not vetting tenants thoroughly
Putting the time in to select good tenants is key to the success of your rental business. If you don’t do your research beforehand, you could end up with tenants who damage your property or miss rental payments. As much as you might like to hope they will cherish your property, tenants do not always treat places as they would their own home, meaning wear and tear costs will be higher.
Ask for references, as past behaviour is a good guide to how your tenants will act in the future so this should give you an indication of whether they pay the rent on time and how well they might will look after your property.
- Stuck in a rut
Another problem that landlords face is sticking with their investment the way it is. You have successfully brought and rented out your beautiful three bed house with income X coming in monthly, it is easy to become stuck in a rut and not have the vision to improve the income as you are simply used to this.
It is not all doom and gloom as being a landlord can be very profitable and enjoyable, allow us to take all the hassle out of the equation as we can assist and advise on all the pitfalls that you may come across and make your investment hassle free.