As high house prices and tougher lending criteria leads people to rent for the long-term, the opportunities for landlords are growing by the day.
However, being a landlord isn’t a fool-proof way of making easy money. Like any major investment, it comes with some potential stumbling blocks despite the obvious rewards.
At Letting Solutions we have come up with a list of the most common mistakes landlords make and, more crucially, how to avoid making them.
Seeing rental property as an instant cash cow
Unfortunately, being a landlord is not an immediate gateway to untold riches. While there are examples of people making big money from renting out property and those that make a comfortable living from it, it’s important to remember that this is the exception rather than the norm. This is not to say that you can’t make decent returns on your rental property, just that it’s unlikely to make you an overnight millionaire.
As usual, you get out of it what you put in. Ambition is to be encouraged, but it’s best not to get too carried away. Start small and build your portfolio up, rather than the other way round.
Ignoring the legal side of things
Your main priority as a landlord is to keep your tenants safe. If you fail to adequately protect them you could be hit with harsh financial penalties or, in really bad cases, prison. Why take the risk?
Make sure you give incoming tenants an Energy Performance Certificate before they move in, proving to them how energy efficient your property is. Additionally, all furniture needs to adhere to fire safety standards and all electrical equipment and plug sockets must be safe to use. A gas safety certificate must be secured for every gas appliance in your property. There is no point trying to find ways round these measures, and there are many more you need to consider – speak to a reputable property letting agency for a more comprehensive rundown.
Thinking of it as a hobby rather than a business
You should be treating your rental property in the same way you would a business. First and foremost, you want to be making a profit. To give yourself the best chance of doing this you must carry out some initial research – charge rents that are too high and you risk deterring would-be tenants, charge them too low and your rental yields won’t be anything to write home about.
Perhaps most important of all is getting good, reliable tenants in place – tenants who will treat your property to let like it’s their own and always pay you their rent on time. This is where an experienced, knowledgeable letting agent comes in handy, taking some of the stress and hassle away from you – whether that is in relation to finding tenants or managing the property itself.
Not providing the best you possibly can
In an increasingly crowded marketplace, it’s more important than ever before that your property stands out from the crowd. Tenants won’t stand for shabby and unmaintained homes – they want their landlords to be fair, friendly and on the ball, otherwise they won’t hang around for long.
While regular upkeep, home improvements and redecoration doesn’t come cheap, it’s better to deal with the issue early before it gets out of hand. Ask yourself: can I afford to plough regular investment into my property/properties? If the answer to this is no, then you should reconsider whether you are really cut out for a life as a landlord. Ensure your finances are in check and you’re in it for the long-haul before you commit to investing in rental property.
Hard graft (and cash) is required to make a success of letting property, but the great rewards and satisfaction levels you get in return make it fully worth it.
If you would like more information about being a landlord or the lettings service we offer, please get in touch with us on: 0845 520 1420. In addition, we provide an online free property valuation tool to give you an accurate idea of how much your property is worth in West Lothian’s rental market.