You’re making an investment when you buy a property to let. The general expectation is that the money you initially expend will eventually turn into a consistent form of profit. However, like any investment, there is an element of risk vs reward involved when letting a property. Becoming a landlord isn’t a sure-fire way to financial success, as many unfortunate stories on the internet will tell you.
So, how can one mitigate the risks involved with lettings to ensure they’re making a return on investment? Well, we have the answer to this question. Read this article if you’d like to become a landlord and want to avoid being lured into a false economy.
Buying the Right Property
Let’s start at the beginning. Your property is what determines your success as a landlord, so you should never try to cut corners or buy the cheapest option available. Instead, do your research. Find properties in highly desirable areas, where schools are nearby or where public transport and facilities are abundant. Next, investigate whether the property is truly worth what it’s marketed as – perhaps try bartering down the cost if you can.
We also recommend using a reliable estate agent who is giving an honest price as opposed to an inflated one. Lastly, evaluate how much work will need to be done on the house or flat. This is a big factor in determining how much your buy-to-let will cost you in the long run. By taking your time and doing this kind of research, you’re certain to find the right property for letting.
Furnishing and Redecoration
Though decorating your property is a big expenditure, it’s an important step in guaranteeing your letting is cost-effective. The more practical and attractive your property, the more rent you’ll be able to charge tenants. As such, you should prioritise durability and aesthetics when renovating. It’s best to choose colours and furnishings which are quite neutral because your tastes likely differ from the potential tenants’.
Avoid things like patterned wallpaper and instead elect for natural tones on the walls, such as white or magnolia. This will help invite sunlight into your property, making the rooms appear brighter and bigger than they are. It’s also a good base to build the rest of the decoration up from.
Regarding flooring, we recommend landlords choose materials which are durable above everything else. Though carpet is the cheapest option, it’s easily damaged and stained. Instead, choose something durable and low maintenance – that will last longer and look good even in ten years. Laminate or vinyl flooring is usually best. These materials are scratch-resistant, water-resistant and can endure high-foot traffic, plus they’re not overly expensive by comparison to engineered wood. By investing a smart amount of money into your floors now, you won’t have to pay for repairs time and time again, saving you a fortune in the future. This same principle applies to the white goods you supply tenants. Don’t cut corners and cheap out. Buy appliances which are the best value for money. You can use price comparison websites to do this. Finally, do ensure the property looks its very best before putting it on the market for letting. Aesthetics might seem superficial, but everyone knows whatever looks nice is more appealing to people. Investing in nice furnishing will pay off in the long run.
Finding Good Tenants
Your tenants can have a massive influence on how cost-effective your lettings are. If you have bad tenants, then they probably won’t pay their rent on time – or at all – which is infuriating for landlords who have overheads to account for. There’s also the issue of damage. Of course, some things can’t be helped, such as chipping the kitchen work surface. But if you’re constantly having to go in to repair things, the issue probably isn’t with your property, but your tenants. These damages can also affect the overall value of your home. For example, tenants who smoke will leave everything imbued with a cigarette-stench which is difficult to wash away. Even taking their deposit can’t cushion the impact of a repairs and cleaning bill.
Sorting Your Insurance
Though going through paperwork for insurance is boring, it’s necessary for protecting you and your money. Landlords must ensure they have everything in order, such as rent guarantee insurance or accidental damage insurance. This will help you get your money back when it comes to problematic tenants. As implied by the name, rent guarantee insurance also means you don’t have to worry about whether people pay their bills. Among other things, insurance also protects you from legal expenses when a previous tenant tries to leverage false claims against you. Landlords who aren’t covered will lose an absolute fortune.
These are the main factors that will influence how cost-effective your letting is. The cheapest option is never the smartest option. If you want a return on investment, spend a little extra on furnishings, insurance and the right property – plus, investigate your tenants before letting to them.