Becoming a landlord can be an exciting new business venture and an excellent way to increase your earnings. While there is a lot to be excited about when becoming a landlord, it can also be daunting as it is a big decision and a large responsibility.
It can feel overwhelming when you are beginning your journey, so this post will offer a few useful tips for first-time landlords that will help you get up and running and avoid a few of the most common mistakes. So, if you are thinking of taking the plunge, be sure to keep reading for advice that will help.
Understand your legal obligations
First, you need to take your time to understand your legal obligations as a landlord. Landlords have many responsibilities and legal duties, including providing a safe environment and regular gas and electricity safety checks. Be sure to research the legal requirements, particularly key legislation such as the Tenancy Deposit Scheme (TDS) and energy efficiency standards. By having a strong legal foundation, you can avoid issues and be a responsible landlord from day one.
Aside from your duty of care to your tenants, fulfilling your legal requirements is also important in case problems arise with your tenants. Were you ever to need to evict a tenant, if you had not fulfilled your duties to them, this could present challenges to you.
If this feels too overwhelming for you, a letting agent can be a huge help and while this will add to your costs you may find their services very useful.
Use a specialist mortgage broker
Purchasing a buy-to-let property is a huge financial decision. If you need to take out a buy-to-let mortgage, it is smart to use a specialist mortgage broker like Commercial Trust. Specialist brokers will get to know your circumstances and needs and then use this information to find the best mortgage based on your situation.
This can streamline what can be a complex process, while also giving you access to products that would otherwise be hard to find, which could help you make significant savings over the long term. Of course, there can be fees if you decide to go down this path.
Think carefully before securing debts against your property. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
This is a risk with any mortgage, it essentially means that if you don’t keep up with your mortgage payments the last resort for the lender is to take possession of the property and sell it to cover your debt.
It is also important to understand that buy to let mortgages are not regulated by the Financial Conduct Authority and don’t come with the consumer protections a mortgage on your home would. This is because letting property is seen as a business activity, and so people taking out buy to let mortgages are expected to know about them, how they work and the risks involved.
Set rental prices competitively
The key to success as a landlord is setting a competitive rental price. Obviously, you want to maximise your returns, but you also want to attract tenants. Therefore, you should conduct thorough research on rentals in the area and set your price competitively.
You can always increase your prices down the line, but be wary, as this can drive away reliable tenants, and there is nothing worse than an empty property as a landlord.
Choose the right tenants
Another major decision is the tenants for your rental property. A good tenant will make your life a lot easier, so you need to use a robust screening system to find people who will pay rent on time, take care of the property, and report issues.
Be sure to perform reference checks and obtain personal references from previous landlords before making a decision.
Look after good tenants
Finally, if you have good tenants, you want to do all you can to keep them happy. Every landlord has bad experiences with tenants, so when you find people you can trust, you want to keep hold of them. This can be achieved by taking care of the property, responding to issues promptly, making upgrades, and being competitive with rent prices.
These tips should be useful for any new landlord. Hopefully, this advice will help you hit the ground running and enjoy this new venture.