Running a buy-to-let property is not as easy as it seems, especially in the early stages. While the profits are a welcome addition to your current source of income, the hassles associated with the day-to-day can be a handful at times. The recent tax changes for landlords of buy-to-let properties doesn’t make it any easier.
Nevertheless, it is also an exciting venture, and when you overcome all obstacles, it can be rewarding. To achieve this, there are 5 rules you need to abide by.
- Research the property before acquisition
This is one of the biggest mistakes some landlords make. While you are in a hurry to snag a good deal, remember that not everything that glitters is gold. That cheap property may be too good to be true. Some people have ended up paying for a property that is embroiled in an intestacy dispute.
It is better to be safe than sorry. Before hurrying to accept that “attractive” offer, pause to consider all options. Be careful with “as-is” properties too. Most properties in this category have been abandoned.
- Prepare a written contract
Always work with a solicitor on your landlord-tenant agreements. It will be unfortunate to go through all the effort staging your property and getting an offer from potential tenant, only to botch it with an unprofessional contract.
For instance, not setting the cardinal rules can allow them conduct unfavourable practices such as subletting the property despite your contract. A good solicitor covers all the basis. Find out more about written tenancy agreements here.
- Screen your tenants
It can be difficult to vouch 100% for the credibility of a tenant, especially someone you do not know. But if you conduct a screening, you can eliminate (or significantly reduce) the heartache that comes with a problematic client. The following questions can help you correctly profile the type of client you want.
- What do they do?
- Where do they work? Ask for an employer’s validation
- Why did they live their previous accommodation?
- Do they smoke or have pets?
This shouldn’t be a determining factor. However, it costs more to renovate smoke-strewn walls or flooring damaged by pets after they leave. Be careful of discriminating against potential tenants. Keep it within accepted legal practices.
- Buy rental property insurance
This is an essential part of owning a buy-to-let property. You want to ensure there are you have the correct type of insurance. In addition to the standard building insurance, there are liability insurance, fire insurance, flooding or subsidence insurance, contents of building insurance and so on. Many insurance providers offer this as a bundle so it is easy.
- Keep tabs on your property
Some people hand over full management responsibility of their property to a caretaker, probably because they are too busy with other obligations. While this is okay, it is important to involve yourself regularly. Visit the property, know your tenants and go through the books with a financial expert.
This way, you keep yourself abreast of what is happening and avoid being defrauded. Some landlords have been arrested along with fraudulent caretaker for scamming unsuspecting rent-seekers.
If you abide by these rules, you should be able to run your buy-to-let business easily. You can also ask more experienced landlords in your area for advice.