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How To Avoid Some Common Landlord Mistakes

common-landlord-mistakesWith the demand for rental properties increasing and house prices frozen at a reasonably low rate, buying a property with a view to renting it out has become increasingly popular, both with seasoned property developers and first-time landlords who’ve left their jobs in order to make their living from property.

With so many new landlords emerging, it’s inevitable that mistakes will be made and issues will arise – this is natural in any new process and can’t be avoided. However, there are a few mistakes new landlords commonly make that are easily avoidable but can have devastating consequences should they be made.

When entering the buy-to-let market for the first time, it’s tempting to look for the cheapest property possible and then charge the highest rent possible in order to improve your profit margins. However, many landlords make the mistake of buying a cheap property and not questioning why it costs so little; the reasons for this can be anything from being in an undesirable neighbourhood to being in particularly bad repair. The implications of making this kind of mistake is having no prospective tenants or having to spend a significant chunk of your budget on improving the house, both of which will harm your profit margin.

It’s also easy as a new landlord to focus solely on figures and, as such, let any old people willing to pay the rent move into your property. It’s vital to properly vet any prospective tenants and get the full low-down on them, both financially and on a personal level. You want to ensure, as far as possible, that they won’t be late on rent payments and won’t trash your property.

Obviously, some reasons for tenants missing rent payments can’t be detected right away and may occur during the course of their tenancy – job losses or unforeseen expenses for example. But on the whole, thoroughly checking prospective tenants’ background before accepting them will offer you a decent level of protection. If you aren’t sure how best to go about performing background checks, good letting agents can offer a comprehensive service for a fee.

Unforeseen costs also present something of an issue for new landlords, with many basing their budget around putting down a deposit and making mortgage repayments, while offsetting these costs and hopefully turning a profit on rent payments.

Unfortunately, there can be a lot of unforeseen costs involved with renting out a property, ranging from minor maintenance to full-on renovations to keep the property up-to-date and attractive to prospective tenants. There’s also the issue of empty properties – it’s estimated the average rental property is empty for two months a year. Always make sure to factor these considerations into your budget, and adjust buying plans accordingly.

It’s tempting when starting out as a landlord to go it alone; after all, you will be able to keep all the profit you make. However, the world of buy-to-let can be daunting and for a first-time landlord not fully understanding the laws and obligations you have to fulfill can have some pretty dire consequences.

The best option for a first-time landlord is to sign up with a letting agent; while the fees will take a chunk out of your profits, the advice a letting agent can give you is invaluable, from drafting up tenancy agreements to advising you on insurance policies. They will also help market your property and even manage it if you live far away. Going through the buy-to-let process with an expert is a valuable experience, and in the long term can give you the confidence to go it alone on later ventures!

Christopher Joseph Smith is writing on behalf of Shepherd Gilmour, specialist letting agents based in Manchester

photo: landlordspecialists.com.au




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