Renting can be a financial minefield for private landlords, legislation changes often and different local authorities seem to make up their own rules as they go along, with one aim in mind to levy fines on the unwary landlord.
Tenants, local authorities, politicians and the media seem to view landlords as villains bent on exploitation rather as a business community providing a vital service, they all work against rather than with landlords.
The private rental market is no place for amateur landlords, rouge tenants can spot one a mile off and once they have wheedled their way into your confidence (and property) they will cost you thousands in lost rent, legal fees and repair costs.
A landlord can invest £millions in buying, refurbishing and furnishing a property only to have a rouge tenant move in refuse to pay rental, costing thousands of pounds in legal fees to evict them then they trash the place before they leave, and yet you the landlord are still seen as the villain. It seems that the full weight of the law is always behind the tenant and a landlord has little or no protection.
Fail to carry out the required checks and your insurers wont pay you a penny for the damages and trashed furniture, and whose going to compensate you for the lost rental income and legal fees?
Auction houses are full of properties having to be sold off quickly because someone's dream of having a 'nice little investment property' has turned into a nightmare, and they are now months behind with their buy to let mortgage and their savings are spent the mortgagors breathing down his neck.
While the majority of tenants are decent folk and most rentals go well, there is no sure fire way of knowing if that wonderful tenant of yours will go rouge, the ne'er do wells are usually easy enough to spot, but a relationship break up, or loss of a job can change the most harmonious of landlord tenant relationships upside down, with dire financial costs for the landlord.
What every landlord needs to do is behave in a completely professional manner by doing all the necessary ground work before commencing any tenancy, we advise on the basic steps and advise you on the current legislative requirements for your situation.
The 13 steps to being a successful private Landlord
A successful landlord is one who doesn’t feel like pulling their hair out every time the phone rings. It’s someone who actually looks forward to the beginning of the month when the rent checks start coming in. It’s someone who runs a tight ship with systems that can handle the big waves that are bound to come. Success is possible as a landlord, if the right steps are taken.
1) Remember its a Business, not a Hobby.
The no.1 reason that many private landlords have so many problems is largely because they don’t see renting as a business. They approach it as you would a hobby. Thinking they can dip in and out, put things off and not really worry too much about paperwork.
Where else would someone treat an asset worth in the high hundreds of thousands of pounds which is capable of generating a 5 figure income year on year in such a lax fashion. If you cashed in your property and gave the money to a wealth management business then found out they were then found out they was acting like this how would you feel?
Recognizing that renting is a business and approaching it with the care respect and diligence that you would any other business venture will ensure that you start right and are in a position to spot and stop most of the hazards that
2) Always thoroughly check your tenants
I cannot emphasize this strongly enough. The biggest mistake landlords make is letting to the wrong person. You are giving someone unsupervised control of a huge asset and as well as non payment of rental once they are in your property it can cost you thousands of pounds to get them out if things go wrong. On top of this they can cause massive damage to the decor ans structure, trash or steal all of your furniture fixtures and fittings, and you wont get a penny back from the insurers if you cant prove you carried out full and verifiable reference checks.
This is what happens to landlords who treat their rental business like a hobby and let because the their prospective tenants "seemed like such nice people" (everyone is a nice person when they want something) then refuse to carry out even the most basic checks on the people who are going to be living in their properties.
What would a bank say if you walked in off the street, no proof of experience, qualifications or income and asked for a large loan? You seem like a nice person so here have this £250,000 we trust you to pay it back.
A bank doesn’t run on emotion, and you shouldn’t either. Put your business hat on get that referencing done, because that sweet talking nice guy may just the silver tongued devil who will cost you your house.
3) Treat Your Tenants with Respect
Don’t allow personal feelings to get in the way of a business relationship. Tenants want to be treated fairly and be seen as an equals. Treat each tenant with dignity and respect and it will come back to you in success.
4) Don’t Be Too Nice
Your job as a landlord is to be fair, not to be nice. Being “nice” will give your tenants and others the invitation to walk all over you and take advantage at every turn. By allowing your tenant to break the rules, you open yourself up to years of struggle and compromise that will ultimately lead to huge financial losses. There is a difference between respectful and being nice. Choose wisely.
5) Get Help
With over 28 Million real estate investors in America, there are bound to be countless investors in your town who can help you out during tough times.
Whether it’s the phone number for a plumber, help dealing with a tough eviction, or just reassurance that you are doing the right (or wrong) thing, reach out to other landlords for help. Landlords love to “talk shop” so look for opportunities to open the conversation.
6) Be Knowledgeable
To make landlording an easier task, you need to be well equipped to handle the problems that you will face. The best way to do this is through education. Books, courses, and mentors are all great ways to improve your abilities. Listen to podcasts, talk with other investors, and teach others what you know.
7) Create a Policy & Stick to it
If you are running your rental business off the top of your head, making up the rules as you go, you are opening yourself up for a lot of hassle. Tenants will know if you are making rules up on the spot, so having a written policy (that your tenant has) will make life much easier. Rather than trying to explain why a certain action is not allowed, you simply can refer to the policy.
8) Quality Product = Quality Tenants
While this isn’t a hard and fast perfect rule, in general the quality of your tenant will depend largely on the quality of the home you are providing. By providing a better-than-average home you will set a standard for the kind of tenant you attract and keep.
9) Set Office Hours
Do you want to fix repairs at 10:00 at night? How about receiving phone calls at 6:00 am? As a landlord you get to set your own hours. You should publicly let all your tenants know that you are only available at certain times for examples between 10am- 4pm on weekdays.
10) Get a Google Voice Number
A neat tip you can also try relating to the previous tip is to sign up for a free “Google Voice” account – which supplies you with a phone number that is forwarded to your own cell phone. Give all your tenants this number and set up a business voicemail on that line. All business related calls go to that number but your phone (or multiple different phones) will ring and can be answered.
11) Know When to Outsource
Many repairs can be easily fixed. Many more cannot. If you are extremely handy with construction and tools you may be tempted to do all the repairs yourself. While this might be a good idea, it also may not. Just because you can do something doesn’t mean you should. In order to be a successful landlord, you need to balance cost savings with enjoyment.
12) Be Organized
Have all the forms you need organized neatly in your file cabinet, have your procedure written down for all common problems (vacancies, repairs, etc.) and keep your maintenance contacts organized neatly for easy retrieval. Keep current with your accounting. Have a clean office. These, and many other organization tools, may seem small and trivial but they are one of the most important ways you can keep your business a business that succeeds.
13) Always Charge a Late Fee
It may seem cruel – but you should always charge a late fee, and make it known ahead of time about this policy. Most tenants make a lot more money than just what rent is, but not enough money to live each month. As such, they must constantly prioritize what gets paid and what doesn’t. By being strict with late payments, you place “rent” higher on the priority scale than other obligations. Additionally, the extra income when rent is late is a nice compensation for the stress of not getting rent on time.
How Costly Home Repairs are like a School Bully
Real estate investors can see great gains when purchasing an investment property. Unfortunately, there are some major perils that can befall a house and put a serious dent in the value of that asset. These costly repairs can come at you much like a school bully on the playground. Many of these perils are much more insidious than a fire or natural disaster.
Monthly residual cash flow can be attractive incentive to become a landlord. Landlords collect rent each month, pay their mortgages and pocket the rest of the cash. What the public doesn’t see, however, is that successful property management involves managing people, forecasting repairs and maintenance, covering untimely losses and unexpected costs. This includes monthly maintenance. Landlords can keep their properties in tip-top shape and tenants happy by reinvesting a portion of rental income and performing monthly maintenance.
Costly home repairs that can seem