How to succeed at being a landlord
It’s easy to see why people think that owning property and becoming a landlord is a short cut to wealth. But in fact, investing in property is not a decision that should be taken lightly. Yes, with a fair wind there is money to be made, but there are also a number of legal obligations, not to mention risks involved, that can quickly turn your experience sour.
So how is it that some landlords succeed while others do not? Here we look at some top tips, advice and guidance to make sure you’re entering the rental property world with your eyes wide open and the best chance of success.
How to succeed as a landlord
- Understand right from the very beginning what your financial objectives are. Do you plan to use the money as your regular income, or will you set it aside as capital growth?
- Did you know…? There are 160+ laws and 400 rules and regulations that dictate how you can legally rent out property. These determine the safety of your tenants and keep you out of trouble, making sure you avoid fines and don’t get banned from being allowed to let your property.
- Make sure you fully understand your financial situation and the options you have available to you. This should include the tax implications of any property purchase, rental and sales. If you’re stuck, speak to a financial adviser for more information.
- Speak to the experts to make sure your finances and assets are protected and insured. The property market can fluctuate, there is no guarantee prices will continue to rise. So it’s vital to get the best advice you can, to make the right decisions for your situation and to make sure you have a contingency plan in place for if the markets should take a turn for the worse.
- If you’re thinking about your investment with a business mindset, you should also be thinking about your exit strategy. You may only just be buying the property, but if you want to make sure you’re running your ‘ship’ in the most tax efficient way possible, you need to start planning now.
Pitfalls to avoid on becoming a landlord
There are plenty of reasons landlords fail to make a profit on their investment property, and very often this can be avoided with a bit of thought up front. Investing in a rental property is not something that can be done on a whim, it requires research, financial planning and the ability to ask for advice when it’s needed. And more than that, there is a great deal of responsibility that comes along with it.
Some common pitfalls:
- Not protecting your investment property or your finances against potentially serious issues. Should the worst happen, it’s important to know you’ll be protected from any potential financial fall out. Get that buy-to-let insurance<link to buy-to-let insurance blog> in place.
- Not keeping up with the buy-to-let laws and regulations. It’s vital that as well as your property you protect the tenants who are living in side. Research your obligations and make sure you’re doing everything you should be doing by law. If you’re nervous about staying on top of all this, or simply don’t have time, consider finding an experienced letting agent to manage the property, and associated bureaucracy, for you.
- Not understanding what being a landlord entails. There are tonnes of obligations, both legal and moral, when it comes to being a landlord. You have to make sure you keep the property in good condition, look after your tenants’ needs and deal with bureaucracy, paperwork and licenses as required.
If you’re ready to get started and would like to speak to a buy-to-let mortgage adviser, contact us today.