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Mistakes Often Made By Landlords – And How To Avoid Them! Your freshly purchased, freshly decorated Buy-to-let has a new tenant who pays on time and takes good care of your investment. Eutopia! But this doesn't come about by chance.
1.) Buying The Wrong Property In The Wrong Location At The Wrong Price!
Unless you have made a deliberate decision to hunt in 'student-land', a two-three bedroom home has a wider audience and offers a better chance for capital growth over the medium to long term. To get a feel for tenancy, always speak with a few letting agents who cover the area where the property is located: it is surprising what a single digit post code change can do to the desirability of an area.
2.) Only Buying Close To Your Home
Too many inexperienced landlords only want to buy BTL property within a short distance drive believing they need to be 'on-hand' to manage them. It stands to reason that good deals won't always be in your neighbourhood. The next consideration to point one above is that the numbers must work. Three £100,000 properties yielding £500pcm rent each gives better math than one £300,000 property yielding £1,100pcm rent. And, it is unlikely three properties will be without a tenant at the same time. And, of course there is no Stamp Duty on the lower priced properties.
3.) Getting The ‘Wrong’ Tenant
Giving in to temptation to gamble with a potentially undesirable tenant just to occupy the property quickly can turn into a nightmare. A reliable tenant will be willing to agree: a 6-month let via Assured Shorthold Tenancy Agreement; a credit-check; an employer reference; a previous landlords reference, and a two-month deposit (given you have to give two-months notice after the initial period, why shouldn't they?).
4.) Not Making First Impressions Count
A face-to-face interview at the property to be let is always advisable but remember, you, as well as the property, are being assessed. Both you and the property need to be well presented, clean, tidy, friendly (but not gushing). You and the tenant need to be happy you will get along.
5.) Insufficient Marketing
Too many landlords keep their property a closely guarded secret! You need to 'shout' about your property through imaginative advertising and when writing your copy Ad', think what the reader will want to 'buy' and not just what you want to 'sell'. Add pictures and floor plans. Be seen on websites, in local newspapers, on public bulletin boards as well as putting up a ‘to let’ sign outside the property.
6.) Leaving Your Property Vulnerable To 'Void’
Unless your tenancy agreement requires 2-months notice (see 3 above), even though the existing tenant may not have given notice, just chatting with them from time to time will gauge their intentions to remain. If in doubt, it may pay you to advertise your property during the final month of their initial period thereby covering potential voids. If the existing tenant wishes to remain, any responses to your Ad' could be put on a shortlist of potential future applicants.
7.) Poor Maintenance And Upkeep
It's quicker to let a cared-for property for a longer period than one which looks tired and you will encourage good upkeep too. If the property needs a bit of attention between lets, paint the walls with neutral magnolia (even over wallpaper if necessary) and, if you have to, you can get away with a cheaper carpet provided you have used a top quality underlay.
8.) Pricing The Rent To High
When you purchase a Buy-to-Let property, the surveyor will provide a fair rent assessment. When re-letting your property sometime later, check with your local letting agent (or the Internet) to stay in-line with the market. If you need an incentive to let, try offering a free-rent period rather than dropping the monthly rent i.e. 12-months gets one free.
9.) Not Looking After The Current Tenant
Reputation is everything and if a tenant feels hard done by, s/he will probably tell their friends about it. Similarly, if a tenant is pleased with the property and the Landlord, they will spread this news too often finding a replacement tenant for you. Why not ask the outgoing tenant to write their views of their stay in a 'Tenants Comment Book'.
10.) Going It Alone
Letting Agents obviously come a price. But a typical £50 invested (10% of £500pm rent) can save you a huge amount of time to get on with the building of your portfolio. Routine checks of the property will be taken care of for you together with finding re-placement tenants as required, and of course you will be kept you on the right side of the Landlord Reg's.
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