Editor’s Note: As discussed in yesterday’s post, depending on your skill level and time available, a property management company might make sense for your rental investment. Here are a few more tips from Jen Bowden with Delineo.
As investments go, buy-to-let arrangements can be an extremely lucrative way of generating extra income. However, with the constant risk of sudden repairs, periods of vacancy, and bad tenants, it can also be stressful.
However, there are a number of ways to relieve the burden of being a landlord to make sure you get the most from your buy-to-let agreement.
Don’t Get Complacent
Once you’ve found a tenant that pays the rent and causes little hassle, it’s easy to let the property slip your mind.
However, just because they’re reliable financially doesn’t mean that they’re maintaining the property to your standards. To avoid finding yourself with a considerable repairs bill when they eventually move out, be sure to conduct quarterly checks during their tenancy.
This might also remind them that the property isn’t theirs and encourage them to respect it during their tenancy.
Build a Database
If you intend to manage the property yourself, then build up a database of reliable plumbers and electricians in case of emergency. When tenants are pushing for a maintenance issue to be resolved, the last thing you want to do is employ a contractor you don’t know, as this can sometimes end up costing more in the long-run.
Try to keep a record of preferred suppliers, and note down any recommendations, particularly if your property is any sort of distance away from where you live. If there is a problem, you’ll want someone you can trust to take care of it.
Use an Agency
Though not the cheap option, you might find that enlisting an agency to look after your property on your behalf is the most effective way to run a buy-to-let property.
An agency will typically take a management fee of around 15 percent of a month’s rent, but in return they will:
- Place tenants on your behalf, so not only are you relieved of the stress of conducting viewings, but you’ll have more chance of greater occupancy
- Conduct regular checks to ensure the property is being maintained to a good standard, and;
- Deal with any essential repairs and maintenance on your behalf.
This option does take a considerable amount of time out of the equation for you, but you will need to make sure you do the math. In addition to the cut your agency will take, a buy-to-let mortgage lender will typically require that the rent covers at least 125% of the mortgage repayments. Be careful that you don’t price your property out of the market.
Provided you have taken time to consider the pitfalls, buy-to-let can be a really worthwhile investment that more and more people are enjoying the benefits of. In fact, since the introduction of the government’s recent ‘Funding for Lending’ initiative, the number of buy-to-let investors has grown by 10 percent since 2011.