Are you interested in letting your property? Whether you want to make a long-term investment or you’re looking to make some extra monthly income, letting a property can be a financially rewarding experience.
But if you’re new to the game, there are a few things to consider before opening your doors to renters. Here are ten tips for letting your property including the best investment properties and financial planning.
Find the Best Rental Property
Buying a rental property is different than buying a home for yourself and your family. You need to consider many different things outside of your own personal taste and style. Think of the types of renters you want and let that lead you to the property location.
Are you interested in letting to families with small children? Choose a property near a quality school and plenty of activities. You may want to invest in a larger home with multiple bedrooms. If you’re letting to young singles and professionals, a condo or apartment might be a better investment. Check the downtown scene as well as public transportation availability.
Calculate Income and Expenses
This is one of the most important steps to take before letting a property. After all, if you’re looking to make money you need to calculate both your expenses and potential income. Expenses include maintaining the property and paying the mortgage or other fees. As the landlord, any general repairs and maintenance are your responsibility. Once you determine your overhead costs you can set a rental rate.
It’s important to consider the current market and what the average rent is for the same type of property you own. Letting agent fees include advice and guidance in all of these areas and are well worth the investment if you’re a first-time landlord or are letting property far from where you reside.
Consider a Change in the Market Value
When calculating your expenses and income it’s important to plan for the unexpected, including dips in the market value of your rental property. Before you invest in a property, check how much it recently sold for.
You should also consider the age and location of the property. The real estate market is unpredictable, which is even more reason why you should only invest in properties that show a substantial return on investment (ROI). Planning ahead financially is a big part of being a successful landlord.
Plan for Dry Spells
Speaking of planning ahead, you also need to allocate funds for when things dry up. You may not always have a reliable renter in place, which means you need to budget for vacancies. Consider all of the expenses associated with maintaining the property, including monthly bills and overhead costs.
If possible, put aside extra funds before letting a property to fall back on when times get tough. One thing to avoid is letting to unreliable or sketchy tenants just to fill the vacancy. The damage and headaches you could incur will cost you more in the long-run than a few months without tenants.
Know the Laws (and Follow Them)
As a landlord, it’s your obligation to know and follow all the laws surrounding letting a property. These include things like what actions are grounds for eviction, how much notice a tenant must give before vacating, what’s covered by the security deposit, and your rights when performing routine inspections of the property.
You must also provide the renters with important certificates and paperwork including an Energy Performance Certificate and both a gas safety and electrical safety certificate for Houses of Multiple Occupancy.
If you decide to collect a security deposit, you must also protect this using a tenancy deposit scheme. The money must be protected within 30 days of receiving it and returned if the tenant meets all requirements outlined in the rental agreement.
Avoid unwanted lawsuits and headaches by following the appropriate laws — they’re put in place to protect both you and your tenants.
Inventory the Property Before and After
One of the best ways to protect your property and any items contained inside is by performing an inventory check both before and after letting the property.
Some landlords choose to rent property fully-furnished. If so, document exactly what pieces of furniture are inside the home and what condition they’re in.
Take detailed notes and photographs. You should do this in the presence of the tenant as well so there’s no confusion or discrepancies. Once the lease ends, perform a final walkthrough with the tenant. This is your opportunity to identify any damages or excessive wear-and-tear to the property or its contents that might result in not returning the security deposit.
Hire Professionals to Help
At the end of the day, letting property can be a very lucrative and rewarding endeavour — but it’s also stressful. With so many laws and regulations to follow, as well as responsibilities, it might be in your best interest to hire a letting agent or property manager to help. Not only can they help you find and vet quality tenants, but the best letting agents can offer services such as collecting rent, monitoring the property, and handling tenant issues. The peace of mind alone is well worth it for most landlords.
Before you purchase property and start the letting process, consider hiring a letting agent or property manager to simplify the process. Do your research about the current market and the location of your property. With the right pre-planning and smart business sense, letting your property can turn into a lucrative source of passive income.