Could You Become a Buy-to-Let Landlord?
Investing Your Money in Property
An Introduction to Residential Lettings and Management
Being equipped with as much knowledge as possible beforehand is always a wise decision whatever the situation and this is especially true if you want to become a buy-to-let landlord. This is easier said than done however because the very nature of a property rental business means you can only react to a situation once it has already occurred.
All the preparation in the world is not going to arm you with a workable solution. Even landlords of long standing deal with problems on a daily basis which they have never encountered before. Nowadays, where there is an increasing level of paperwork in every area of life, to be a buy-to-let landlord you must be computer literate, be prepared to fill in endless forms and deal with perpetual changes in legislation which are more likely to protect the tenant than you.
Even if a property management agency is enlisted to do this for you, it is still your duty to ensure they are acting in your best interests. You will quite often have to be prepared to get your hands dirty, cleaning up the foul mess both inside and outside your property that unscrupulous tenants will invariably leave behind. You must be prepared to be on call round the clock when things go wrong which they inevitably will.
Having a contingency plan will lower your stress levels. If your usual plumber is unavailable you need to have another lined up; leaks never repair themselves. Rental properties often fall into a state of chaos if you don't check on your tenants periodically to see things are in still in order. Often you will get a tenant who pays regularly but the house is a tip and other times you will get a non-payer who keeps the house immaculate.
Ideally you need tenants who pay, keep the house and garden tidy and don't cause a nuisance to the neighbours or the community. In order to prevent the likelihood of a tenancy becoming unmanageable it is far better to take every step to avoid that happening when the tenancy commences; it is thus wise to vet your tenant thoroughly and set the rules from the onset.
Being too trusting and lenient is not always a good quality in a landlord as there are some renters who will take advantage of you or be too demanding. You must run your rental properties in a businesslike manner and be fair and reasonable at all times. Keep as many lines of communication open with your tenant and always ask for alternative contact numbers of two people in the event of an emergency. If several of lines of communication break down at once it's very likely your tenant does not want to talk to you and the tenancy has gone pear-shaped.
Playing Monopoly for Real... Can you Really Win When Everyone Else is Cheating?
'Asset Rich, Cash Poor'
The monetary aspect of buy-to-let is an ever changing scene so you will need a reputable financial adviser who can search for the best current deals regarding mortgages and insurance. Join a landlords association such as the NLA in the UK or, LandlordAssociation.org in the USA. There are also a huge selection of online platforms where you can swap experiences and learn from the mistakes of others. You will make plenty of mistakes of your own but the way forward is to turn them around into something positive so that your property rental business will thrive and survive.
There's No Easy Way to Riches!
You Could Lose Much More Than You Ever Stand to Gain!
You can never have too much spare cash! A buy-to-let business ideally needs some positive cash flow each month to be viable so unless you have an endless supply you need to figure out very carefully what you will be left with after all the bills have been paid. As a landlord you will be responsible for insuring the property and for putting all safety features in place and paying for periodic inspection tests - then there are repairs and maintenance issues to resolve on a regular basis and fees associated with drawing up the tenancy and eviction fees also need to be factored in.
You will never have a period when some bill or other doesn't drop through your letter box if you own several rental properties and any surplus cash at the end of the month may have to be to ploughed back into your business. Remember the last person to get paid is you - if you get paid for your time at all! Buy-to-let landlords can be in business for a number of years and still not make any profit so it's difficult see how some people perceive landlords as a greedy bunch of fat cats. Most of the time you'll feel as if you're running a registered charity especially when you are short changed or swindled out of money you are entitled to.
Sadly there is a section of society that will always want a free ride and as a landlord you will need to be wary of this. There are those tenants who remain at the very bottom of society because they don't attempt to better themselves but merely rip off money from those they wrongly assume can well afford to lose it. The landlord/tenant relationship should ideally be one whereby both gain something: i.e.. the landlord gets his due rent to pay the mortgage and the tenant has a suitable place to live because for whatever reason he does not want to or cannot afford to buy his own house. Neither party should lose because of being taken advantage of by the other.
You as a landlord must also be quite clear about the fact that the lenders and the council will always expect payment from you even if you have been short changed by your tenants. The more houses you have, the more money people will assume you have but this is not the case as you will have endless bills to pay and if the cash is tied up in the property what can you do if you run out?
Landlords also pay over the odds for their mortgages and are ostracised often. It's a shame that their value in society is not given a more worthy status. Good landlords provide excellent accommodation for families in the lower income level and also to middle class renters who wish to maintain their mobility and not opt fro home ownership just yet. Landlords are providing an invaluable service to the community but instead they get bombarded with silly rules that hinder them and add to their overheads.
Being a landlord can be a fulfilling role if you are the sort of person who prefers to be their own boss but it is not to be taken lightly and not something that can usually be done if you have a full time job. It won't all be plain sailing so realistically you will need to anticipate that some bad experiences will happen. View them as character building and obstacles to overcome and this will help you maintain a positive outlook so your business venture will be rewarding both financially and otherwise.
There is plenty of help and advice to assist you on property portals such as MSN Real estate or Rightmove UK whichever side of the Atlantic you live on. Be mindful of your obligations in providing a good standard of accommodation for your tenants and run your property rentals business on sound standards and principles and you will not go far wrong.
There's Always a Risk This Will Happen...
Well, could you be a buy-to-let landlord after reading this article?
© 2014 Stella Kaye