Could You Be A Landlord?
Often criticized but essential to the economy, landlords live a varied life. On the one hand, they are the subject of a plethora of headlines about how terrible the rental economy is and how renters are being ripped off. On the other, they provide a vital service for those who cannot (or do not want to) buy their own home. It’s like society can’t quite make up their mind which category they fall into.
Even with these differing opinions, it’s easy to see why running a rental property is an attractive proposition. It’s another income stream that is often used to bolster a retirement and when it goes well, can be a lucrative and even enjoyable undertaking.
If you’ve ever considered dipping your toe into buy-to-let, there are a few things you need to be aware of. This might sound like we’re trying to scare you off, but that’s not the case. It’s about awareness. Many people find their rental property to be their financial undoing due to bad management and not being aware of what they were getting into. Advice forums for landlords are filled with the same stories over and over again, so by briefing you up front, you can make a truly realistic decision about whether or not this is for you.
Need To Know #1: The Property You Choose Is Vital
So you see a property. It’s in your price range, and you know you could add some value to it with a few renovations. You plunge in because you like it and it works on an economic front.
This is entirely the wrong way to go about it. You have to put your tenant at the forefront of your mind, right from the moment of property acquisition. Let’s say you’re considering a five-bedroom house. It would have a high rental tag and be perfect for a family – but not many large families want to rent. The mistake you’ve made is buying based on what you would like, rather than what your potential renters need.
While renters come in all sizes of family and professions, the most commonly rented properties are on the smaller side. Gardens are not necessary. If you want to target families, then check the links to local schools and conveniences. For professionals, look at the transport links. You have to know who you’re targeting from the start. Only when you know you’ve got the right property for the demographic you want to rent to should you be making offers, contacting a solicitor for conveyancing and dreaming of your new rental income.
Need To Know #2: It Can Be Difficult, Mentally
So you finally have your property, and you’ve struck gold; you have a tenant, and they’re all moved in.
Here’s the kicker: that property isn’t technically yours anymore. You have no more access to it that the average house along a street – that’s the law. You can’t go in without notice. This mindset – of ownership that doesn’t feel like ownership – is often the comeuppance of new landlords.
Do you really think you can let go and leave a tenant to do as they please with your investment? It’s not for everyone. Don’t think you can protect yourself with regular inspections, either – due to being legally required to give notice; tenants will likely spruce the place up. It takes a lot of courage and a few leaps of faith to be a landlord. Don’t sink money into a project until you know you can deal with this side of it.
Need To Know #3 – You Might Lose Money
In the dream, you buy a house for next to nothing and rent it to coverage the mortgage costs for years. Eventually, it’s paid off, and you have a valuable asset.
Except – what if you don’t? What if you go through years of stress, maintenance of the property, dealing with tenants – and at the end of it, you’ve lost money? It can happen. We live in volatile economic times, and house prices are one of the first things to take a dive when the economy is in trouble. Even if you don’t plan to sell, the lowering of prices will apply across the renting demographic, too. That’s why being a landlord should only be a supplement to your income or pension; never put all your economic eggs in one basket.
With a little more awareness of the perils, you should hopefully be more aware of whether you can handle the landlord lifestyle. Good luck!