Inside information on secrets of starting a buy-to-let operation that makes money
Award-winning investor and letting agent Sandra Widdrington gives some personal advice for would-be landlords.
THE first piece of advice I was given was to buy the worst house in the best street and if you would not live there yourself, do not expect anyone else to live in the property and pay rent.
I have always adhered to this advice and made sure that all my properties are to a good standard.
You must also carefully research the area where you want to buy your property. You can either do this yourself or ask a specialist letting agent to provide advice on the best location and type of property that will easily rent out. If you plan to research the market yourself, be very careful when speaking to local estate agents as they could try to sell you old stock.
Search local newspapers and the internet for properties and try to speak to existing landlords for their advice and to the local authority, as they can help with details about the demand for and supply of rental property.
You should also look at how close the property is to local amenities such as shops, transport and schools, and ask yourself: “Are these the type of amenities that are important to your prospective tenants?”
If you are aiming to let your property to a family with schoolage children, how close the nearest schools are, will be an important influence on where they choose to rent.
When you find a rental property you should arrange to look round it. Never buy sight unseen, as some did in the buyto-let boom.
Make sure it is what you need and assess whether you will have to spend any additional money on repairs or decoration.
This needs to be added into the asking price and so your offer needs to take this into account.
When you have completed on the home and pick up the keys you need to think about what is required for a rental property.
This is where most landlords fall down as they try to put their own mark on the place and carry out works to suit their own lifestyle. This can make it completely unsuitable for tenants and my advice is to keep it simple.
The basic requirements are carpets, curtains, light fittings and a cooker. Anything else, ie, washing machine, fridgefreezer or dishwasher are an extra.
My own investment properties are all of a similar standard. They all have central heating, quality carpets and neutral walls, a good, modern kitchen with oven, hob and extractor fan, a contemporary white bathroom suite with shower and easily maintained gardens, plus parking facilities.
If you want to give your property to an agent to manage then ensure that they are members of ARLA (Association of Residential Letting Agents).
This ensures they have the necessary knowledge and are up to date with the latest legislation. Also, if there are any problems with rent, tenants or the condition of the property they have the expertise to deal with them.
If you decide to manage the rental property yourself, make sure you get references for the prospective tenant and be very thorough as this could save complications further down the line.
Also, remember you must, by law, deposit the bond in the correct manner with a Government approved scheme. You cannot keep the bond yourself.
Next, you need to keep a close eye on the rent payments and any problems must be addressed immediately.
As soon as the rent is two months in arrears, the correct paperwork must be issued and 14 days’ notice given to the tenant for all outstanding rent and you must make them aware that otherwise mandatory possession can be sought from the courts.
This is where a good qualified letting agent comes into play.
Landlords must treat the rental property as a business and not a charity. Being a landlord is not for the faint hearted, you need to be firm but fair and follow all the legislation and regulations. It is not a short-term money making plan either. You need to be in for the long haul.
At the moment, interest rates are low and capital growth is stagnant, whereas before it was higher interest rates but good capital growth.
To sum it all up, I’d say that the art of being a good landlord is listening to the tenant, asking a fair rent and dealing with any maintenance issues as soon as they are reported. It sounds simple, but getting it right takes a lot of effort.
Sandra Widdrington is owner of Jigsaw Letting, Selby: 01757 241123. www.jigsawletting.co.uk
INVESTMENT OPPORTUNITY: It is important to buy properties that are in a suitable area.