Smarten up your act and reap the rewards
Rentals specialist and seasoned investor Graham Bates reveals how to make the most of the market and become a better landlord.
LANDLORDS will look back on 2012 with a mixture of optimism and despair.
Optimism because never before has the private rented sector enjoyed such buoyancy with high demand from good quality tenants and despair because at no time has it been more difficult to raise finance to either keep established residential property portfolios together or to expand, which frustrating when the opportunity exists to buy bricks and mortar investments at such low prices.
So what is this new year likely to bring and how can you become a more successful landlord in 2013?
The good news is that the rental market is expected to remain extremely busy everywhere.
In my patch, demand both in Leeds city centre and its suburbs remains strong to the extent that we expect demand to outstrip supply.
A strong income flow is the starting point for any landlord and critical both in terms of meeting loan repayments and maintaining the condition of the property.
So with all the signs pointing to the number of prospective tenants expected to outnumber available properties, if you are experiencing voids (the period when your property is vacant) of more than a few weeks between tenancies, you need to ask a few key questions to help identify and rectify the problem:
Is there a problem with the condition of the property? If you are not addressing small repairs, it will start to stick out like a sore thumb and your property will give the impression that it’s not cared for, which is not a good sign for a prospective tenant who wants to rent a nice home
Is it well-presented? For example, is the furniture or décor shabby? In times when finances are tight, it’s more difficult to bite the bullet and spend money on what may seem to be non-essentials but tenants have high expectations and a poorly-presented property with a shabby sofa or marked walls can be instantly off-putting. It can also drive down the rental value so a little money spent wisely can often reap rewards.
Do you have the right letting agent? How your agent presents your property is crucial so look at their website, review the photography and ask them for an activity report – how many viewings have taken place and what feedback has been received? Are they advertising your property on key web portals such as Rightmove and Zoopla.
Not all agents use sites such as Rightmove because of the costs that apply but this is a big disadvantage to a landlord and you shouldn’t hesitate to switch agents who are not fully marketing your property.
Are you asking too much? If you have the right letting agent they should have given you sound advice on how much your rental property is worth per month but some agents will tell you what you want to hear rather than what is realistic and some landlords have expectations that are simply too high.
Price is often a key factor when a property is sticking but it’s equally important to maximise your income, so you don’t want to go in too low – the answer is to ask your agent to look at comparisons with other similar available properties so you have a real understanding of where the market is at (remember prospective tenants are doing these comparisons themselves).
For most landlords, tenants should be in plentiful supply and those looking to get onto the buy-to-let ladder for the first time should not be overly concerned about finding someone willing to pay the rent, with the caveat being that you need to buy the right property in the right location (more of this in future columns).
So what other steps can landlords take to improve their position in 2013 and maintain a successful investment strategy?
It may sound obvious but just as you periodically review your personal income and expenditure, it’s important to do the same for your rented property. Just like running a business, you need to analyse your overheads to see if there are areas where you can make savings:
If you think you are not getting the best mortgage deal, ask a broker to check out the deals available (especially if you have at least 40 per cent equity). Is your agent charging too much – remember the cheapest is rarely the best but you need to ensure you are getting fair value?
Ask an energy broker to see if you can reduce the cost of utilities (some landlords offer rents inclusive of bills where this is especially relevant).
Other costs to review include buildings insurance, repairs and suppliers of items such as furniture.
Bricks and mortar investments can be fraught with difficulties if you don’t manage the property well but if you keep your rental property looking good, monitor expenditure closely and work with an established and credible letting agent to maximise your rental income, it should turn out as safe as houses.
Graham Bates is chief executive of Eddisons Residential. Eddisons City Rentals is one of Yorkshire’s leading letting agents. www. eddisons.com/cityrentals.
INSTANT ATTRACTION: Pat and Dennis Lofthouse fell in love with Church Cliff House and its seaside location when they saw it eight years ago. The house has been renovated and overlooks Filey bay. It has a walled garden and fenced paddock and outbuildings that house garages and store rooms.
OPPORTUNITIES: Graham Bates, who has a wealth of experience in residential lettings, says demand will continue to outstrip supply.