Rentals for novice buy-to-let investors

For a newbie rental property investor, the choice of whether to go short or long-term might be one to ponder.

Generally, there are two options – long- and short-term rentals.

Certain areas are popular for short-term rentals which can achieve much higher rental returns for landlords. Some property investors are even looking at a mix of long- and short-term rentals. In holiday areas, you may find you can rent out your holiday home when it’s not needed for your/family purposes and so achieve some returns on your investment.

Not all areas are suitable for short-term letting year-round; investigate carefully as there are risks associated with this type of letting.

Rentals could be for holiday or business purposes and there are also gap rentals where people come for a period on a work contract or move to an area and rent for a period.

Pros – flexibility and higher rental returns. If you want to use the property for a period for your own use, you have the flexibility to do so.

Cons – occupancy risks and higher costs. You aren’t always guaranteed occupancy and it requires more financial commitment, as the unit needs to be furnished and equipped with basic services like television and Wi-Fi. Maintenance costs also tend to be higher.

Pros – Stability and financial consistency. Ensuring good management of your property and tenants would mean you can basically bank on your monthly rentals. Securing a good tenant who looks after your property provides peace of mind.

Cons – Lower returns and the potential risk of delinquent tenants. It’s become quite onerous to evict delinquent tenants. Ensure thorough tenant vetting and regular property inspections.

Unless you’re in the business of rentals, it’s best to work with a rental agency to assist in setting your rental at the correct level to attract maximum occupancy.

Paul French is operations director of the Coastal Property Group