Becoming a landlord can be a fulfilling and lucrative job – if you know what you’re getting into. When you invest the time to care for your tenants and property, letting a home or flat is an easy way to generate passive income.
But overlooking a few key tips could result in nightmare tenants, damaged property, or even legal trouble.
Consider these tips before renting your property.
Make Time to Do the Job – Or Hire Someone Else
Letting a property involves a lot more than handing over the keys and collecting cheques. As a landlord, it’s your job to maintain the property, respond to tenants’ issues in a timely manner, arrange inspections and upkeep, manage relationships and more. It can easily turn into a full-time job, especially if you’re renting more than one property.
If you think you can let a home and work a full-time job 2 hours away, you’re going to be making a lot of costly rail journeys. Set aside time every week to manage your property and contact your tenants regularly to ensure they’re happy with your space. You’ll need to dedicate more time to your rental just before and after renting to a new tenant.
If you can’t be bothered to be at your tenants’ beck and call, consider hiring a rental agency to manage the property for you.
Get Landlord’s Insurance
At the top of every list of HMO property advice is landlord’s insurance. This is important for all rentals, but especially HMOs (houses in multiple occupation). These rentals have high turnover and multiple adult occupants at a time. This means more depreciation and damage in the long term.
Tenants will not be liable for most of this damage under UK law unless you can prove that they were negligent or had intent to damage the property. Even then, only about 40% of renters have insurance, so you might be stuck paying out of pocket regardless.
Landlord’s insurance also covers fire damage, theft, accidents and legal fees (in the event that you’re sued by a tenant), so it’s a no-brainer for most landlords.
Vet Your Tenants
Never judge a book by its cover, and never judge a potential tenant by their description of themselves. 99% of tenants describe themselves as “quiet, responsible and hard-working.” But when they move in, everything could change.
Always perform background checks and credit checks on tenants to assess their ability to pay. It’s also a good idea to contact tenants’ previous landlords or bosses, especially for HMO rentals. It’s important to understand if a tenant gets on well with others, as conflicts between tenants make a landlord’s life much more difficult.
It’s advisable to do interviews with potential tenants to get an idea of their personalities. However, their references and backgrounds should inform your decision more than the interviews.
Renovate for Bigger Cheques
Before you list your rental property, consider renovations that could up the value. If your property is in a popular part of your town or city, a simple renovation may boost your income considerably.
For example, spending £5000 to renovate the back garden may allow you to increase rent by £150 per month. That renovation would pay for itself in under 3 years and generate profit long after that.
You have an opportunity to do this every time a tenant moves out and you begin the search for a new one.
Simple renovations that add to monthly income include replacing countertops, appliances and bathroom tile. Adding smart home features like app-controlled locks, lights and appliances is also very affordable.
Never Let a Property That Hasn’t Been Inspected
As a new landlord, you MUST fulfil all the legal requirements of letting a property before tenants move in. These requirements are not limited to paperwork and tax documents. You have to inspect the property to ensure it’s safe and accessible for tenants.
This includes everything from gas and electrical hazards to seemingly small issues like uneven stairs. A violation could land you in legal trouble. Tenants can report violations to the city council, which will hold you accountable and fine you. The authorities may also decide to inspect your property if they believe it is in violation.
It’s important to perform regular inspections of your property to protect your tenants and yourself. You are liable for any harm caused to your tenants due to health and safety violations on the property.
The #1 Tip for New Landlords…
As a new landlord, remember that you’re not dealing in property and pounds. You’re in the business of people! At the core of letting property is helping others and building relationships. If you care for your tenants, they’ll treat your property with respect and be more likely to stay long-term.