Common Mistakes Landlords Should Avoid
Estate Agent in Strabane
3rd April 2018
Whilst owning a rental property can bring many advantages in todays present climate landlords should also be aware of the common pitfalls that could see your property rental investment go up in smoke.
As with any investment it’s important to be aware of the associated risks that come with buying property to let out. These can be avoided by completing the right research, having set targets and goals and reviewing your investment on a regular basis. Here are the four common mistakes that property investors make.
Buying a property that they would live in
One of the biggest mistakes, often made by newer landlords, is purchasing a property that they would like to live in themselves. Whilst that delightful rural countryside cottage surrounded by lots of land may be your dream home, it may be a disaster purchase if it doesn’t attract tenants. Most tenants are those in their twenties, according to the latest government statistics, who are social and may be dependent on public transport; therefore they’ll be looking to rent in areas with good access to local amenities, like bars, clubs, restaurants and transport links. Forget about what you want in a home, and start doing research on rental hotspots to invest in, as well as what renters are searching for in terms of number of bedrooms, size of property etc.
Ignoring background checks on tenants
It’s important as a landlord that you to do your due diligence and vet your tenants properly. Any tenant who doesn’t pay on time, or at all will have a negative effect on your monthly mortgage repayments, hurting your cash flow and putting you at risk of repossession.
Ensure you complete a credit check, request bank statements, proof of income and a reference from a previous landlord (if they have one). If you aren’t confident in completing a thorough check, get in touch with a local letting agent who will be able to locate potential tenants and complete these checks for you.
These aren’t guarantees, but by doing the right background checks, you’re limiting the risk of choosing the wrong tenant. And if possible, look into getting a rental guarantee insurance policy that covers your rental costs if your tenants do not pay.
Ignoring the Regulations
Whilst buying-to-let can be a nice way of earning money, it does come with plenty of administrative work, including rules and regulations that you must abide by.
For instance, whilst you are liable to pay income tax on your property, there are also additional costs so ensure you do your research, or alternatively seek professional tax advice. Other things to remember include gas, fire and electric safety standards and Landlords Registration Fees. Remember to keep all paperwork in a safe place as well!
Mortgage Provider loyalty
Despite the struggles in the buy-to-let sector suffered during the credit crunch, the state of the market has changed dramatically in the last few years with new lenders and deals. This means that as a landlord, you now have more options to choose from, so it’s certainly worth shopping around for a new deal, especially if it works out better for you. There’s nothing wrong with reviewing your rate at least once a year.
We hope the above will prove helpful and please remember that for all your Lettings needs contact Strabane Property Centre Ltd, we manage a substantial rental portfolio and we would be delighted to assist you in all aspects of the rental market.