Being a landlord isn’t rocket science. At the same time, it’s not always as straightforward as you might think. Sure, it’s great when everything ticks along nicely. But, managing tenants can get complicated.
Tenants that miss their rental payments, damage your property or worse refuse to move out when asked, can end up costing you lots of money. And, be aware selling a property with tenants can take a long time.
I guess what we’re saying is being a landlord isn’t the type of business that will just run itself. So, to make sure you successful, here are X easy tips to help you avoid common pitfalls and keep on track to make a healthy profit.
Tip 1 Buy the right property
There’s no point buying a property located a million miles away if you want to be a hands-on landlord. It makes far better sense to buy closer to your home. This way, you can respond to any emergencies quickly and be able to keep an eye on things. On the other hand, if you want to capitalise on cheaper real estate by buying abroad, make sure you do your homework. Countries have different housing laws, so you don’t want to get caught up in too much red-tape.
There’s also a whole heap of things consider before you agree to buy your rental property. These include:
- Mortgage repayments
- Ongoing maintenance costs
- Is it already tenanted?
- The condition of the property—when was it last decorated, do you need to buy new appliances or is it ready to rent immediately?
- Is there a local rental market?
Tip 2 Don’t put all your eggs in one basket
We all know that being a successful landlord is a long-term game. And, it doesn’t come without risk. So, it pays to be prepared. If the income from your property pays for your mortgage or living costs—what will happen if your tenants fail to pay you on time or there’s a gap in tenancies?
This is why it’s better to spread out your investment. For instance, rather than pinning all your hopes on a single house, put your money into multiple flats. This strategy is generally more likely to give you a better return in the long run too. As well as provide you with greater financial flexibility during low times.
Tip 3 Get the practicalities right
Landlords get a bad rep sometimes. But, remember your tenants are your business. You should foster a healthy relationship with them, which is firm but fair. Don’t become your tenant’s best friend as it’s unprofessional and may lead to unwelcome difficulties.
But, also don’t ignore them for weeks when they report something is broken or needs repairing. If you treat your tenants fairly, you’re less likely to encounter issues later on that will impact on your income.
- Set your rent at an appropriate level. Don’t try to over-charge as today’s renters are savvy and will know exactly what the local going rate should be.
- Always Interview prospective tenants. If you can’t meet them in person do it over the phone or via video call. Also, request references and check their credit ratings as this will give you a good indication how likely they are to pay their rent on time.
- Seek legal advice to help you draft a lease agreement.
- Give your tenants a chance to review the lease terms so they ask any questions before they sign. This way you can iron out any potential issues beforehand.
Tip 4 Know the law
Do your homework and familiarise yourself with landlord-tenant laws. These can be pretty complicated so don’t hesitate to seek professional advice. As, breaching your tenant’s rights can land you in serious hot water.
For instance, private tenants are protected from unfair rent increase as well as unfair eviction. They also have a right to know who their landlord is, to live in the property undisturbed and have their deposit protected as long as they don’t break tenancy agreement.
Tip 5 Become a tax pro
In the eyes of the taxman, any rental money made from your property is considered income. So, you need to pay tax on it. Tax regulations differ from country to country.
Always do your homework. After all, you don’t want to pay more tax than you need to. For instance, married couples can divide the property between them thereby reducing their overall tax bill.
Want to sell a tenanted property?
If you’re a landlord and are struggling to sell your property due to having tenants – it’s not the end of the world. In fact, you can use a company like House Buy Fast, who has lots of experience buying properties from landlords. And, they don’t require your tenants to move out, so you don’t risk losing any income whilst the sale goes through.