How to avoid common buy-to-let investment mistakes
Buy-to-lets are one of the most popular property deals. That’s not surprising as they’re a highly lucrative form of investment.
However, being a landlord is not without its challenges. But by taking the following precautions, you can avoid any costly buy-to-let mistakes.
Keep on top of buy-to-let admin
As a landlord, you’re running a business, which means you must keep on top of the paperwork.
First up, there are all the legal and practical documents that must be kept up to date including:
- Gas safety certificates
- Insurance policies
- Right to rent documentation
- Property inventories
- Inspection summaries
Next, you need to make sure you keep all your invoices and receipts for the taxman. You’ll need to have copies of mortgage statements as well as receipts for any expenses such as maintenance and repair bills.
Research rental charges in the area
Before you commit to your buy-to-let investment, you should research rental rates in the location and determine what would be an appropriate rent for your property. You need to be able to charge a high enough rent to keep your cash flow positive.
If you undercut the market and charge too low a rent, you could end up attracting the wrong type of tenant. Alternatively, if you set the rent too high it could result in void periods – and can you afford to have your property sitting empty?
Make sure you decide in advance what you intend to charge so that it’s in line with similar rental properties.
Thoroughly vet your tenants
It’s vital to carry out comprehensive vetting of potential tenants. You need to ensure they’re going to pay the rent on time and take care of the property.
Free tenant search sites have a bad reputation and should be avoided. Instead, look to letting agents to guide you, if you’re unsure of how to manage this aspect yourself.
You also need to make sure your tenancy agreement includes provision for all eventualities and adheres to current landlord regulations. This valuable document should outline how your tenant should treat your property as well as the duration of the tenancy and your financial agreement.
It’s best to avoid free tenancy agreements sold online and take the advice of a professional letting agent or solicitor.
Regularly inspect your property
As well as making sure your tenant is taking care of the property, you should check that they are sticking to the terms of their agreement. This could mean ensuring they haven’t moved anyone else in or are keeping pets when they shouldn’t. Any changes in circumstance could have a bearing on your legal liability as a landlord.
Your inspection can also be used as an opportunity to spot any maintenance issues and schedule in any work that needs to be undertaken.
Know when to evict
Late or missed payments, damage to your property, anti-social behaviour – don’t let these things go unchallenged.
Take advice so you understand when it’s time to start the eviction process. Leaving it too late can be a costly mistake.
Rely on a professional letting agency
It can be hard work to manage all the admin involved in buy-to-let properties and keep up to date with the increasing legislation that effects landlords.
If you have the time and experience of being able to vet tenants, write tenancy agreements, deal with bad tenants, then it’s not a problem. But if this isn’t for you, then hand the job of property management over to a professional letting agency.
Obviously, this will impact your profit margins, but you should factor this cost in before you make your buy-to-let investment. By relying on an agency, you can enjoy the financial benefits of being a landlord without the day-to-day hassles.
Would you like to learn more about property investment?
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Dates: 30 Nov-1 Dec & 8-9 Dec 2018
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