A buy-to-let property can be a sound investment but managing the property might prove difficult for inexperienced landlords. Here are some points that every potential landlord should consider.
Do you want to manage the rental yourself or use a rental agent?
Using a rental agent can be a wise choice, as a rental agent is well versed in managing property and will be able to assist with any disputes that arise. Most rental agents have systems in place to keep track of rental payments and home inspections. This way, your property will remain in good condition.
Agents will be able to use their experience to select suitable tenants for you. Choosing a tenant is imperative in the letting process as you’ll need a tenant who will keep the property in good condition, as well as someone with a clear credit history who can make their rental payments on time every month.
Do you want to rent long term or short term, furnished or unfurnished?
A pro to renting long term is not having to find another tenant every few months, and this works as a con for short term letting where a new tenant must be found often. Long term renting generally requires a lower rental, but allows for stability as good tenants can remain in the property for years. When renting out a property short term, a higher rent can be charged, however the demand needs to be considered, as consistent demand will be needed for consistent rental yield.
Either way, a general rule is that a landlord will ask for 2 months rent as a deposit and this will be returned to the tenant at the conclusion of the lease, provided the property is in good condition. If the property is in need of damage repairs, the deposit is then used for that and the balance returned to the tenant.
Whether you wish to rent out your property furnished or unfurnished is a personal choice, and whether you have the means to furnish the apartment. On one hand, a furnished apartment is more attractive to renters, on the other hand, it means that there are more of the landlords items that could potentially get damaged.
What repairs or maintenance jobs need to be done?
As a potential landlord, it’s a good idea to take stock of what may need fixing, before you rent your property out, and also take note of what may need fixing in the future. These future maintenance jobs can be included in the lease agreement, for the landlords cost to fix, and the tenant should be forewarned about these.
We advise landlords to keep money aside in case of unforeseen circumstances such as legal costs due to a defaulting tenant, or issues not covered by home insurance. Landlords are required to pay for the general upkeep and maintenance of the property, and about 5-8% of the rent should be kept aside for this purpose.
How secure is the property?
Security is a big factor for tenants in this day and age, with burglar bars, remote controlled gates and alarms being the norm. As a potential landlord, it’s wise to use your discretion to determine whether your property is secure enough to for tenants to feel comfortable living there.
Do I know enough about the legalities of letting?
Whether you’re letting your property out yourself, or using an agent, the legalities need to be considered. A lease agreement is imperative and must be structured correctly, and understood by all parties. A lease agreement done correctly will help avoid any complications about the responsibilities of each party. Grant Rea, RE/MAX Living Rental Specialist, says that “The lease should deal with all details regarding the tenancy such as where the deposit will be held and how disputes between the two parties will be addressed.”
Rental agents have extensive legal knowledge about rental disputes and the legalities of letting a property out, and would be a great asset to you in this regard.
Source: Private Property