When it comes to learning about how to invest in property, it can be just as helpful to learn what not to do as it is to discover best practices.
There has been a huge buy-to-let boom in the UK in recent years, but while acquiring a rental or two may seem like an easy way to enjoy some extra cash flow, skipping steps during the acquisition process can actually cost you money and cause a substantial headache in the process. Here, we take a look at some of the most common mistakes made by property investors to help you steer clear of these and enjoy success in your venture as a landlord…
Not doing adequate research on your property
Many first-time investors look to buy run-down properties below market value in the hopes of regenerating them and either letting them out or “flipping” them to generate profit. However, it’s vital to have at least one survey carried out by a RICS-accredited professional to determine the extent of the renovations required. What may seem like a fixer upper in the light of day may actually be a home on the verge of condemnation, filled with beneath-the-surface problems that only a trained eye can see. Make sure you instruct a professional before committing to a project that could doom your buy-to-let dreams before they begin.
Not conducting thorough tenant screening
It’s important to carry out thorough tenant screening, and to keep aware of the changing legislation surrounding this, such as Right to Rent checks. However, it’s also important to keep an open mind to tenants and to review individual applications on a case-by-case basis; on average, tenant prospects have lower credit scores than in previous years, not to mention the house price boom of the past decade has meant the average age of renters has risen. Be thorough, but also be willing to negotiate lease terms rather than rejecting applicants outright.
Getting the rental rate wrong
It’s important to ensure you price the monthly rental rate at a figure comparable with the local average. Request an amount that is too high, and you’ll be left with no interest from tenants and extended vacancy periods, which means you’re not generating any monthly income. List it too low, and you’ll end up losing money or breaking even instead of creating a profit. Not sure how much should you charge for rent? Carrying out research online using portals like Rightmove and Zoopla can help you determine the average in your local area. Alternatively, handy online calculators are available to take care of that work for you.
Failing to heed advice from your property management company
The rental property business is complex, especially so for a new investor. Your property management team will have years of experience, and so we are well placed to tell you how it is – whether you want to hear it or not! From things like building maintenance to managing repairs in a timely manner, dealing with rent collection, listing a rental successfully and much more, we have just about seen and done it all. Trust in your management company – we are here to protect your best interests!
If you are unsure about how to get into property investment, make sure you take plenty of time to do research and conduct due diligence on each potential deal before making any decisions.
A seemingly great deal in a hot area may seem like a fantastic opportunity to be leapt at, but any seasoned investor will affirm that there is truth in the old adage, “if it looks too good to be true, it probably is.” Take your time, do your research, and where necessary seek advice from property management experts who have seen and done it all before.