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Whether you are the tenant or the landlord, there are laws in place to protect both parties. Following this guide can save you a lot of heart ache and give peace of mind when dealing with a rental property.
Buying a rental property isn’t the same as buying a home for yourself or your family. You should consider that your tenants will not have the same taste as you. Presenting the home as a blank canvas allows viewers to see its potential.
Think about what type of tenants you are looking for when deciding the location of your property. Do you want to rent to single working adults, parents with kids or are retirees your target market?
If you are buying the home for the sole purpose of it being your income, consider things such as proximity to schools, transportation, and other local amenities. Before making your decision, speak to the neighbours and walk the area, as this is more than likely what your possible future tenants will be doing.
Let’s face it, you’re renting out your property to make money. The financial aspect is the first thing you need to look at. The two most important factors are your income versus your overhead costs.
Expenses include the mortgage and all other bills related to maintaining the property. When you let a property, it’s your responsibility to fix any repairs and address tenants’ complaints. Once you calculate overhead expenses, you can set a reasonable rental rate.
When choosing a rental rate, consider the current market. What’s the average rent of comparable homes or properties in the area? You can also elicit the help of experts. Hire a property manager or letting agent to help you calculate costs and maintain the property.
For many new landlords, paying letting agent fees are well worth it. A letting agent brings experience and industry expertise to the table. This is especially beneficial if you don’t reside near your rental property or you’re a first-time landlord.
When letting your property, you need to plan for the unexpected. This includes dips in the market value of your rental property and other economic hardships. Before you invest in a property, find out the most recent sale price.
You should also consider the age, size, and location of the property. The real estate market is unpredictable. Do your research and try to only invest in properties that show a substantial return on investment (ROI). Financially planning ahead is a big part of succeeding as a new landlord.
When planning ahead you also need to have a financial cushion for those times your rental property sits vacant. You may not always have reliable tenants knocking on your door. That means all your overhead costs including monthly bills and maintenance come out of your pocket. But what happens when your pockets are empty?
Before you start letting property, put aside extra funds to fall back on when times get tough. This includes both vacancies and delinquent tenants who don’t pay on time. One way to protect yourself from this is to avoid letting to unreliable tenants when you’re feeling desperate to fill a vacancy. The damage and headaches you may encounter will cost you much more in the long-run than a few months without steady income — especially if you planned for it.
Some new landlords don’t realise how many rules, regulations, and laws surround letting your property. Landlords are required to know and follow all laws surrounding letting a property.
There are important laws you should know about. Such as the eviction process, how much notice tenants must give before vacating, what the security deposit covers, and your rights for performing routine inspections and gaining access to the property.
You also need to provide tenants with important certificates and paperwork like an Energy Performance Certificate and both gas safety and electrical safety certificates for Houses of Multiple Occupancy.
One major law every landlord must follow is to protect the tenants’ security deposit. If you decide to collect a deposit (and you should), you have to protect it using a tenancy deposit scheme. Protection must be in place within 30 days of receiving the money and returned if the tenant meets all requirements outlined in the rental agreement.
Following the appropriate laws means avoiding unwanted lawsuits and headaches. These laws are put in place to protect both you and your tenants.
In order to protect your property and its contents, you should perform an inventory check both before and after letting the property.
Some landlords let their property fully-furnished. If you choose to do so, document all items that are inside the home and their condition.
Take photos and detailed notes. Make sure the tenant is present during this process so there’s no confusion or discrepancies later on. At the conclusion of the lease agreement, you should perform a final walk through with the tenant. This is your chance to point out any damages or excessive wear-and-tear to the property or its contents. Depending on the extent of the damage, you may be able to keep the security deposit.
Although letting property can be a very lucrative and rewarding experience, it’s also quite stressful for new landlords. With so many things to consider, responsibilities to handle, and laws and regulations to follow, you may want to hire a letting agent or property manager to help. These professionals can vet quality tenants, collect rent, monitor activity at the property, and handle tenant issues in your absence. This is especially helpful for landlords living in a different location from the property.
Before you start the letting process, the letting agent or property manager can simplify things for you. They can get you off the ground and help handle some of the day-to-day stress. If you’re investing, be sure to do your research about the current real estate market and the property location. With proper planning and the right resources in place, letting your property can be a great investment with long-term financial benefits.
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