Do you want to make the most out of the property market but not sure where to start? If a landlord doesn’t optimise their business, they will struggle to get off the ground and potential to grow their prospects.
According to Simply Business, 600,000 small businesses, such as property letting, were at high risk to fail following the 2020 Coronavirus outbreak in the UK. Broken down, that figure is equal to more than 1,700 businesses a day. Here are five easy tips and tricks to get your feet off the ground and onto the property ladder.
1. Research before buying an investment property.
Before purchasing an investment property or renting out one you already own, make sure it has the potential to produce positive cash flow in current market conditions.
Is the property within your budget? Consider whether property is in good condition (no major repairs being needed) and therefore offers a potentially high return on investment. Maximising this return can be the difference between success and failure when you’re trying to get your business off the ground!
2. Always budget for unexpected costs.
It’s important to determine how much you want to earn to make the investment property worth your time and effort. Budget any and all financial projections for the property. You should also prepare for extra expenses and potential missed rental payments. This is especially important for a first-time landlord who may be paying out-of-pocket to purchase an investment property.
Some of these extra expenses for a property may include; landlord insurance for accidents, sudden loss and liability, maintenance and repair costs, rental licensing, mandatory inspections and annual registration fees, and property and rental income tax.
Along with these examples, also factor in the possibility of expenses to pay if your rental property sits vacant and bookkeeping or accounting fees if you choose not to do them yourself.
3. Stay organized.
For a first-time landlord, managing a rental property can seem daunting at first, but staying organized can make this initially intimidating prospect a lot less challenging. However, it is one thing to figure out how to start renting property and another to stay organized and turn a profit.
If you have a method for organization and adhere to it, your business will run more efficiently. Some methods you can use to keep your business in order include:
- Documenting all communication with tenants, maintenance people, and everyone who inhabits or works on your property. Keep digital and printed copies of all your documents and correspondences.
- Store all rental applications, lease agreements, repair bills and insurance documents in a secure but easily-accessible place for future reference.
- Create receipts for rent payments and security deposits, and create a filing system for receipts from advertising costs, tenant reimbursements and utility bills.
Staying on top of all this means you won’t fall behind with correspondence or your financial tracking. This can be a vital way of helping you protect your income.
4. Narrow-down prospective properties to get the best investment.
The type of property you end up purchasing will determine the amount you’ll have to finance, budget for repairs and the profit you’ll make. If you are struggling to choose between multiple properties that make for an attractive investment, here are some questions to ask yourself before deciding:
- Is the property close to your home? If the property is in a walkable neighbourhood 56% of renters find this important according to the Zillow Group Consumer Housing Trends Report in 2019.
- Does the neighbourhood feel safe?
- If the property is in an urban area, does it offer an easy commute to the city’s centre? According to the Zillow 2019 report, 57% of renters find an easy commute to work or school important.
Zeroing in on the best property for you means you can get the best financial outcome for your investment, which is another vital way of helping you protect your income.
5. Decide if you want to hire a property manager
If you’re looking to avoid many of the issues that landlords must deal with, including many expenses and the process of advertising and optimizing the financial potential of your property, you can hire a property manager to handle either the entire rental process or just a part of it.
Doing this can save you a lot of headaches! Keeping on top of all this information, as well as liaising with tenants, probably isn’t the reason you got into the land lording business.
That’s exactly why property managers, like Keey, exist!
If you feel you could benefit from Keey’s services, take a look at what we can do for you at Keey!