Are You Ready to be a Landlord?

12 Apr 2011

Property price
The biggest expense you are likely to have is the initial purchase price of the property itself. make sure that you purchase the property for the best possible price and understand all of the additional costs that you are likely to incur, such as solicitor's fees, stamp duty and mortgage arrangement fees. Always seek expert advice.

Advertising your property
If you are letting without an agent you will need to consider advertising costs. These depend on what type of method you use and the amount of coverage you are looking to achieve. Some landlords like to showcase their properties in the local newspaper, while others embrace the web and advertise on portals. If you give your property to an agent then they will market the property on your behalf over a variety of different media and should produce bespoke brochures and other marketing materials sometimes not cost effective for a landlord to do themselves. Not to mention a presence in a high-street window.

On-going maintenance
Even the most modern properties will need on-going maintenance throughout it's life as an investment. Ensure that you have factored in a sinking fund into your initial calculations to allow for one-off jobs and more major works over time. A good agent will offer as part of their full management packages regular property visits, with reports, on the state of repair and cleanliness from their property management team. If you are going it alone, you must consider doing this yourself.

Mortgage payments
Do your homework. Seek independent financial and market advice to make sure you have the best financial product and that there is a demand for the property you are going to purchase. A consultation with a financial advisor will allow you to weigh up the options planning for all scenarios. It is also crucial to have a mortgage that covers let property, and that you understand any constraints within it. For example some mortgage products will not cover DSS tenants.

Added extras for your tenants
With the competition between rental properties becoming tougher you should always seek advice from the professionals on what you can do to stand out from the crowd. Some properties will acheive more interest if they are furnished, if there is a big garden consider including a gardener into the rental rate and in the case of student or sharer properties maybe a cleaner?

Insurance
Landlords require specialist insurance to cover their own possessions, the fabric of the building but also accidental or malicious damage from tenants and public liability insurance. scottfraser recommend a policy through brokers NW Brown which has been set up to fully cover landlords.

Management company charges for leasehold properties
If you purchase a leasehold property you will be expected to pay an annual management charge to cover costs to maintain communal areas. These costs can differ considerably between developments and management companies so make sure you have checked before you sign. Also ask the management company for a breakdown of what it covers so you are not hit with an unexpected bill further down the line.

Void periods
It is unreasonable to expect that you will not have any void periods between tenancies unless you are lucky enough to have tenants renewing their tenancy time and time again. There are two schools of thought from agents on void periods. Firstly get the voids down to as small a period as possible to save on down-time but allow for no maintenance time or "problem solving" as a result of deposit disputes and then plan in major refurbishment works every few years. Or secondly allow a slightly longer period to account for maintenance, have the property professionally cleaned and have a full check out with a trained property manager and inventory clerk, thereby reducing disputes and spreading maintenance costs.

Agency fees
If you instruct an agent to look after your investment property you can do so on numerous different packages. The most popular is the full management service and fees do vary as does the service received. Always check what is included and review your service on a regular basis. In many cases the cheap agents are cheap for a reason.

Take all of this into account and you will be on the right track to a solid investment. scottfraser offer investment and asset management services to investor landlords with consultation advice to full property search and acquisition services. If you are a first time landlord or seasoned investor we would be happy to help.

Laura Stafford
Assistant Manager - East Oxford Office
01865 244666 / laura@scottfraser.co.uk