The 15 Biggest Mistakes Made By Landlords
1. Buying investment property on the advice of estate agents. Your market research should always include talking to a local letting agent. Simply ask "what type of properties are you always short of?" to find out the properties and areas that will give you the best yield.
2. Not factoring in leasehold block service charges when looking at the return from a property. Charges can easily reach 20% of rental income. In an older block you must establish that a sufficient "sinking fund" has been built up by the leasehold block management company to pay for the replacement of major capital items such as windows, roofs, lifts, communal boilers. If not it’s a game of "musical chairs" with the unlucky landlords left to pick up the tab.
3. Not investing in kitchens and bathrooms - it costs relatively little to tile a bathroom (and it’s cheaper to over-tile than to strip off and replace the existing tiling) and provide clean and hygienic new worktops in kitchens. Kitchens and bathrooms are a major "turn off" on viewings. A bathroom with both a bath and shower will be the most popular.
4. Installing light cream coloured carpets to look modern. They look modern, but stain quickly – Darker shades are much more serviceable.
5. Not providing an allocated parking space with a city centre apartment. A flat with a parking space will let long before all the other flats in the block and will achieve a price premium of up to 10%. If at all possible, negotiate a parking space.
6. Not reviewing rent regularly, particularly when the same tenant stays in the property. Allowing rent levels to fall behind the market rate can significantly impact your yield.
7. Not putting up a ‘To Let’ board. As a result no-one passing and no-one locally knows it’s available to let. This can eliminate many good prospective tenants.
8. Instructing too many agents or none at all to get the property let. One or two agents working to let the property is best and the landlord should expect weekly progress reports. If you instruct one agent agree a timescale of three weeks in which you will expect a tenant to be found or you will bring in a competing agent. If you have more than two agents working on it, they each decide they only have a reduced chance of securing the tenant and give it lower priority to their sole agency instructions. This may involve a longer wait or having to accept a lower rent.
9. Not carrying out an identity and independent credit checks on their tenants. The most credible looking tenant may have CCJ’s and a record of exploiting the unwary landlord.
10. Not using Guarantors when letting to tenants who are students or in receipt of Local Housing Allowance.
11. Not taking out rent guarantee and legal costs insurance. This can be a really expensive mistake, especially when the economy and job market is shaky.
12. Not diarising tenancy expiry dates and asking tenants in ample time whether they intend to stay. This is one of the most effective ways to eliminate void periods and needs effective management.
13. Not renewing tenancies on a fixed term basis. This locks in future rental income, but many landlords let tenancies roll on to a periodic tenancy.
14. Don't consider that a tenancy started in June will finish just before Christmas when it will be hard to find another tenant. Set tenancies in June to last for 7 or 8 months to end in late January/February when there is generally a shortage of properties available.
15. Not considering factors such as floor level and aspect when buying a flat.
If the flats are serviced by a lift then all flats on floor 2 and above will achieve the same rents but if there is no lift then flats on floor 1 will achieve the best rents. Flats on the ground floor achieve less rent unless there is access to a garden or patio. If there is a patio or a balcony consider whether it is going to get sun - a southern aspect will make for a brighter lighter flat that will remain easier to let over the years.
If you have any questions on letting your property, or would just like free, no obligation advice then contact us today: 01784 495660