How to Be a Successful Landlord

I have written a lot about the benefits of property investment, and there is a distinct trend in recent times for people wanting to buy property in order to let it out. In fact, an article by Tanya Powley, Ed Hammond and Kate Allen in The Financial Times newspaper suggested that the Bank Of England’s new interest rates are set to fuel a “buy to let mortgage boom”.

This can be a great investment, and the rental income can be a very good way to mitigate the costs of a mortgage – and once your mortgage is paid off you can generate a nice additional income on the side.

What many people don’t realise is the level of responsibility that is involved in having a tenant living in your property. You have a high level of duty to care for the property and are responsible for the overall well-being of your tenants whilst they’re living there.
If you get into the game of being a landlord, it can be very intimidating. If you enter into it lightly, you’re much less likely to be successful in your venture. There are many aspects involved in being a successful landlord to ensure that your investment is more of a boon than a burden. This piece will explore the necessary considerations that any landlord must adhere to in order to be successful.

One of the most important aspects of being a successful landlord is having the best insurance you can in place to protect yourself against any damages or losses. Damage and maintenance to your property is pretty much inevitable, as maintenance is required on even the most modern property and normal wear and tear occurs naturally as part of everyday use.

The costs of this can be quite substantial, and it’s not something you will particularly want to pay for out of your own pocket. A lick of paint after a tenant leaves might be much more bearable for you than replacing a boiler for example, it’s much better to be covered than not.

So, it’s safe to say that insurance is pretty important. But when you look for a policy there is a challenge in determining what cover you should and shouldn’t get. Bear in mind the following when considering what type of cover to get;

• Accidental & Malicious Damage – The types of damage that are covered are an important consideration when choosing insurance. For insurance purposes damage is categorised into accidental and malicious damage, and some insurers may offer one type but not the other. For example iInsure365 cover both, whereas More Than residential landlord insurance only specifies cover for accidental damage. If you need cover for a specific type of damage, such as fire, then make sure this is specified in your policy

• Contents – For most insurers of landlords, contents cover is an optional extra. This doesn’t cover your tenant’s possessions; it covers anything that is owned by you in the property. This may include electronic appliances like fridges and dishwashers, but also things like lighting fixtures and fittings. If you plan on providing your tenant with some type of appliance or there are any expensive contents within the property that are not owned by the tenant, then you should have contents cover to avoid any potential unwanted expense on your part

• Public Liability Insurance – This insures you for claims made against you for injury to third parties or damage to their property up to a certain value. This may be up to several million pounds depending on the policy. It is worth considering this type of cover as essential, as it will help you to defend such legal actions and to pay compensation if you are found to be legally liable. Bob Landlord wrote in an article for the Property Investment Project that “Since the UK is becoming ever more litigious; every landlord should have public liability insurance to cover themselves.” It’s probably better to be safe than sorry, you never know if someone might fall down the stairs and sue you. Most providers will offer public liability insurance

• Loss Of Rent – Because so many people depend on the income that their property will generate for their livelihood and to pay their mortgage, it is worth considering cover for loss of rent. This will enable you to maintain your income should a tenant not pay their rent. The type of policies that offer this are called ‘Rent Guarantee Policies’. This is usually an optional extra form of cover and will most likely affect your insurance premiums

A well protected landlord with the most appropriate insurance for their needs is much more likely to be successful. Unfortunately things like damage and public liability claims are a part of the reality of being a landlord, and because you’re not living in the property yourself it’s very difficult to control – as a result insurance needs to be in place for the greatest chance of success.

Always make sure you read the terms of your insurance policy thoroughly and make the effort to shop around for various quotes before proceeding.

Reliable tenants are a dream; they can be a very good asset to you and can even become a personal acquaintance in a mutually appreciative business relationship. The trouble is that they are particularly difficult to find. The reasons for this are many, but there are several things that you can do in order to make sure you find the best tenant possible.

As a business relationship, there is likely to be a little bit of give and take between you and your tenant. Remember that being a hardnosed landlord can cause tenants to seek accommodation elsewhere, so flexibility can be beneficial as maintaining a tenant over a longer period of time is actually much more profitable than having a high turnover of tenants.

Considering the above; when dealing with things like late rent payments try to have a dialogue with your tenants. They may have legitimate reasons (like the loss of a job) and if you’re flexible, this makes for a happier and in general easier to deal with tenant when it comes to other problems.

Some tips to remember when finding and choosing tenants include;

• Use A Reputable Letting Agency – It can be a struggle to find tenants and it’s a very easy option to go to the nearest letting agency in your area and sign up. But just remember that you should do your research first to find the most reputable ones. Look for accreditation from official governing bodies

• Purchase Property In Areas That Are In Demand – This will have a very big impact on the ease of finding a tenant, in addition to the value of the rental income. There are several very student oriented towns in the UK that are good bets for consistent demand every year. According to The Complete University Guide these include London, Manchester, Brighton and Cardiff. If you don’t buy in an in demand area you may have a struggle in finding a tenant, or replacing a tenant when they move on

• Think About What Kind Of Tenants You Want – There are many different types of tenants. Families, young professionals or students for example. Who is your property most suited to? This is an important question, a one bedroom flat may be best for young professionals or students whereas a three storey house will be more suitable for families. Always mention in any advertising or conversations with letting agents that you have a certain type of tenant in mind

• Take A Deposit – Taking a deposit that is usually in the region of around 1 months’ rent gives you an added level of security when it comes to any damage or repairs you might have to carry out when a tenant leaves. This is a basic issue of dealing with tenants, so be sure to take one

Stephen Nation of Sequence Home stated in a recent article that “There are lots of things to contemplate when deciding to become a landlord… to help your investment become a success” and that seems like a very wise statement. The bottom line when it comes to tenants is that you have to be very vigilant but also provide some degree of understanding towards your tenants, and remember that finding tenants is a process just like buying – it can take time and it will require some hard work on your part.

Just a quick word of advice, try to avoid letting to friends and family – this can lead to various complications that would best be avoided.

I think it’s perhaps just worth mentioning that if you don’t want to deal with all of the responsibilities and duties that I have covered here, being a successful landlord will be much more difficult. However, You could always use a property management service to help you with things like maintenance and rent collection.

With such a vast array of property purchases and the market increasing at an alarming rate, at this point in time according to an article in The Guardian newspaper house prices are rising at their fastest rate since the 2006 peak, many people are choosing to buy properties and let them out.

This can be a very positive thing, provided you take the proper care and precautions that being a successful landlord requires.

References
http://www.ft.com/cms/s/0/535f956c-000c-11e3-9c40-00144feab7de.html#axzz2br4vYL4l
http://www.thecompleteuniversityguide.co.uk/cities/
http://www.sequencehome.co.uk/press-office/2012/04/23/how-to-be-a-successful-landlord
http://www.propertyinvestmentproject.co.uk/blog/landlord-insurance-quotes/
http://www.theguardian.com/business/2013/aug/13/rics-house-prices-rising-fast-peak