Investing in Property & the Art of Being a Landlord

Property is very important. If you own property, it’s probably going to be the most important investment you ever make. In terms of expense, buying a house is usually the single most expensive transaction a person will make in their lives.

Property is also an excellent way to make money, many people try to get on the property ladder and then make money from their investment. There are many ways you can do this. You could purchase a property, renovate it and then sell for a quick profit – this is known as property development.

On the other hand you could purchase the property and convert it into something else. For example, a 5 floor town house could be converted into a series of flats to then be sold.

Another option, which is increasingly popular, is to rent out your property to tenants. But what are the benefits of this and why would you want to invest in property to be a landlord?

Well, there are several benefits to being a landlord. The most obvious benefit is that you will be generating income from your investment. This income can then be used to help pay your mortgage on the property, or if you’ve paid it off already then it can be used as disposable income.

There are many other benefits including;

• Tax Advantages – there are various government schemes in place that allow you to claim back the tax on maintenance to the property, such as painting or pipe work.

• Appreciation In Value – one of the best things about being a landlord, as opposed to selling, is that your property can gain in value as time goes on.

• You Can Use The Property Yourself – you can always move into the property if your situation changes, after giving notice of course.

You can also have a lot of free time. If your property generates enough income for you to not work another job, then you will have a lot of time to yourself without having to work. So, enough about the benefits – there must be some downsides. Let’s explore the disadvantages of being a landlord a little bit more deeply.

There are a lot of different responsibilities involved with being a landlord. This is the real disadvantage, as you will be accountable and liable to quite strict government enforced rules and regulations. Depending on your circumstances and whether you’re willing to shoulder these responsibilities, you may not want to be a landlord.

The main disadvantages of being a landlord include;

• Liability – you are responsible for the safety of your tenants, and you really need to take this seriously. Complying with regulations is your responsibility too – and you may have costly legal action taken against you if you don’t fulfil these requirements.

• Maintenance – the most significant cost as a landlord is maintenance, and this can be substantial particularly if the property is old or run-down. Insurance can help with accidental damage and there are cheap landlord insurance schemes available for things like malicious damage or to cover the building contents.

• Tenants’ – tenants are likely to be demanding and you will be responsible for them. They can be hard to deal with, although you could hire a management company to deal with them on a day-to-day basis at an added cost to you. You could also have problem tenants who cause you to lose rent, although insurance often covers this.

Overall being a landlord has its fair share of disadvantages. The cost and responsibility are probably the biggest things to think about, if your budget is tight and you rely on the income from your property then you will be in a precarious position as the income from rent can fluctuate.

You need to decide whether the risks of being a landlord are balanced out by the rewards. Being a landlord is not for everybody. There are many management services that can make a big difference to the sort of hassle you might have in terms of maintenance or tenant problems – but these can be costly and ultimately you will be wholly responsible.

You may have to deal with other issues like vacancies. Many people don’t want lengthy leases and it can be hard to fill a property with a tenant if your property is in a competitive area. There is also the problem of tenants with poor histories, or no history, in rented accommodation. People with no rental history, such as students, can be a bit of a gamble – so you might need to think about being a landlord if you’re not willing to take the risk.

One option for potential landlords is to sell the property as leasehold. This way you are still responsible for the maintenance and upkeep of the property, but the buyer will pay you a lump sum for the right to occupy the property for a fixed number of years. This can be anything, from 25 to 100 years. It’s also possible to charge ground rent to the occupier to cover services, and provide a little bit of regular income on the property. Keep in mind that ground rent is usually only on longer term leasehold ownership arrangements. This amount is fixed for the duration of the lease.

Becoming a landlord, in addition to investing in property in the first place is something you shouldn’t enter into lightly. There are many considerations, and you really need to be absolutely willing to handle all of the responsibilities yourself.

It’s not an easy decision, but if you have the right attitude and you are determined to put in the hard work then there is no reason why you can’t be a successful landlord. It’s always wise to consult a lawyer and a financial expert before you get into anything – make sure you get all of the relevant information so you can make a reasoned decision.

Thanks for reading. I’d love to know what you think of this Instructable, so please feel free to comment below. If you liked this piece then please view the rest of my work on Instructables. I would particularly recommend the related one “How To Buy A House (UK)” for some more property related information.

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