10 Things I wish I knew before becoming a Landlord for the first time

10 Things I wish I knew before becoming a Landlord for the first time
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#1. What is the right type of property to buy?

In expanding town centers, there tends to be an abundance of apartments rather than houses. Once a significant development is allowed to go ahead by local council planning departments, often other developers pile into the market also looking to build nearby in the hopes that prices may rise in the area immediate area as new buyers enter the local market and developers set the precedence for pricing in the area. Here are 5 things you should watch out for when buying an investment property.

At some point after price rises, you tend to get a situation of temporary oversupply of rental properties which can bring down prices in the area in later stages. Each area is different and therefore carrying out thorough research is essential to buying the right type of property in the right area. One type of property that is not built much anymore, is the 1 bedroom freehold house – the scarcity of these types of properties should mean that it retains its demand and value better than other types of properties over the long term.

#2. The importance of finding recently sold comparable properties

When you are a property investor you regularly find yourself having to switch mortgage deals when terms are coming to an end. You could renew with your existing lender on a new product or go to another lender altogether. Some may be involved in a project – buying a property, adding value, or converting and then after either letting or selling on. Banks and surveyors will rely heavily on comparable properties and what they have sold for in the area. Knowing what the most recent or significant sold prices in the area are a must. If there are no recent comparable sold properties the surveyor may give a cautious valuation, resulting in the investor not being able to withdraw the equity desired. This is especially important for HMO investors who try to obtain commercial finance. If you don’t know what the recently sold comparables are contact Sophic Property and we can help.

#3. Property maintenance always costs more

Getting things done to someone else’s timescale – namely, your tenant – can be difficult, especially in times where property contractors and tradespeople are very busy. It is important to conduct your research on the cost of renovations and get a few quotes until it fits your budget. Property is an expensive investment and so at times, expensive maintenance comes as part of it. Of paramount importance is to keep enough cash to be able to deal with any costly maintenance that will likely come for those who invest over a 10 year timescale.

#4. The tenant must come first

If you are relying on a tenant’s payment to cover the cost of your mortgage/income then needless to say that finding the right tenant who will stick to the rules and is a reliable payer is priceless. Going the extra mile for tenants is worth it in the long run and will ensure you have a smooth journey throughout the process. It is important to be personable and keep it professional at the same time.

#5. Buying a property close to where you live can save you stress

Keeping an eye on things like maintenance and a presence with your tenant can be important. If you need to arrange any work, inspect anything – traveling far away to a property 100+ miles away is a poor use of time. Save yourself the aggro and focus on the market that you know and understand – which is your local property market or nearby. Not all areas are the same – some towns are cheaper than others, and that’s always for a reason!

#6. Buying near employment hubs with high-quality jobs

If you have high-quality employers who are expanding and hiring – this will bring new people into the area as they relocate for work or study. Buying in an area where the industry is expanding. Look for nearby universities, hospitals & business parks as hotspots to buy near. This is a must to ensure the rental aspect of your business as well as the longer-term capital gain that could come. Here is our report on the top 10 job sectors in Reading, Berkshire.

#7. Buying property with the potential to add value

One strategy to create equity with any property you own is to undertake a extensions, conversions or refurbishment projects. This is one way to force the value up rather than to high and hold which tends to be a longer lasting investment for investors. Buying a property that you could add value to could also shield you from negative equity – you could literally build your way out of trouble if it’s a house, and probably not if it’s a flat.

#8. Government policies towards housing

So many changes have come into the housing market in the last 10-15 years from EPC’s, mandatory EICR certifications, changes in the licencing for HMO’s, right to rent checks, permitted development rights, the tenant fee ban – just to name a few. It is worth making time each month to see what changes are being discussed in government or connect with a local property market expert with an established track record to seek advice on your property matters.

#9. You will need a network of professional tradespeople as your portfolio Grows

Tradespeople are like landlords, trying to run a business. Like any sector, their work can increase or decrease rapidly, depending on local demand. After the first lockdown of 2020 – tradespeople were in high demand as people did home improvements and landscaping at home to create nicer environments for themselves. Sometimes even your best tradespeople will let you down. You will always need back up and recommendations. Keep asking and do not be afraid to try out new tradespeople if they seem committed to taking on your work. You can read about how often should you redecorate as a landlord here.

#10. Unfurnished tends to be less headache, but sometimes it’s necessary

In a small one bedroom city centre apartment, you may be better off buying furniture and providing it for your tenant as it may save them the hassle of moving furniture up and down the lifts and if the apartment is small it may be better suited to buying smaller furniture. If on the other hand you have a larger four bedroom detached house – a family could choose to let it from you and want to bring all of their own furniture from another four bedroom houses they were living at previously.

Offering furnished properties in general is more hassle because if a landlord provides items to the tenants, then the landlord must also maintain them – which means replacing items when they require it.

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