We offer five top tips for buy-to-let landlords
1. Do your local research: As a general rule of thumb in the Bishops Stortford area the smaller the property the higher the rate of return you'll get. For example a typical 1 bedroom property selling for £120,000 will demand a monthly rental amount of around £600 (6%). However a 3 bed detached property on a nice road will likely sell for around £300,000 yet only demand a rental return of around £1,100 (4.4%). There are a lot of factors to consider here though, such as area (near good schools or the train station), off-road parking, age and decoration of the property etc...
Top Tip: Searching the property portals such as Rightmove to see what is renting and for how much is a good start but also speak to a local agent who'll be able to give you an in depth run down on what type of property is a hot one for a buy-to-let investment.
2. Don't be afraid of a little refurbishment: Although a complete refurb of a property is not a great idea unless you're an experienced landlord or property developer, don't shy away from a property that needs some T.L.C. These properties ultimate tend to offer better value for money and you may not need to do all the work right away. Remember you're not going to live in the property yourself and tenants will not expect top of the range decoration and fittings. Most tenants also won't complain if you want to improve the property during their rental term, so long as it isn't too much too often. Do the minimal level of refurbishment needed to get in good tenants and a good rental income and then use any extra income from the rent to improve the property as the rental progresses.
Top Tip: Paint walls and skirting white or very neutral - this makes it much easier to keep the property looking fresh over time with minimal expense and upkeep. Consider getting either bleach-able carpets or wooden/laminate flooring which are both long lasting and durable in a rental property. Keep things simple, allow tenants to add their own touches with their soft furnishings, tenants are happy with modern, clean and simple decoration.
3. Choosing the right tenants: Despite the economic situation there are still many good quality renters out there and you should be picky about who you put into your property. If you're not using an agent for this process then be sure to get a reference from their current landlord, a reference from their employer and a copy of their recent bank statements. If for any reason the prospective tenants aren't willing or able to provide any of these then move on, no matter how genuine they seem. Don't be afraid to ask them questions such as why they are moving property, how long they have lived in the area and what they do for a living.
Top Tip: Use an agent at least for the tenant finding part of the process. Agents are much better at finding quality tenants and will be able to do the whole referencing process for you. Check your agent gets a credit check done on your tenant along with all the above reference checks and go for an agent that uses an independent specialist referencing company. Ask your agent about rental guarantee insurance - if the tenant is suitable for this then they are a low risk tenant.
4. Furnished or unfurnished? This is a regular question from landlords and one with no definitive answer. In terms of rental income there is very little or no difference in the amount you will get between a furnished and unfurnished property. That being said it can be easier to rent a property if it is furnished or unfurnished. The general rule of thumb on this is that smaller properties (Studio, 1 bed & 2 bed flats) can benefit from being furnished or part furnished whereas larger properties (2, 3, 4+ bed houses) are more desirable when unfurnished.
Top Tip: Speak to a local agent on this one. Although the above guidance is applicable it is by no means exact advice for your rental property. Make sure you have an inventory, if any furniture does get damaged during the tenancy you will have very little way of recovering the costs from the tenant without one.
5. Get some professional advice: Most good quality local agents will be more than happy to provide you with free advice on your rental property or a property you may be looking to buy. If the agent you contact isn't happy to come out to see you and the property and give you a no-hassle advice service then pick up the phone and find one that will. Remember that every property is different and the rental market does change over time.
Top Tip: Bit of shameless self-promotion here but First Property Management are more than happy to provide you with whatever advice you need for free and with no strings attached. Give us a call now on 01279 65 99 65, email us at firstname.lastname@example.org or pop in and see us at 9 Newtown Road, Bishops Stortford, CM23 3SA.