You may own many properties in your portfolio. You may own just one rental property. You may look after them yourself, or you may instruct an agent to do this for you. Either way you should be keeping an eye on how your properties are making you money, because, sure, that’s why you have them right?
There are several checks you can be doing. You don’t need to be doing these all the time, but enough to ensure your finger is on the pulse.
Firstly, a simple one. Check your mortgage. Ask yourself;
- What rate am I currently paying? Is this competitive?
- Has my initial rate finished and I have been put on a standard variable?
- Are there any better mortgage deals out there?
- You might find your property has increased in value enough for you to remortgage to a better LTV (Loan To Value) and as such are able to aquire a much better rate.
Secondly, rent. Now this one can be a touchy subject as it affects your tenant’s finances and with rents rising to record highs you need to be careful.
- Top Tip 1 – A happy tenant makes a happy house. I cannot stress this enough. Try to keep your tenants onside. Happy tenants are much more likely to look after your property and bother you less with basic maintenance. It might not be worth making a few extra £’s if it will ruin the relationship with the tenant. In the long run, they are more likely to complain and more likely to leave. This extra maintenance cost, void period cost and tenant finding fees will leave you more out of pocket. Make the tenant feel like it is their home and not just a landlords cash cow.
- Now, keeping the above tip in mind it’s worth reviewing the rent on your properties. Now I rent review for many clients (some landlords of mine, and some landlords of other agents). Some with one property and some with many properties, and you would be surprised if this hasn’t been done regularily how out of touch your rent charges may be.
- I have seen properties where the rent hasn’t increased for years. Here, be careful because if there is a tenant in situ then you may find that placing such a heavy increase in rent on the tenant could put them in severe financial difficulty. In cases where there is a significant difference in rent currently being paid and market value, then negotiate a step process into the rent increase.
- Increasing the rent by just £25 per month on a property can make you an extra £300 per year. If you have four properties this would be an extra £1200 per year. I have recently reviewed rent for a client who has numerous properties that he looked after himself. He is now an extra £4000 a year better off. Again refer to Top Tip 1, if increasing the rent will severly damage the relationship with a good tenant, then I advise to look at the long term.
- Top Tip 2 – If the property is vacant then advertise at the current market value. Sounds obvious rght? Over-price it and the property won’t rent. Remember, the property is likely your source of income so every day its empty, that’s costing you money. Under-price the property and you will mysteriously notice that interest in the property is sparce and you may not attract the desired tenant. I recently had a client who was advertising her rental through another agent at below market value. She had only two viewings and those were from applicants who couldn’t provide suitable references. Her agent actualy advised dropping the rent further to attract more interest. She approached me for advice. I took on the property, increased the rent to market value and it rented in less than 24 hours. The rent was so low previously that tenants thought there must have been something wrong with the property.
- Top Tip 3 – When advertising your property for rent and an applicant offers under asking price. Do Not Dismiss – If the applicant is able to move in quickly and has great references then consider accepting the offer. I’ve lost count at the amount of landlords that hold out for that extra £25 per month on a property that rents for £750 per month. That is just about a days rent. Having the property empty would cost you about £173 per week in lost income. I have seen landlords refuse an offer £25 lower than asking price but keep the property on the market and empty for another 6 weeks. That is just over £1000 lost.
Remember, if you need any help or advice with your rental properties, whether you have one or many, I can help. I conduct rent reviews for landlords who are clients of ours, clients of other agents or self managing so please get in touch. We can also search 1000’s of mortgages to get the best deal for you and your properties.