I still see these simple mistakes being made on weekly basis. We all make mistakes, even expert property investors. It’s nothing to be shy about, its how we learn. So to help you along the way, here’s a short list of tips.
Void periods are the time between tenants when the property is empty and not earning you money. Avoiding this sounds obvious doesn’t it? However, I see this common mistake all the time. The property is worth £750 pcm. A tenant applies for the property and offers £725. This tenant can move in immediately and has great references. ACCEPT, ACCEPT, ACCEPT.
I see so many landlords hold out for full rent and in doing so leave the property empty for weeks. At this rate, it will lose you £25 every day that property is empty. Having empty for just three extra weeks holding out for the £750 full rent you would have lost £525. Not to mention the extra council tax and utility bills you may have had to pay during that period.
Rental properties will naturally increase in rent over time. However, I see landlords wanting to increase rent almost every 6 months. Is that so bad, the tenant should be paying market value rent right? WRONG. Remember, rents are already at record levels and a lot of tenants may struggle with rent increases, especially so often. If you have a good tenant, who pays on time and looks after the property, then cherise this relationship. Increasing the rent can upset the relationship you have with the tenant, this may cause the tenant to consider leaving. If that happens, you are likely to have a void period which (as above) could cost you significantly more than what you would have gained with the rental increase.
If you do need to increase the rent, then be respectful. Talk to your tenant, discuss the plans and come to a mutual agreement.
Overpricing / Underpricing
So your property is empty or about to be vacant. Be cautious not to over price the property, especially if there are other similiar properties in the area. Tenants are much more savvy now and will know the property is overpriced. Remember the plan is to get it rented as soon as possible with the best tenants. Overpricing can lead to void periods and (as above) can be costly.
On the other side of the penny, I see some landlords so keen to get their property rented they will underprice the property. Now, while this can seem logical it can be counter productive. Good quality tenants would likely see this and think there is an issue with the property.
Not Employing A Good Managing Agent
There are so many letting agents out there at the moment so be mindful when chossing the right agent for you. So many landlords will look to pay the lowest price possible. Be sensible and use your head. The old phrase “you get what you pay for” does work in the service industry as well. Ask questions to the agent / manager. Do they know what they are talking about? Are they knowledgable?
I’ve seen so many landlords put their expensive assets in the hands of the cheapest agents, only to return a year later saying how bad things have been and could I “fix” the buildup of problems that have occured. The mis-management of a property by a cheap and cheerful agent could cost you more in the long run. Remember, managing a rental property is a skill and requires knowledge and experience.
Rules, laws and legislation changes all the time, almost on a monthly basis. It can be hard keeping on top of all the changes. Even more so now that a lot of laws are different in Wales, England & Scotland. There are new rules all the time with electic, gas, charges, licencing, the list goes on and on.
With Wales in mind, the main one to be aware of is that if you own a rental property in Wales, then you need to regsiter with Rent Smart Wales. This is a legal requirment. If you manage and look after the property yourself, you need a licence to do so. Otherwise you will need to use a licenced agent. Unsure about this? Then get in touch and I can talk you through what you need to know.