With so many favourable articles of late proclaiming the positive merits of investing in buy to let properties, a novice landlord might be forgiven for thinking that owning a rental property is an easy way to make cash.
But the reality is somewhat different—the potential for earning a healthy profit is almost certainly there, but there are also many pitfalls on the road to becoming a successful landlord. So before you acquire a massive headache, learn how to avoid common landlord mistakes:
1. When your insurance policy is about to expire always shop around. Don’t just accept the ‘automatic renewal’ letter from your existing supplier. If you have a portfolio of properties then consider an insurer who will insure all the properties on one policy, as you can normally make a decent saving.
2. Never make the mistake of assuming a bad tenant is better than no tenant—an empty property might be highly undesirable, especially if rental payments are required to cover a mortgage, but a bad tenant could end up costing you thousands in damages, plus they may run up huge rent arrears and then abscond.
3. On a similar note, ALWAYS check references thoroughly. Just because a tenant appears to be nice and respectable, it does not automatically mean they ARE nice and respectable!
4. If your property is subject to a mortgage, ensure the lender is aware you are letting it—this is a common mistake people make when letting their home for periods of time. A failure to do so could invalidate any insurance policy you have on the property.
5. Do not be tempted to cut corners on landlord insurance—a good policy might prove to be essential if you fall victim to #2 on our list.
6. Always ask for a decent deposit to cover the cost of potential damage to the property—expensive cleaning and repair bills at the end of a tenancy are a big problem for many landlords.
7. Overdue rent is a very common issue faced by landlords, so make sure you have a clear tenancy agreement drawn up with the rent due date highlighted to avoid confusion. If a rent payment is late, take immediate action to resolve the problem.