The experts at Belvoir answer 10 commonly asked investor questions…
FAQ 1. How can I maximise my profit potential?
“Always research the market thoroughly and invest in the right property at the right price,” says owner of Belvoir Nuneaton and Hinckley and co-owner of Belvoir Tamworth Clayton Foston.
“Do the maths to make sure the figures add up. What are the expected outgoings, potential rental return and likely yield?
“Once secured, make sure you present the property to a high standard within your set budget. As a general rule well-presented properties attract high quality tenants.
“Additionally, make ongoing assessments of the property and its profit potential and don’t be afraid to release your asset if it isn’t delivering.”
FAQ 2. What types of properties make good investments?
“The local market will dictate which properties will make the best investments in your area,” says co-owner of Belvoir Liverpool West Derby and Belvoir Liverpool Central Adam Rastall.
“Ensure you do your research carefully in order to identify what kind of properties are in demand, which are letting quickly and which are sticking, possibly due to an oversupply or an oversaturated market.
“Think too about the local infrastructure. If there is a university nearby, perhaps consider the student market. If the area is known for its superb schools, family properties are likely to be in demand.
“As a general rule, most tenants will be looking for parking solutions, a low-maintenance outside space and good local amenities and transport links nearby too.
“If you understand your local market you will be well placed to choose the right investment for the location.”
FAQ 3. How can I ensure I get a good tenant?
“A significant key to success for many investment landlords lies in finding the right tenant for the property,” says Clayton.
“Late-payers, non-payers or disruptive tenants who cause damage to your property can severely affect profit potential.
“Ensure all tenants are credit checked before you commit to them, plus obtain references from their employer and previous landlord if they have rented before.
“It’s also important to meet them in person. While you should never go on instinct alone, this meeting will help add to the picture of their suitability as a tenant.”
FAQ 4. How can I make sure maintenance costs are kept to a minimum?
“In order to minimise long-term maintenance costs it’s advisable to buy a property which has already got a good standard of workmanship,” says Adam.
“The biggest maintenance expenses are usually roofs, boilers and electrics so always check out the condition of these before investing.
“Once purchased and tenanted, it’s also important to arrange regular inspections of your property,” he continues.
“These vital visits will allow you to assess any current maintenance needs and repairs, plus arrange for them to be solved at speed.
“It’s also wise to ask the tenant to make you aware of any repairs as they arise between inspections too.
“Leaving maintenance issues to escalate throughout a tenancy can turn small issues into big problems… and big bills.”
FAQ 5. How can I avoid the ‘void’?
“In order to maximise profit it’s important to avoid long periods of ‘void’ between tenancies,” says Clayton.
“Preparation here is key. Ensure you have good quality up-to-date marketing material, plus a concise marketing strategy which can be executed when needed. Be ready to market your property as soon as notice is given.
“Clear communication with your current tenant is also essential so you fully understand their future plans and can act at speed.
“Another way to minimise periods of void is to retain your current tenants. Effective, efficient and fair landlords who troubleshoot issues as they arise are more likely to enjoy longer term tenancies.”
FAQ 6. What are the common mistakes made by landlords?
“There are a number of commonly made mistakes and it’s vital to understand what these are in order to avoid them yourself,” says Adam.
“Among the most frequent are: lack of research before committing to a property, buying the wrong property in the wrong location, not understanding current market conditions, ignoring important figures and facts, cutting corners, becoming overfriendly with your tenants, not understanding the law and failing to keep up-to-date with legislative changes.
“Another commonly made mistake is not treating the property as a business venture,” he continues.
“An investment property should be chosen with the target tenant in mind, not your own personal style, tastes or wants.”
FAQ 7. How can I benefit from instructing a property management agent?
“Whether you’re new to the industry or already an experienced landlord with a large portfolio of properties a good property management agent can be a valuable resource,” says Clayton.
“As an experienced industry expert they will understand lettings law and be up to date regarding recent legislation, plus they will be able to identify properties which are likely to make good investments and advise on the potential rental return.
“They can also help with all practical elements of the tenancy too, from sourcing tenants and organising viewings, to carrying out inventories and essential inspections, plus arranging the tenancy agreements. Additionally, they can also deal with check outs, deposit returns and help resolve any arising disputes.”
FAQ 8. How do I choose the right agent for me?
“It’s important to carefully research the agents in your area before you commit,” says Adam. “Each agent will have their own price structure, plus range of services offered.
“Think about what’s important to you. Do you want a large office or a smaller bespoke service? Is an out-of-hours emergency service on your wishlist? Perhaps the availability for weekend viewings is key?
“In addition, always ask where your property will advertised and how it will be marketed, plus the general timescales in which their properties take to let.
“Create a short-list and visit each agent in person. You’re going to have a long-term close working relationship during the investment period so it’s important that you can communicate with each other effectively.
“Ask to see testimonials, reviews and any industry awards they may have won too.”
FAQ 9. Do I need an investment exit plan?
“The short answer is yes and this should be created before you’ve even started looking at investment opportunities,” says Clayton.
“In fact, what you want your investment to ‘achieve’ will affect which property you choose and the amount you are willing to invest.
“Some landlords are looking for a high monthly rental return, others long-term capital growth. Some see their investment as a pension pot for the future or an inheritance plan for their children.
“Always identify the purpose of your investment, plus the timescales involved, before signing on the dotted line.”
FAQ 10. How can I find out more about becoming a successful landlord?
“If you’re thinking about becoming a landlord it’s important that you gather together as much information as possible,” says Adam.
“Your local letting agent is a great place to start. They will be able to help, advise and support you, from choosing your very first investment to building up your property portfolio.
“Sharing advice and benefiting from the experience of other landlords is also useful,” continues Adam. “Get in touch with landlords in your area or join a landlord forum or network.
“Additionally, you can visit property investment shows and exhibitions, plus read books, online blogs and specialist magazines for more information too.”
Article Courtesy of: Belvoir