Buy to let landlords have rarely had it so good with rents near record highs and property prices climbing back to pre-recession prices.
The lure of property investment has been a siren call for thousands looking for an alternative to poor returns from savings, pensions and investments.
But running a profitable buy to let business comes with some effort – and here are five vital points to watch.
Don’t forget you are running a business
It may be called property investment and taxed as investment, but landlords run a property business.
Businesses need financial controls, policies for tenants, property maintenance programmes and an exit strategy when key goals are reached.
Buying the right property in the right area is not luck but a carefully considered plan. Match homes to tenants. Size, the rental cost, location and the condition of the home all make a difference. Research the area and crunch the numbers to make sure the figures add up for the property.
If the rent does not cover costs and make a profit, the investment is not worth while
Control the cash
Even the best businesses can fail if cash flow dries up. Chase late rents, pay the bills on time and keep good financial records for completing accounts and tax returns. Don’t forget to have a plan for times when the rent is not coming in, like a cash reserve or rent guarantee insurance cover.
Don’t take tenants at face value
Most tenants are pleasant, hardworking people who pay their rent on time. Some are not. Taking references and a credit check will help ease your mind about taking on the latter.
Law and order
If you rent out shared houses in multiple occupation (HMOs) do not forget to follow the rules – licence the property, follow health and safety procedures and do not break tenant deposit protection or eviction laws.
Councils and the courts come down hard on errant landlords – and they are all volunteers because they had a choice whether to follow the rules or not.