Buying a Property
When you make the decision to buy a property for rental purposes it needs to be taken into consideration that there will be expenses that need to be paid whilst the property is being rented out. Often a landlord will buy a property and have a mortgage that doesn’t take this into consideration. This can lead to big problems if the property needs to have any maintenance done or work during the period of a tenancy.
Costs that can be Incurred
Some costs that can be incurred during the period of a tenancy have been listed below. These costs can vary depending on the amount and the quality of the work that is to be undertaken, plus whether the work is being carried out by you or by a contracted party.
Problems that regularly come up when renting a property are below.
Central Heating Problems
Painting Interior and Exterior
Replacement of Carpets
Electrical goods need replacing washing machine, fridge, freezer etc
Drains and Guttering
Door Repairs/Lock Refits
These are just some of the common problems that can occur at anytime throughout a tenancy. Before undertaking a buy-to-let mortgage or becoming a Landlord of a property it is very important that the yield made from the property covers the mortgage and also leaves a contingency in order to make repairs.
Budgets and Rent Values
Landlords who are looking to rent a property for the first time may be unfamiliar with the rates and the amount rental property can yield. It is important to research the market; there are a number of ways to do this. One way is to look into what other similar properties are achieving for rent values in the same area. Look in the local papers to get an idea of rent values of current advertised property. Check out the major sites on the internet that are advertising a range of property, try to use a rental price index to get an idea of property values and average rental prices. A link to the RRPI (Residential Rental Price Index) has been included in this article.
Average Rental Property Prices
Make sure that from the yield gained from the property that the extra income is saved in a bank account as a float in case there are any major problems that need paying for. A lot of jobs that do come up can be carried out by the Landlord themselves. However if you are a landlord it needs to be considered whether this is a viable option for you, do you have time to be fixing problems in the property or are you better off giving the responsibility to the property management company. After all it is part of a full management service that repairs are undertaken by the letting agents if you are on a full management contact. If you are not interested in this and are going to look into just a tenant find then make sure you do have the time to take care of the property.
In summary the most important factors to remember before buying a property is to ensure that you are aware of rent values, have a contingency, decide on what type of management service you require if any, remember that the ongoing maintenance of a property will result in smaller bills in the long run.
Chris Courtis is the co-founder of the Rentright Rental Property Portal . Rentright provides property for rent from local letting agents throughout the UK and is the home of the RRPI (Residential Rental Price Index).