The biggest mistakes made by landlords
All landlords make mistakes. It’s part and parcel of being in business. But in our experience, some are more serious than others. And happen more often. Here are the seven biggest mistakes made by landlords:
Making an unwise investment
We may as well start with the biggest potential mistake any landlord can make. Buying the wrong property in the wrong area. To an extent buying any property is a gamble but when you are buying to let there are some rules it is wise to follow:
- Buy with your head, not your heart. Don’t buy a property to let because you would like to live there. Always look at a property as if you were the tenant.
- Make sure the yield on the property will give you enough to make a profit. Don’t make assumptions about how much rent you can charge without first researching what other local landlords are charging.
- Consider the location carefully. Is the area likely to attract a wide range of potential tenants? Or at least the type of tenants you are looking for? For example, planning to let a family home may not be the wisest action in an area heavily populated by students.
- Don’t pay too much for the property. An obvious thing to say but carefully work out your maximum price and stick to it. Don’t be drawn into paying more than you can afford and shop around to find the best possible mortgage.
- Carefully weigh up the work needed to make the property suitable for letting out. A fixer-upper isn’t a bad thing as long as you have a very good idea of budget and have calculated the complete cost of purchase and refurbishment.
- Keep a tight control on costs. Does the kitchen need to be the top end or can you go for a more budget style to save costs? Don’t spend anything unless it adds value to the property and is essential to achieving the maximum level of rent.
Not checking references
Rushing to let a property is a common mistake. But it’s an understandable one.
An empty property doesn’t generate income. Every day without a tenant is costing the landlord money. It’s very tempting to let a property to the first likely tenant who comes along. But this can often be a mistake.
Take the time to check employers and bank references. You need to know the tenant can afford the rent. Evicting a bad payer takes time, effort, and money.
Reduce the chances of a bad payer by checking references.
Not knowing about DPS
Every landlord should be familiar with the deposit protection scheme. Yet many seem either to be unaware of DPS or don’t consider it necessary.
Disregarding the deposit protection scheme is a big mistake and one which can cost the landlord dear. The tenant could claim compensation from you for up to three times the amount of their deposit. And evicting them for any reason becomes very difficult.
Make sure you use the DPS and don't forget the legal paperwork.
Not getting insured
Landlord insurance is a must. Yes, it’s another expense. But not taking out a policy, especially one which includes public liability insurance, is a massive mistake.
We are living in a compensation culture. If a tenant should have an accident on your property you could find yourself on the wrong end of a lawsuit.
Protect yourself with public liability insurance. Insure the property and contents too. The monthly premiums are a small price to pay for the peace of mind and financial protection landlords insurance provides.
Remember standard home insurance is not suitable for rental properties.
Not using a reputable online letting agent
A good online letting agent can make a massive difference to a landlord’s business. They do so much more than just find a tenant.
An agent which knows the business can help with the day-to-day management of your properties. They will also compile accurate inventories. A good letting agent will also ensure all legalities are taken care of and paperwork completed.
But before choosing your agent do your due diligence. Look for an agency which is established and call them for a chat. Get a feel for their experience before committing yourself to anything.
Forgetting about regular inspections
When a tenancy is running smoothly it is easy to forget about the property. The tenant is paying the rent on time and they are not hounding you every minute of the day over imaginary issues. Everything is going well and the rent payment is landing in your account every month.
But never forget your property is a big investment. You have a lot of money tied up in it and you need to protect it.
Even if you are certain you have the best tenant in the world you still need to inspect the property regularly. Countless landlords have learnt this lesson the hard way. They have been stunned to discover extensive damage to their properties after a seemingly ideal tenant left.
Don’t get caught out. Either inspect the property yourself or instruct your online letting agent to do so on a regular basis.
Not making an inventory
This is a mistake a surprisingly large number of landlords make. An accurate inventory complete with written report and date stamped photographs is the landlord’s best weapon should there be any dispute at the end of the tenancy.
An inventory accurately portrays the condition of the property at the start of the lease and can easily be compared and contrasted with photographs taken at the end of the tenancy. This provides all the evidence needed to successfully make a claim against the tenant for damage to the property and its fixtures and fittings.
MakeUrMove are an online letting agent established in 2008. Our experienced team provide a full property management service for landlords throughout the UK. Call us on 0333 8000 210 for more information.