There are many things to consider when deciding whether to become a landlord, it doesn’t take much to turn from landowner to landlord, all you need is a property to rent and some know-how. A big question that you need to assess before you can go any further – should you outsource management or do it by yourself ? You firstly need to ask yourself a few questions and answer them honestly:
- Are you prepared for the unruly tenants, dirty toilets and complaints about flapping wall paper?
- Are you the type of person who will easily get wound up or are you calm and collected?
- Are you handy around the home, or equally are you ready to pay for handy men?
- How do you feel about a stranger moving into your beloved home?
- Is it really worth all the hassle that may be caused? Or are you better off cutting your losses now and selling the property?
Finally, you need to realise that this could, potentially be a lifelong commitment, and it is a business! It’s not like selling a house, you have to maintain the property, and if you aren’t handy with your tools the cost of repairs can slowly creep up.
Not only this but you are likely to want to go on holiday, at least twice a year, therefore you will need not only emergency contacts that your tenants can call in case of an emergency but you also need to establish a relationship with a plumber, builder, a carpenter and an electrician who you can trust to jump in and save the job at a moment’s notice – and they will charge you a fair price for anytime call outs.
What do you do about bad tenants?
The rental sector is enjoying a large boom as 40% more people live in rented accommodation now than did in 2006. On the whole tenants are very responsible people, and will treat your property with the respect that you would expect. Unfortunately though, there is a high possibility that you’ll encounter some tenant difficulty – whether that be from tenants unable to pay the rent because of redundancy or the tenants that have no concept of their responsibilities to you and your buy to let property.
Go full management
Whether you’re planning on letting just a room, a studio flat, a house or even a large acre estate, a management agent can be an extremely valuable resource in taking care of the whole process for you and taking a lot of the stress out of becoming a landlord. A managing agent can provide an assortment of services, from simple things like collecting the rent and managing the day-to-day running of the property to addressing the legal aspects of renting on your behalf.
If you are undecided on who to go for, remember it is always advisable to choose a letting agent who is a member of a professional organisation, such as the Association of Residential Letting Agents, the National Association of Estate Agents or the Royal Institution of Chartered Surveyors – all of whom are bound by a code of practice.
Services
Whether you choose to be an active landlord and whether you are going to employ a lettings agent to do all of this on your behalf, unfortunately, your decision may already be made up for you because of your financial circumstances and experiences. You also need to take into account how many properties you are planning to rent and the size of these properties.
Bear in mind that you will be on call 24/7 and you may not want to deal with the constant call outs and the legal aspects of the let directly with your tenants and prefer to have it all dealt with by specialists. Whatever your conditions or budget, a property manager can provide you with a variety of services designed to make the overall process of letting easy and stress free – you can really take on the role of being the ‘sleeping landlord’.
Responsibilities
A good organisation will provide a full array of management services for all your different property needs. However, you as the property owner can hand over as many task as you want to, whether that be full or partial responsibility. The management agent will act as the middle man who confers between you, the owner of the property and the tenants who are renting it and are often responsible for:
- Marketing your property and find tenants suitable for your property
- Viewings of your property
- Finding references as well as conducting credit checks on potential tenants
- They will also prepare the tenancy agreement
- Organising the collection of the tenant’s deposit/and rent per month, if they do not pay one month then they will legally case them up for you
Cost
The cost of instructing a management agent will depend on which services you buy into, obviously depending how much responsibility they are given. The majority of management agents will ask for a percentage of the gross rental income, rather like a commission.
Don’t be tempted by the cheapest fee – you want quality! You want your agent to be motivated to keep the property occupied and the tenants happy at all times, so negotiate a mutually rewarding deal where you can. Fees can range from anywhere between 5% and 10% of your gross rental income for a basic service, to 15% or more for a full management service – so get bargaining!
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Karen runs two businesses and also has property which she rents out – so she’s well used to knowing when she can manage something herself vs. when she needs to get in outside help! For properties in the Kettering, Wellingborough, Corby area, she uses Ashan Property to manage her various properties and tenants, so that she doesn’t have to get her hands dirty too often with maintenance!