5 Of The Things To Bear In Mind Before Becoming A Landlord
If you are considering setting up in business as a landlord then there are a number of things that you will need to consider. Below we highlight five of them: –
Type of Tenant
You will need to decide the type of tenant that you would like to rent to as this will affect the sort of property that you wish to purchase to let out. For instance, do you wish to rent to a single person, a couple, students or a family? Do you prefer to let the property to a professional high-income earning individual or to someone that has been unemployed and on benefits for many years? Will you allow pets in the property or not?
If you are going to rent to a single professional person then you may wish to consider buying a one-bedroomed apartment. However, if you wish to let a property to a family then you may wish to purchase a three or four bedroomed house with a reasonable sized garden.
If you are going to rent to students then the property will need to be within reasonable travelling distance of the university. If you intend to let to a professional couple then you may prefer to buy an apartment that is centrally located in a major city where the employment prospects are favourable.
As a landlord you will have many responsibilities such as notifying HMRC of your business as you may have to pay income tax and national insurance, making sure that the property and its contents meet safety standards such as gas safety, fire resistant furnishings and electrical appliances being fit for purpose,
Most people have a budget when it comes to buying property. The proposition needs to be affordable and capable of generating a reasonable profit for you. Therefore, you will need to consider how much you can manage to pay for an investment property, do you require a mortgage, how much do you have in savings to contribute towards the purchase, can you afford the repayments on that borrowing, what other expenditure you will have in relation to renting out the property such as landlords insurance and what the projected net profit will be. You may wish to get some financial advice from the likes of an accountant or an experienced landlord.
Managing the property
Will you have the time to keep an eye on the property to make sure that the tenants maintain it and the contents in a satisfactory state or will you be using the services of a letting agent to do this? Who will be making sure that the rent is paid on time and chasing up any late payment of rent?
The above are just 5 of the many things that you need to consider before starting a business as a landlord. If you feel that becoming a landlord is for you then we wish you every success.