Make Sure You Take Running Costs Into Account
According to research carried out by Platinum Property Partners, a franchise providing support to buy-to-let property owners, there is a concerning number of landlords that do not take into account such things as maintenance and running costs when calculating their return on investment on their rental property. The research was conducted back in February 2015 with in excess of 200 landlords.
It was discovered that approaching 12% of landlords did not take into account any costs when working out their return on investment. Furthermore. 75% of landlords did not take into account the top ten most popular costs that they found they had to pay for.
The top ten most popular costs were: –
1. Repair costs.
2. Letting agents’ fees in respect of managing a buy-to-let property.
3. Decoration and refurbishment costs.
4. Fees charged by letting agents to find tenants.
5. Regular costs to maintain the exterior of the property such as cleaning windows and gardening.
6. Maintenance fees.
7. Regular costs for cleaning the interior of the property.
8. Service charges.
9. Mortgage interest.
10. Marketing or advertising fees in respect of letting the property.
It has been estimated that the average annual cost of the above ten things per property comes to around £8,359. We are sure that you will agree, this is a sizeable sum and, if not taken into account, could impact on the viability of some buy-to-let purchases. Therefore, it is important that these and other costs should be factored into any calculation to assess the return on investment.
Entering the buy-to-let property market place as an investor is a huge financial commitment for most people and a great deal of due diligence needs to be done before committing to buying such a property to then let out. You may wish to obtain some professional advice in this respect to ensure that a prospective purchase is financially viable.