Our DIY guide for
Buy To Let Landlords
Buying A Property
Do your research and do your sums -
mistakes will be very expensive.
Research to make sure there is a demand for lets
in the area and that there is nothing that may be changing that
situation. Look for opportunities where there is likely to be an
increase in the demand for rented properties. If you are completely
new in an area ask agents for advice on where they think "hotspots"
may be - they will usually advise if they think there is an
opportunity to manage such properties if you buy - and they want
properties that can be easily let.
ie. select the area that has the best LONG TERM
potential then select the house in that area.
Get the sums right - you don't want to be in a
situation where you are subsidising someone to live
in your house -
if that were the case on the basis that you intend to gain on
capital growth - then do your sums again as you stand to loose a lot
of money if you are wrong.
From our experience - generally the
larger and more expensive the house is will give less rental return
/ £000 invested compared to smaller houses.
The best research tool that is free to use is
www.rightmove.co.uk.
Compare the cost of buying the house to similar
houses for rent in that area - will the rent cover all costs? - and
don't underestimate your costs you are only kidding yourself - add a
good contingency.
You can check the actual selling price of houses
on that street going back several years - go out and look at these
houses and compare them to the one you are interested in.
Get the right mortgage - look at the bigger
picture not just the short term % - compare the costs of a
reasonable rate mortgage for the full term compared to discounted
mortgages for a few years at a time and paying out some heavy set up
and admin charges each time you move. A short term discounted
mortgage would certainly be the option if you were only looking for
a short term investment.
Choose the right house - our simple criteria is
that a house must have:
-
plastic windows and double glazed
-
gas central heating
-
a
modern electricity distribution / fuse breaker box with earthing
-
upstairs bathroom
-
good roof (you can usually tell from appearance of tiles)
-
good kitchen units in good condition
-
good working bathroom fittings
A lot
of ex council houses usually have been upgraded to these standards.
This
is to ensure good tenant appeal, good resale potential (eventually), low set up costs
and low maintenance. The rare occasions we have deviated from this
have been expensive. We have never had a full structural survey
carried out on any rental houses we have bought - one house that we
use as a holiday let in Derbyshire is approx. 350 years old, we felt
that if it was going to fall down it would have done so by now!! - but we are not recommending
that approach.
2 of
our houses are re-possessions - there are a few simple tips we
learned from buying the 1st that saved us several £000 on the 2nd one we
bought.
We
always shop around for the cheapest solicitors - a quick conveyance
on a buy to let is not really that important, the deal is done and
it is not incurring any costs or inconvenience at this stage. We used an Internet
based solicitor once but prefer one where we can easily get to - for
whatever reason!
House
insurance for rental properties varies greatly - so it is very
important to read the small
print, you usually get what you pay for - but don't pay out for
what you don't think you need. We used to use
www.homelet.co.uk which is
very comprehensive with frills but we now use
www.rentguard.co.uk which
is a lot cheaper but still covers our basic requirements.
Buying
a Property
Preparing a Property
Finding a Tenant
Moving In
Preparing the Property
First impressions count - think from the
angle of a potential tenant viewing the house.
The day we get the keys is the day that
work starts - time is now costing you money. While we are weighing
up the work to be done and setting out our plans we will be
stripping walls, clearing rubbish, pulling out carpets etc. The house would be decorated throughout to
these simple rules:
-
magnolia walls
-
white ceilings
-
white gloss paintwork
-
tile behind worktops in kitchen
-
tile around toilet, bath and shower areas (if not already)
-
hard wearing low cost contract carpets of mid / speckled colours
-
darker colour carpets on stairs
There
would only be a few exceptions to the above rules to enhance certain
features of a house to make it more appealing - but beware - do not
personalise the decor too much to your taste. It
MUST remain neutral to attract all tastes - especially if you are
letting unfurnished so that the decor fits reasonably well with your
tenants furnishings - which is one of the criteria they will be considering
when viewing.
Don't leave the garden to last - it
needs to grow a bit to look its best - make it easy maintenance as
most tenants don't like gardening.
NB. the last thing to do is get the
carpets laid - but getting measurements, selecting and getting
prices for carpets are amongst some of the earliest things you must
do.
If you
contract out the decorating the above rules provide the cheapest quotes.
We
have usually allowed between £2000 to £5000 to cover buying costs (solicitors
etc) and to prepare the house to the standards we require to make
it ready for letting.
Time
is money - you are now paying a mortgage whilst preparing the house
and you are getting no rent! Compare the cost of paying for help
compared to getting the house ready say a month earlier and the
month's rent you get sooner. Remember this is a business - don't let
it turn into an expensive hobby.
There are the Legal issues that you must adhere to and then
there are the grey
areas that require a landlord to take "all reasonable precautions"
which are not so easy to identify.
-
you must have a gas cert - these cost about £60
(excluding any repair work)
-
we
always have an electricity cert for the houses we own - this is not a legal
requirement - but if your tenants get electrocuted you could
land up in court if you are accused of not taking "reasonable
precautions" for the safety of your tenants - these cost
about £120 (excluding any repair work)
-
make sure you are fully insured with at least £5m third party
liability and legal cover to cover for the above or other
unforeseen situations.
-
we
always fit smoke alarms
-
make sure your doors have 5 lever locks for security - your
insurance company (or your tenants insurance company) will check if there is ever a claim.
If the locks are not to standard you may not be insured and your
tenant may be making a claim off you instead!!
-
carry out a fire risk assessment -
make sure there are ways to get out of the house in case of fire -
if there are locking windows upstairs - leave the key in or on a
hook near the locks.
-
make sure there are good clear instructions on how to use all
the equipment in the house - from boiler to burglar alarms
-
carry out a
Risk Assessment in each room of the house - identify hazards relating to what can
cause a fire, tripping hazards etc and what you have done to
minimise these risks.
Do you let furnished or unfurnished?
Furnished properties tend to be for
short term lets, temporary relocation for work etc
Unfurnished properties tend to be
favoured for longer term lets where the tenants have their own
furniture etc.
Furnished or unfurnished the kitchen is
best fitted with matching cooker / fridge etc that fit and look
good.
You'll know if you've got it right as
the 1st tenants to view will want!!
Buying
a Property
Preparing a Property
Finding a Tenant
Moving In
Finding a Tenant
Finding a tenant is easy - finding the
right tenant is crucial to a hassle free letting.
Internet Advertising starts 2 - 3 weeks prior to
even getting
the property. We start putting details
on various letting websites asap (including our own website -
www.Lets2Let.co.uk) - these are usually free and we can
get pictures of the inside of the
property from the sales literature or from the estate agents website
we bought the property from.
Our favourite websites that seem to
provide a reasonable amount of enquiries are:-
http://nottingham.gumtree.com/
http://www.vivastreet.co.uk/
http://www.localads.co.uk/
http://www.nottingham.freeexchange.co.uk/
http://uk.freeads.net/
http://www.classifieds.co.uk/
and of course our own website at:-
http://www.lets2let.co.uk/
All the above websites are free - of
course there are other websites that you have to pay such as:-
http://www.fish4.co.uk/iad/lettings - fish4lettings
http://www.houseladder.co.uk
http://www.hotproperty.co.uk
http://www.home.co.uk
These can be quite expensive - we use
houseladder and found tenants using it - we took the 12 month option
(costs approx £120) which you can advertise as many different houses
as you like during that time - but only one at a time!
Newspaper advertising in the local papers
starts when it gets to about 2 weeks from when we are ready for tenants.
Newspaper advertising is the most expensive (at approx £40 / week).
These ads usually bring a lot of enquiries but most are not really
suitable for most Landlords.
Viewing Properties - A tip is to contact any potential tenant
just prior to setting off for a viewing to check they are still
interested to avoid a wasted journey. Avoid "mass" viewings all at
the same time - these are just chaos - leave a 10 / 15 minute gap
between appointments - this way you can spend time and ask plenty of
questions such as:-
-
how many in group / family?
-
relationship between the tenants
-
how long been together?
-
how long working and is it
permanent?
-
any pets?
-
did they previously rent?
-
why renting or moving?
-
how long rental period - long /
short term.
Credit Reference Checks - We have only taken on tenants who are
working as we can only get rent guarantee insurance on "workers" -
some Landlords specialise in DSS. Although we do not always take out
rent guarantee insurance it is a requirement that the credit
references approve any potential tenants for this insurance.
This means there has been no major
credit problems in recent years and their earnings are considered
sufficient to afford the rent. Potential tenants pay for these
checks that cost approx. £25.
We use
www.rentchecks.co.uk that we have found to be an
efficient and reliable service.
Tenancy agreement - remember you want tenants that are going
to give you the least problems.
So assuming the credit checks have come
back OK (or if not you have a very good reason to continue) you now
need to sign a tenancy agreement.
A typical agreement will have the
conditions shown
here (NB. if you use any of
LETS2LET services you can have the agreement that we use for free).
If you are signing the agreement where
occupancy is not immediate you must have a witness.
Again if the agreement is not for an
immediate start date it is normal to take the deposit when you sign
the agreement - if the tenant pulls out of the agreement prior to
occupancy they loose all or part of the deposit.
BEFORE the tenant signs the agreement
check their ID.
You must see a photo ID and their
previous address ID (the address they used on the credit ref forms).
Ideally photocopy these documents and
return them to them but at least note all the reference numbers on
the documents.
Photo ID can be a passport, driving
licence etc. - with their name and photo.
Address ID should really be a utility
bill - with their name and address.
If you do not do this any rent guarantee
insurance you take out will be void!
Buying
a Property
Preparing a Property
Finding a Tenant
Moving In
Moving In
So you've found a tenant - don't rush
and skip important steps.
It's vitally important to make sure that
you have the house properly prepared and all the appropriate and
important checks done before and during handing over the keys.
Some Useful Links
Nottingham Tram Timetable
Tips for the tenant in finding a property
Landlords UK |
Links |
Forum - Landlord UK
Guides, Links, Information and Forum
LandlordZONE®
Decent and Safe Homes
East Midlands Landlords Accreditation Scheme
National Landlords Association
DISCLAIMER:- The information on this website is purely based our experience so
we cannot accept any responsibility for any damage, costs or losses
in anyone following and implementing this information in any form.
For
more information about the houses we have to rent and to arrange a viewing
contact:-
Steve on 07765
810111 (anytime between 7.30am to 10.30pm) or
email
info@Lets2Let.co.uk
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