Passive property profits may not be as passive as you’d hoped
As a buy-to-let landlord, the rental income and capital gain you make should provide passive profits that have the potential to change your life. Unfortunately, if you are ill-prepared, those profits could come at the cost of a lot of hard work. Keeping up with tax and landlord law changes, dealing with nightmare tenants, and sorting out property maintenance issues are just a few of the landlord activities that are more complex than you may think.
In this article, you’ll learn about the seven most common soul-destroying difficulties that DIY landlords complain about when they first enquire about the services of an investment property manager.
1. Finding new tenants
It sounds easy, doesn’t it? Invest in a buy-to-let property, advertise it for rent, and then let it out.
Advertising your property as available to rent is the easy bit – though you will need to decide where to advertise it. A tip here is to avoid free tenant search sites: they tend to attract the professional tenants from hell).
After advertising, you’ll need to:
- Conduct viewings
- Negotiate rent
- Vet tenants
- Produce a watertight tenancy agreement
- Conduct a moving-in property inspection
Each of these activities could trip you up. It doesn’t get any less tricky from here though.
(Read our article “5 tenant types every landlord should avoid” for some advice you can’t afford to ignore.)
2. Losing great tenants
All the hard work associated with finding good tenants paid off. You got great tenants. They looked after your property, reported maintenance issues in a timely fashion, and, most importantly, were never late paying their rent.
Just when you think it is safe to relax and enjoy a well-earned mini break away with your partner, your terrific tenant’s hand in their notice. They’ve been offered a new job in a different part of the country, and they’ll be moving out in four weeks. Return to soul-destroying difficulty number one.
3. Dealing with tenants who pay their rent late
All landlords suffer from a tenant who is late paying their rent at some time in their life as a property investor. It’s a huge frustration, and one you must put a stop to quickly.
Prevention of late payment is the best cure, of course. Which is one reason why you worked so hard to get good tenants, and then vetted their employment record and credit file. Other actions that help prevent late payment include:
- Ensuring that the tenant knows the rental terms (including amount and date of payment)
- Putting in place late rental payment penalties
- Ensuring that rental payment details and late payment penalties are included in the tenancy agreement
If your tenant still pays their rent late, you should follow our advice in our article “7 steps to help buy-to-let landlords deal with late-paying tenants”. Be prepared to be thick-skinned and emotionless when dealing with late-paying tenants – you’re running a business, not a charity.
4. Keeping up with landlord law changes
From energy certification to the treatment of tenant deposits, to changes in how landlords are taxed, the government continually meddles with landlord law. It’s your responsibility to make sure you stay abreast of all the changes. Getting something wrong because you ‘missed the announcement’ is not a valid excuse in court.
As if frequent landlord law changes aren’t irksome enough, you’ll also need to ensure you stay within the guidelines of a total of 178 laws that may apply to buy-to-let landlords ranging from anti-terrorism to work at height regulations.
5. Replacing damaged property within your property
Damage to property can be a big expense. If a tenant leaves and you discover broken beds, trashed tables and washed-up washing machines, you’ll have to replace all before you let to a new tenant.
You may try to withhold some of the tenancy deposit to pay for the damaged property, but you’ll also need to know the difference between wear and tear and damage to make sure you don’t ‘overcharge’.
You can help to protect yourself with suitable landlord insurance, and you should also consider regular property inspections as a way to keep an eye on how your tenants are treating your property.
6. Raising the rent
You will want to raise the rent to maintain profits as your costs rise. But doing so can be tough. How do you decide by how much you can raise the rent, and how do you do so legally?
Check out our article “How to raise rents without resistance from your tenants” for advice that will save you a lot of aggravation.
7. You’ll need to be a DIY maintenance expert
DIY landlords also need to be DIY experts. You’ll need to have the time and skills to carry out maintenance when it is required. You’ll need to build a list of contacts for jobs you can’t do or are not qualified to do (e.g. gas inspections and electrical work).
If you love DIY and have plenty of free time on your hands, this may not bother you too much. And if you know lots of local tradespeople, and you’re good at negotiating a fair price, you may be able to keep costs down to a minimum. That’s a lot of ‘if’s and ‘and’s…
Make it easy on yourself
Our mission is easy: effortless property management for the buy-to-let landlord. As hundreds of landlords across the nation have discovered already, being a buy-to-let investor doesn’t have to be soul-destroying. You really can have your cake and eat it.
Live with passion,