Are you about to become a Poole Landlord or do you just want a practical checklist when viewing potential investment properties? Here are our thirteen buy-to-let top tips…
Investment properties on the rise with an ever-growing demand for rental properties, it is clear that we have not lost our appetite for buy to let and to be honest the return on your money is better in bricks and mortar than in the bank currently. We have come up with some tips and advice in our new mini guide to the world of Poole Property Rentals:
1. Size matters
This depends on your target tenant. If you are after a single professional, you might consider a small flat, maybe even a studio, in a good, central area. If you want a family, for a longer-term let, you might look at three-bedroom properties, a larger home with more square footage, or a house in the suburbs. Studios, or one and two-bedroom flats are often easier to let and appeal to a wider audience but in my opinion the market in Upton & Hamworthy the majority of tenants are looking for three bedroom family homes in good school catchment areas.
1. Layout
Most modern apartments and houses will have fairly straightforward layouts, while older buildings may have awkward chimney breasts, stairs and rooms through rooms. If you can change the layout fairly easily, that’s a good way to increase its appeal to tenants. For example, it is often worth moving a bathroom upstairs from the lean-to at the back or creating a kitchen/diner from a small galley kitchen and dark back room. Stick with what people expect. In the BH16 area most properties are more of a modern style and costly renovations are not required, usually just a refresh of paintwork is needed.
3. Cash to spend
So you have got a bit of money in the bank and it is not gathering much interest. If stocks and shares are an unknown country to you, maybe bricks and mortar is the answer. First of all, do your homework. Decide how much you have got to spend, whether you can do any repair work yourself, whether you want to deal with the tenant yourself and how much it will cost if you don’t. Research mortgage options and calculate your likely profit. Only then are you ready to go out and start spending.
9. Leasehold or Freehold? Freehold is always better!! It means you have more control. In theory, leasehold could mean maintenance charges are spread across the building and in practice it may mean you have to deal with somebody else to get things done and agree costs. Read the lease carefully and aim to have at least 100 years left on it. You might not get a mortgage if it is less than 70 years. Renegotiating the lease should be a condition of the sale if you are in a good position to buy. Many of the purpose built flats in the Hamworthy and Upton area were built around the same time and were given 99 year leases, these are slowly being renewed during each sale so you may bag a bargain is you are a cash buyer as getting a mortgage will be impossible with a short lease.
7. Decoration Do not spend too much money on the decoration. You won’t be living there. Unless it’s a top-end property, avoid expensive and unusual finishes. White paint is cheaper to buy and saves time because you don’t have to cut it in around the edges. New carpets throughout can change the feel of the property. Add a decent underlay, haggle a little, and you can achieve a good-looking finish without an enormous outlay. Replace avocado bathroom suites or damaged kitchens. You might get away with new cupboard doors and fresh grout in the bathroom. Clean up or replace socket fronts, light switches, knobs and taps and the property will look as good as new. The aim is to make money from your investment, not spend it. 4. Location, location, location Obviously, you know your local area best and if you can afford to buy in it, then that makes things easier. If your own area is too expensive, then look further afield. The key to a great buy-to-let is having it somewhere where people want to live. A city/town centre location, close to transport links or handy for shops school catchments, – all these will help drive tenants to your door. You might have to weigh up negative aspects against the initial price but remember that a takeaway restaurant next door will limit your rental even though the property might seem to be a bargain. However, it is worth considering a cheaper road near to a popular area as the rent will be the similar. 5. Add value Even if it is not going to add to your rental income, it is often worth making improvements such as those mentioned above. They will add value when you come to sell, and they will make the house easier to let. Other improvements to consider include double-glazing, a new bathroom or kitchen and creating extra bedrooms. Spend money on making it as maintenance free as possible which will save money in the long run. 6. Talk to the professionals Will you be doing the work yourself or employing tradesmen? Weigh up the cost, the time it will take and whether you are capable. Unless you are used to DIY, it is probably quicker and cheaper in the long run to get somebody in. Boilers and electrical work will need to be signed off by a suitably qualified person. Cheap workers who are available immediately might not be the best option. A skilled worker can often do the work in a fraction of the time. Get recommendations from friends, if possible.
8. Presentation Give everything a good clean. Bathrooms and kitchens should be sparkling. Doors and windows are easily wiped down. If there is a garden, clear it. If you have got time to seed it, do that. If not, use turf, decking or tidy up existing paving. Replace fences and fix broken glass in sheds. Kerb appeal is crucial when you are selling a house and tenants are no different to buyers in their responses. Read our Get Ready for Letting Guide here
11. Furnished vs. unfurnished This depends partly on the type of property you are letting. But if you are going to furnish it, you need to be aware of fire regulations. That means you can not just go down to the junk shop and buy a sofa. You need to be sure it conforms to fire safety rules. Check labels. You also need to consider durability, so buy soft furnishings with removable, washable covers. Mattresses can be covered, too. You will also need to fit carbon monoxide and smoke alarms. Tables, cabinets and wardrobes should not be too flimsy. Make sure the property is safe, reliable and comfortable. Personally I recommend unfurnished rental properties, several reason for this,
no initial cost outlay
nothing to maintain during the tenancy
tenants that move their own furniture in to a property are likely to stay longer
a tenant is less likely to let their children jump on their own bed than a bed belonging to someone else
10. Hidden costs and void periods You need to be able to cover your costs if the property is left empty for a couple of weeks or months, or if the tenant gets into rent arrears. If the tenant fails to pay the rent, it may take months to get them to leave. You can get landlord insurance to cover this. And once the tenants have vacated, you might find you need to redecorate before you can let the property again. Most good agents will have a new tenant lined up before the old tenant has vacated to minimise rental voids, communication between agent and landlord it critical. 12. Tax and capital gains Make sure you have factored in paying your taxes correctly and do not forget you will be charged capital gains when you sell the property. Save your receipts as you can claim against tax when you eventually sell. Redecoration between tenants, however, does attract tax relief. 13. Good relations It is key to get on with your tenants. Treat them well and communicate effectively, then you are likely to find the sentiments reciprocated. Some of our tenants have been with us for 13-15 years and have kept the landlords property as though it is their own. Looking for the perfect buy to let property? Get in touch and we can show you a selection of perfectly suited homes on the market…
Are you a Poole landlord already? How is your communication with your agent?
For free help and guidance with anything rental related feel free to contact me on poole@lewisdean.co.uk or 01202 621900