Practical tips for buy-to-let landlords
Practical tips for buy-to-let landlords
Dylan Evans lives in Bangor and works in the offshore oil industry. He started looking at the buy-to-let market as a pension investment for him and his wife, Cathi, hoping to take advantage of a gap they’d spotted in the local market.
Sharing his insight, Dylan says,“There are a lot of students in Bangor, so it’s hard to find property to rent, particularly for families who need affordable properties."
Spotting a bargain
Dylan kept a keen eye out for properties with older or broken boilers. "I’d spoken to friends who have bought to let and the main things tenants complained about were boiler and central heating problems. Finding properties with bad boilers meant I could use that as a bargaining chip to knock the price down, and then fit a new boiler. That also cuts the chance of the tenant having problems in future that would cost me to fix."
Dylan said that if the boiler’s not in good condition, it’s often a sign that the overall state of the property is below average. "On my first property, I used the general condition and the boiler problem to knock the price down by £8,000."
3 tips for buy-to-let investors
Dylan shares 3 things he would have done differently with the benefit of hindsight.
- Get it on the market fast. "With the first, I waited until all the refurbishment work was done, but with the third I’ve got a couple of rooms ready. That means the agent can get some pictures online and market it. By the time the house is ready, they’ve already vetted potential renters."
- Visit the property at least 3 times before putting in an offer. "Make notes each time. You’ll pick up things you missed the first time, because viewing an investment is pretty exciting."
- Get an objective opinion. "I took my father-in-law to the first property I bought and he spotted some of the things I’d already noted, so I knew I was on the right track. But he also calmed me down about some of the problems I’d spotted that weren’t really a big deal."
Finding the right buy-to-let tenant
"My idea was to offer a home for a reasonable price that’s going to appeal to a long-term tenant," says Dylan. Dylan uses an agent to market the property on its website, and to run prospective clients through standard vetting procedures.
"I gave them a pretty clear idea of the type of person I wanted, but I always meet the tenant to show them around the place. It’s all very well speaking to someone on the phone, but it’s only when you meet people that you get to know what kind of people they are."
Managing the property yourself
Dylan decided to manage the property rather than pay an agent for a fully managed service, stressing the importance of using local knowledge and taking independent advice when making the decision.
In Dylan’s case the agent provided a standard tenancy agreement, but he added some of his own conditions, including a ban on redecorating without permission and a stipulation that fireplaces are to be used for decorative purposes only.
Create a detailed inventory
A detailed inventory helps both tenant and landlord, and Dylan explains that it’s important to cover minor flaws in the property so that tenants understand what they can and can’t ask to be repaired.
"I write the inventory, and am always careful to be as straightforward as possible. One of the properties I rent has a double-glazed window that gets quite a bit of condensation, so that’s clearly mentioned."
Dylan also removes unnecessary items and fittings, so the home is comfortable but basic. “For example, one of my properties had 5 phone sockets, so I took out 4. It just means there are fewer things that could go wrong and cost you time and money."
"Once I let a property, I always leave a full information pack that includes details of the gas and electricity suppliers, and how to contact me. I also leave a welcome note and some flowers. I think it helps to reassure the tenant that they’re dealing with someone decent."
Managing the deposit and monthly rent payments
For each of Dylan’s properties, the deposit goes to the agent, who places it in an approved tenancy deposit protection scheme. The first month’s rent covers his agent’s fee: subsequent rent payments are paid directly into Dylan’s account.
It’s important to make sure you have a financial buffer to deal with problems like repairs, disputes with tenants and periods when the property is unoccupied. Dylan says, "I set about 10% of the rental income aside in case there’s a problem with a tenant. I also have an account that would enable me to meet the mortgage costs for up to 3 months, just in case the property was empty."