Making mistakes is a part of life: many can be laughed off, but others are more serious. And for landlords, there can be legal and financial consequences for getting things wrong.
When we’re asked to take over a rental home by someone who’s been managing it themselves, they’re often feeling a bit overloaded or disillusioned with being a landlord.
While everyone has their own story and perspective, there’s definitely a pattern to how being a landlord can become more complex, and it’s usually when these are missing:
- Knowledge of the local lettings market.
- A long-term business vision or goal.
- Valuing time as much as money.
- Commercially minded financial management.
- Planning for the unexpected.
So, rather than learning the hard way, use our blog to avoid the biggest landlord mistakes and create an enjoyable and profitable experience instead.
MISTAKE #1: NOT KNOWING THE MARKET
It surprises many landlords how lettings can change from street to street, from the target tenant and rental values to proximity to a station or popular school, so detailed research is essential.
- Take some time to check online listings and speak to letting agents about local demand, gaps in the market, and which types of homes make the best rentals.
- Consider that sharers generally want convenience, a social scene and transport, while families want quiet roads, good schools and easy parking.
- Interior fittings also matter, from practicality and durability for families to more design-led choices for high-earning singles and couples.
Remember: it’s easy to fall in love with a property or think it’s a bargain, but that doesn’t necessarily mean it’s the best rental investment. Only due diligence will tell you that.
MISTAKE #2: NOT HAVING A VISION
Even though they might not be conscious of it, most landlords do have a long-term goal. More often than not, it falls into one of the following categories – do any resemble your plans?
- Receiving passive income through retirement (you may want to schedule future maintenance sooner to minimise costs and hassle after you stop working.)
- Passing on a legacy to your children (this makes inheritance tax planning an essential part of your strategy to minimise their liability).
- Cashing in your properties at some point (set money aside from the monthly rent to renovate your property just before you sell to achieve the highest possible value).
It’s simple enough to buy a property and rent it out, but thinking beyond that from the very beginning will help you achieve your hopes for the future far more effectively.
MISTAKE #3: DOING EVERYTHING YOURSELF
It’s sensible to keep the costs of owning a rental home under control, but we meet plenty of landlords who drown themselves in tasks instead of enjoying the life they dreamt of.
There’s a fair degree of work, time and headspace in managing a rental home, and it’s quite a lot for one person alone. Here’s a quick reminder.
- Staying on top of legislation, dealing with repairs, checking that the rent is paid on time, and handling tenant problems and disputes.
- Ensuring certificates are kept up to date (and that appliances and fittings are in working order) for gas, electricity, fire alarms and energy performance.
- Having dates in the diary for insurance renewals, expiring mortgage rates, annual servicing, and mid-tenancy inspections.
No landlord has ever told us that doing all of these on their own has brought them joy, so give away the things you don’t love and free yourself up to work on your business, rather than in it.
MISTAKE #4: NOT STAYING ON TOP OF FINANCES
As well as providing a comfortable and safe home for your tenants, being a responsible landlord means running your buy-to-let as a profitable and bona-fide business.
This means conscientious financial management on both a legal and personal level, including:
- Reviewing the rent annually, regardless of whether your tenants are staying or if you need to find new ones.
- Keeping an eye on your regular costs like professional services, mortgage interest rates, insurance premiums and maintenance contracts to be sure you’re getting the best value.
- Claiming every expense, taking photos of receipts, and saving them in a folder for your tax return to remove the annual last-minute hunt for stray paper.
Staying on top of this will give your business the feeling of a well-oiled machine: good for your bank balance, and even better for your sleeping patterns!
MISTAKE #5: NOT BEING PROTECTED
Imagine if we told you that we work in the hope that nothing will ever go wrong and therefore have no contingency plan – would you ask us to manage your property? Probably not!
Processes, paperwork and protection are hardly a sexy trio, but they’re essential for any business to avoid the constant threat of crisis – so feel the pain and do it anyway!
- Always protect tenancy deposits – saving the £20-£30 fee is hardly compensation for risking a fine of three month’s rent.
- Stick to a rigorous referencing process and prepare a detailed inventory with photos to avoid poor-quality tenants or unclaimable damages.
- Take out insurance for contents, emergencies, accidents and non-payment of rent – the relatively small cost more than outweighs the potential hassle of not being covered.
The fact is that the unexpected does happen, and never when it’s convenient. Having nothing in place to protect yourself will always be a lingering thought, so go for peace of mind instead.
Would you like to enjoy life more as a landlord?
If you own a property to rent, call Richard Cook on 0790 909 3141 or email him at richard.cook@fifeproperties.co.uk for a friendly and expert chat.
We’re not only here to help you avoid landlord mistakes, but also to make the best decisions to enjoy a peaceful life and passive income for as long as you own your rental homes.
