There is much to consider when investing in a rental property. Whether you are a seasoned investor or letting for the first time, this checklist may highlight a few things you might not have thought of...
There is much to consider when investing in a rental property. Whether you are a seasoned investor or letting for the first time, this checklist may highlight a few things you might not have thought of...
The Right House At The Right Price
It all starts with the right house, flat or property at the right price. Needless to say, you will not get a good ROI (Return On Investment) if you have paid over the odds for the property or if you have to borrow excessively so that the expected letting yield will not cover the cost of the mortgage.
The Area
A good house is made even better if it’s in the right area. That is not only is it on a nice road but is there a balanced mix of both let properties and private residential homes? Is it close to local amenities and transportation? These can give you options when it comes to selling and letting.
How Will You Let Your Property
Lettings agents can provide different levels of service in looking after your rental property for a relatively small fee. Everything from just collecting rent to finding and vetting your potential tenants to inventories and check outs.
Tenants
If you choose to find your own tenants then there are a number of tasks you may want to complete such as setting up a bank account, arranging references, setting aside some time to meet tenants and arranging an inventory. Additionally there are certain things you must do for example organise all safety requirements, such as an EPC, and register deposits. Working with a good lettings agent will help take care of this for you.
Rental Income
It is important to get the figures right. You want to let your house and eventually make a profit on any potential borrowings you may owe on the house and any required maintenance and repairs. One way to monitor this is to create a spreadsheet and break down all anticipated costs on a monthly basis.
Potential Expenses
While you are on your spreadsheet, think of expenses such as maintenance, boiler services, electric appliance testing, and an additional budget for the unexpected such as repairs or potential appliance replacement if applicable.
Remember Legal Obligations and Contracts
Check out any legal obligations and make sure your property is up to scratch to avoid any unexpected expenditure, for example is your fuse box obsolete? Also, you will need a contract to protect your tenants and yourself legally.
Development Potential
Perhaps you have no intention of letting your house, you are simply going to restore it, or modernise it, then sell it. Perhaps you will improve your property, then let for a time then sell it. Whichever you choose, consider market conditions and if you can stick to your budget to maximise its potential.
