The Guide To Becoming A Landlord
There are a lot of people who consider becoming a landlord, but there are steps to this that you might not be aware of. Fortunately, you can use this landlord guide to help you through your first experience as a landlord. By the end of this landlord guide, you should be able to find a good property and prepare for your tenants.
Cost Versus Potential Return
The first step in being a landlord will be to get a property that you are going to rent out. When you do this, you need to consider the cost versus the potential return. This means the cost of buying and maintaining the property versus the money that you will make from it.
The cost of a rental property will not only be the purchase price. You need to include the property transfer costs and the legal costs as well as the cost of getting it ready for tenants. You should also find out what the potential costs for maintaining the property are.
To determine if a property is worth the investment, you will need to take the costs per month and subtract the rental income you will potentially get. The income can be determined by looking at the market or by talking to a rental agent. If the end result is positive, you should consider becoming a landlord, but if it is negative it would be better to walk away from that particular property.
Landlord Guide To Houses In Multiple Occupation
Houses in multiple occupation or HMOs will have different rules that you need to know about. To determine if you have an HMO, you need to consider who you are going to rent to and how they are going to use the property. If each person who rents the property is getting a single room and use of common areas such as the kitchen, you will have an HMO.
However, if you are renting to 3 friends you might not have an HMO. This is due to the fact that they will sign the same lease and each person is liable for the whole rental amount. With an HMO, there will be separate leases for each tenant. It is important that you understand what the regulations are for an HMO and ensure that you adhere to them. If you do no, you could face a fine of up to £20,000.
Decorating And Furnishing The Rental
The way that you decorate and furnish the property can be the difference between it being rented and it sitting empty. It is important to note that you do not have to furnish the property. However, a property that comes with furniture will generally be rented for a higher monthly price.
When decorating your rental, you need to consider mid-tone carpeting as this will not show dirt or stains. Cheap carpets can be appealing, but they will not last and will increase your overall costs. You should also consider the color scheme of the house as you want it to be inviting. The fixtures in the house should be modern and you need to replace them after you buy the property.
Preparing For Your Tenants
If you do not want to be a hands-on landlord, you can work through a real estate agent who handles everything. In these cases, the agent will find the tenant and be their first contact. You will get rent from the agent after their fee is taken and be contacted only when serious maintenance is required.
If you want to be more hands-on, you will need to get a tenancy agreement created by a lawyer. You should then ensure that you have a security deposit account where the security deposit will be held. You also need to create an inventory of the house that you go through with the tenant before they move into the property.