7 Buy to Let Success Factors - Tuna Fish Property
Saturday 17th April 2021
Buy to Let Liverpool
1. Understand yourself and why you are investing in buy-to-let property. Identify your goals and set a strategy, in line with current economic and property market cycles.
Many investors have an income strategy, some rely on the cash every month to fund a pension or additional income, for example. Whatever your intention, it is critical to keep costs low in order to maximise the rental return. My last blog showed that lettings agency costs and fees can have an enormously detrimental impact on your rental income, with some agents eating into as much as 40% of your monthly rent. In simple terms, the agents takes 40p of every £1 of the rent.
2. Buy rental property below market value, in a good rental location with a strong tenant demand. If you do not know the area, take professional advice.
3. Don't over-stretch yourself. Crunch the numbers and ensure that the cash flow after costs is adequate and stress test before your buy or refinance to ensure you have to absorb rising interest rates or unforeseen expenditure. Make sure that you have a contingency fund.
4. Ensure that you have the most competitive mortgage product and insure against risk - buildings and contents, landlord's liability, life and critical illness insurance. Review annually.
5. Adhere strictly to the legal responsibilities of a landlord. If unsure, consult an expert lettings and property management company such as Tuna Fish. Food for thought:
a. Do you need a landlord licence?
b. Have you obtained any consent required to let the property?
c. Is your insurance current and does it provide a true rebuild cost of your property?
d. Do you have liability insurance, should your tenant have an accident?
e. Have you undertaken a written fire safety risk assessment?
f. Have you carried out right-to-rent checks on all tenants?
g. Have you protected your tenant's deposit in a government approved scheme?
h. Do you have an Energy Performance Certificate (EPC)?
i. Do you have a current annual gas safety certificate?
j. Do you have a current 5 year electrical safety conditioning report?
k. Are you compliant with smoke and carbon monoxide alarm regulations?
l. Have you undertaken checks for Legionnaire's disease?
m. Does all furniture and furnishings meet the required standards?
n. Do your tenants have a copy of "How to Rent: the checklist for renting in England" guide?
o. Are you aware of your maintenance responsibilities?
p. Use a letting agent which is a member of a regulatory body, such as the United Kingdom Association of Lettings Agents (UKALA).
6. Know from whom you can obtain expert help and advice - solicitor, mortgage broker, surveyor, estate and lettings agents, accountant, tax advisor, property advisor.
7. Asset management - add value to your property and review rents in line with the market. Consider when to sell or release equity for further investment and portfolio building. A good letting agent will automatically undertake rent reviews and also strive to reduce your costs.
If you require assistance with any of the above please contact Tuna Fish and we will be pleased to help.