Do you know your Ideal Property Rental and why?
Do you know your Ideal Property Rental and why?
Having decided on the property strategy with a clear timescale you wish to follow, you will need to look in greater detail of what is involved. The most important factor is the location of the property and a thorough understanding of the area you have chosen; particularly the competition that is available to rent in the vicinity.
You will need to do some extensive market research to make sure the area you think is right, is indeed a good place to invest. Your first place to ask are the local agents both sales and rentals – just make sure you trust the agent and the answers they give! If you do, then you can ask them more in depth questions both to have a better knowledge of the area but also to get a feel of whether the agent is the right one to work for you should you decide to use one.
It`s also always a good idea to check with the local authority to see if there are any building consents or planning issues that could affect the future viability of the area or property you intend to buy to let out.
Having done some ground work in the area of your choice, you need to review the following questions as this will help to make sure you are 100% happy with your whole strategy and will confirm that everything has been thought through fully:
- How much time do you have to manage the property? Do you want an easy life or are you happy dealing with problems? Problems tend to be very time consuming if they are to be resolved satisfactorily, and your decision will rest on both your time availability and level of stress you can handle.
- How risk averse are you? This can reflect both the condition of the property and how much remedial work you want to do before marketing. It equally relates to the size/type of property as significantly greater returns can come from HMOs (Houses in Multiple Occupation) but they do require greater time and finance to set up and to professionally manage. By comparison, a modern house on the estate can be a stress free let, so long as the correct due diligence has been undertaken to make sure the right tenant is installed.
- Can you afford high maintenance costs or do you need a property that is ready to let out? Certain types of older property can often be bought cheaper but could involve more upkeep which again is time consuming and potentially costly. A modern home is probably more expensive to buy but it can be let out straight away and have nominal maintenance issues for the first few years.
- Do you prefer modern or older properties? What is your preference? Older houses tend to be nearer the town centre and amenities, whilst modern properties on estates are normally found further out. The distance out can be mitigated if there is a parade of local shops, a walkable school and a decent bus service. Do you favour flats or houses? Flats are normally cheaper but do tend to have additional annual costs such a sinking fund for maintenance and a nominal ground rent, so it is worth checking. Funding might be an issue in deciding which property best suits you.
- What type of tenants do you want? Single people, Couples, Families or Sharers/Students? Each group come with their own pros and cons and it depends on your preference as to which type you feel most comfortable dealing with.
Having looked in further detail to each of the above points, will give you a decent idea of what market and what type of property you should be looking for.
Managing a property can be an unknown quantity; however if the property is let in good order and the tenants suit your criteria (having been professionally referenced), then you should be spending only a nominal amount of time managing it and this can effectively be a “passive income”. The caveat to any tenant has to be that they pay their rent on time and look after the property, preferably treating it as their home. If any of these points change then the time spent sorting out the problem can prove quite lengthy and costly, so it will pay to review everything from time to time.