Beth’s Buy to Let Tips: How to be a successful buy to let landlord
One of our staff is a buy to let landlord and these are a selection of her secrets for success (and those of other landlords she knows and acts for ). It does not constitute legal advice but is a collection of practical tips from people who have been there and done it !
Tell us your tips. Beth is always keen to hear other landlord’s stories. If you have any tips you would like to share with us please email email@example.com
Are you considering purchasing a buy to let property as an investment for your future? Or are you looking to develop a portfolio of buy to let properties?
Whichever category you fall into there are so many things for you to consider - especially if you are attempting the adventure for the first time! Many buy to let landlords only learn from their mistakes which can prove costly and time consuming.
Here are a few top tips about choosing the right property and how to manage your investment suitably. These are tips suggested by portfolio landlords who have learnt form personal experiences!
Getting it right. There are 5 main considerations:
1) Purchase Price
Rental must at least cover the mortgage payment. Ideally you want the rent to be
at a minimum of ?50 per calendar month over the interest payment.
2) The Correct Mortgage
You can offset the interest payments from the rent and for tax implications it is
favourable to have an interest only mortgage. I prefer fixed rates as it is not my
main residence and I have a few of them to manage so I like to know where I am
3) Easy letting
The property should appeal to the entire letting market (or as near to as possible)
size, layout, parking, garden etc… are important!
4) Low maintenance/ bills
5) Good for resale
CHOOSING THE RIGHT PROPERTY
The best buy to let property must appeal to the widest of letting markets! For example you need a house which will appeal to the elderly, couples, single parents with children, students, single occupants or families.
What you must always consider is the size of a property. Although the best buy may be a 3 or 4 storey 4 or 5 bed property as it is not much more expensive to purchase than a 2 storey 2 bed house, you have to consider whether the property is suitable for the lettings market on the whole and whether the maintenance costs are prohibitive.
For example let me explain from my experience of the multi storey houses I own:
Not every tenant wants the extra cost in heating a larger house even if the rent is the same as a 2 or 3-bed terraced house. A larger house means more cleaning, more council tax and higher energy bills. Also a property arranged on 3 or 4 floors is not suitable for those wanting to keep pets or those who have children as many people (especially those with children) do not want to run up and down the stairs all day!
Also more storeys mean more floors and walls to maintain for you as a landlord. This means more paint on stairwells and greater expense in carpeting them.
However many stairs my properties have, I always put fixed banister poles on both sides of the stair well as it stops wardrobes and beds scratching and denting the walls when the tenants move them in and carry them up the stairs! This means less repainting and filling!
I find that these large, multi storey buildings are best for student letting (that’s if you are
near a university or college of course). Be prepared however for lots of messy students so you will have to clear up and decorate after each student year. They are also hard to extract rent from so my advice: get a guarantor who is a property owner for each of them and keep the property basic - cheap furniture and carpets!
They can be a good earner though as rental income can be ?75 per week per student. If you are advertising for students, register with the local university accommodation shop as they refer students looking for accommodation to you and you can also place adverts on the student and college notice boards.
I avoid bed sit type lettings as I have had some scary experiences and in my opinion when tenants only rent a room they do not care for the rest of the house as a whole and the wear and tear on the individual rooms and carpets is increased.
From my experience 1-bedroom properties are not as successful because as soon as
people move into them they are looking to move out. Everyone apart from the elderly
or those who are likely to remain single long term never really stay in a 1-bed; they are
just stepping stones until people have children or can afford more space
TOP TIP The “bread and butter” house which you will always let!
A 2-bed terrace house can be let to all of the letting market as it is suitable for
couples, people with one or two children, the elderly and single people who do not
mind having a spare room. This is followed by a 3-bed house which is the second
Parking is a real Perk for any Rental!
TOP TIP Visit on weekends and at night. If you are buying a terraced house, can
you easily park outside on the road at all times? If you can it is a real benefit. If the
road is gridlocked parking is only going to get worse!
Also if you buy a property with parking (a terrace with rear parking) or designated
parking it is a real benefit as it will make yours the better of those available for let
and in my experience you will always let it.
Cellars are often damp and even if they aren’t they need constant repair and maintenance
to keep out the damp. Furthermore tenants are likely to fill them with junk which they kindly leave behind on vacating. You then have to clear such junk usually at your expense! This is the same for loft hatches.
I have a catch with a padlock on my loft hatches and only I have the key. I can gain
access in the event of an emergency or leaky roof but they cannot access the loft to
store all of their belongings which can fall through ceilings and be left behind once
SMALL! - This is always a must. Every tenant of mine who has rented the property and commented on how the garden is a bit small and could be larger and more child friendly has never managed to even cut the grass or maintain the small courtyard so in my experience the smaller garden is best.
The less grass and more gravel/bark the garden consists of the better as it is less
maintenance and when the tenants leave you are not tackling a forest! However please note, spray it with some pest repellent when you first put it down as cats have a tendency to think it’s a litter tray!
End terrace or mid terraced
End terrace if you intend to live in it yourself as it would be less noisy but as a rental mid terrace is easier to maintain and generally cheaper than an end terrace.
The advantages of a mid- terrace over an end terrace are:-
; less exterior to paint
; less risk of penetrating and rising damp (end terraces are move exposed to the
; less risk of subsidence (end terraces have to take the movement, etc)
; cheaper to heat (as warmth from neighbouring houses helps to heat them)
Pets or No Pets
This is your personal choice but from experience the pets are only as good as their owners who care for them. At the worst, cats can mess and scent in the house laying worms in the carpet. Cat urine is the hardest smell to get rid of as it soaks into the floor boards! Cats can also sharpen their claws on carpets, wallpaper, furniture and curtains. Dogs can be just as bad leaving muddy and stained carpets, chewed furniture and door frames and if their owner does not clear the garden from dog mess you can have lots of flies in the summer. Neighbours can also complain about the noise if animals bark or make noise all day when their owners are out.
From personal experience 90% of tenants who have had pets have cost me ?120 each in fees for fumigating fleas once they have left the property.
My advice is offer to allow small pets (ie goldfish, hamsters etc…) however if you
decide to take bigger pets ask for a ?200 extra deposit which will only be refunded 6 months after they have left the property when the fleas nesting in the carpet have all had time to hatch. Or better still take a ?200 non-refundable deposit so you can have the carpets cleaned and a flea spray anyway once the tenant has left to protect from any possible risk of infestation. ALWAYS add this deposit clause into the tenancy contract.
Pick a location close to local amenities so that the property suits most tenants wishes. I always pick properties near to the town, shops and train station (i.e. within walking distance). If I buy in a seaside town, it’s always a property near the sea so you can walk
to the beach!
Always consider properties near schools, train stations, local shops and amenities such as takeaways!
Avoid churches for their bell chiming, and main roads as not every prospective tenant wishes to live on one due to the road noise. Being near to amenities is beneficial but that does not mean next to or opposite pubs or night clubs as this can
also narrow your market. Near a school is good but not on top of one as parking and noise at 9 am and 3:30 pm will be a nightmare!
Remember if we buy a house to live in on a busy main road and find that it annoys us, we have to market the property, tolerate the noise in the meantime and sell it.
Tenants only have to serve notice and then move. Tenants do not have to tolerate these things!
Magnolia walls as they are clean and simple to suit the most basic tastes and can be dressed up for the more adventurous with pictures and furnishings. This colour caters for all markets!
Never opt for really light beige carpets. Although the trend at the moment is cream I always go for a biscuit colour with at least 4 different shades running through it, light beige, dark brown, harvest etc.. it shows less dirt!
Always maintain clean kitchens and bathrooms! Clean tiles are a must.
DSS versus working tenant
Make sure you check your buy to let mortgage as many do not allow DSS letting!
Also if you need to evict a DSS council tenant they may be hard to get rid of as the council usually refuses to rehouse them until they are actually evicted by a bailiff. This means more costs for you in taking them to court and arranging for bailiffs, which is why many landlords will not take them.
If your property is damaged you only generally have a minimum deposit from the council which does not usually cover the repairs and the council will not contribute to any repairs. You usually get a larger deposit from a private tenant and, as they are out at work all day, there is less wear and tear on the property.
Be fair with the rent. It’s a known fact that some tenants always stretch themselves to get the best rental property they can afford. They will move in and if they find it too pricey they will enjoy it for a while, the novelty will wear off and they then move out, after the first 6 months, to cheaper accommodation.
You then have the cost of re-letting, especially if you use agents, plus servicing the mortgage payments whilst you find a new tenant. For example, paying ?500 a month for
an empty property will cost you ?1,000 over two months, whereas if you take ?450 in rent you will only have to top it up by ?100 over two months. You do the maths!
Also when the tenant vacates the property the landlord always has to touch up the paintwork at the minimum and clean which is all time and expense. As my tenants are happy with the rent they pay they generally stay for an average of 4.5 years.
I sometimes write to my tenants if I have decided to keep their rent the same for the following year to inform them that the rent is not being increased for that year as they are good payers but that I ask in return that they maintain the property to the best of their ability and notify me immediately should a problem arise with the house.
With most of my tenants this creates a mutual respect and as I appreciate and acknowledge their regular timely payments and reward them by not increasing their rent, they in turn appreciate and respect the property. I feel this is better than having a ?25 per month increase for the tenant which I am then taxed upon!
However, do not be fooled. You do get some bad tenants but you learn which ones you need to be stricter with over payment! You will identify these quickly - they often make excuses, break promises, avoid calls, and pay late!
TOP TIPS FOR MANAGEMENT
; Always shop around for maintenance prices. A lot of people will offer you a
discount if you have a few properties which they could earn money from repairing.
Know your prices. You will learn what is cheap and what is expensive. Repeat
tradesmen can be good but not if they get complacent and pricey.
; Always get a gas safety certificate for the property each year: it is a legal
; When purchasing a buy to let house, tell the estate agents that it is not for you but
for an investment. You usually get the property cheaper as they know that you
are not as attached to it. Make them realise that if you do not get the specific
property you will buy another.
; Try to not get too attached to the property. It is an investment. The tenants will
NEVER look after the property and clean it like you would.
; Be firm. Have a separate mobile number or home number and make it clear that
unless it is an emergency, tenants are not to call you outside of working hours.
; I always have maintenance agreements to cover my boilers and plumbing. Most
emergency call-outs are due to drain or plumbing problems so it’s good if the
tenant can have a plumber’s number to call them out. If you are covered by a
service agreement you do not get billed huge expenses and parts. Many of the
agreements will also cover your gas safety check each year.
; To pick a good tenant, I always ask for their bank statements when credit
checking them (past 3 months for each). They do not have to provide them on the
grounds of confidentiality, but I believe if they can really afford the property and
are sensible with their money, they will show them to you. Also it’s a good check
to see if they pay their current landlord on the first of each month like they claim
they do! And you can see what other commitments they have, such as car loans
and credit cards.
; I now rent my houses with appliances (fridge freezer, dishwasher, washing
machine and cooker). This is to avoid damage to walls and kitchen units as a
result of tenants moving theirs in and out. Also, washing machines are often
tipped sideways when moved, which can stain the carpet with dirty water and
soap build up. The machines can also be installed badly and leak, damaging the
carcasses of your kitchen units.
I go to small retailers and get a price discount for buying a whole set of appliances and I always expect free delivery.
ALWAYS GO FOR FREESTANDING COOKERS - these are cheaper and easier to
replace, and it costs less to have them fixed. I only ever spend a maximum of ?200 for a 600mm-wide cooker and I throw it out and buy a new one every 5 years when it looks filthy!
In my experience, cookers and fridges last for years and so I do not insure them. Also, cookers get so dirty that you throw them out after a few years. HOWEVER washing machines and dishwashers are always insured for 3 or 5 years which is well worth it. BUT CHECK that the guarantee covers tenants usage and not just sole owners as I have been caught out there, and they refused to repair under the guarantee.
I like makes such as Beko and Indesit at the moment. For approximately ?40 per appliance, they offer three-year guarantees covering parts, labour and replacement items if necessary. Five years costs about ?60 per item and it is well worth the cost.
; Always have pre-payment meters in rented houses for the utilities so that it stops
you being left with unpaid utility bills once they leave. Tenants then have to pay
for what they use and they are only ever allowed ?5.00 extra credit in the event of
an emergency. I always write to the supplier and have a spare card/key sent to me
so that if the tenants vacate having taken the keys/cards with them and there are
no lights at the property I have a spare with credit on it! Know your rights! When
a property is empty, you have 6 months free of council tax to find a new tenant! I
also notify the council every time a new tenant moves in, giving them exact dates,
as some tenants do not register for a few months claiming that they were not there
and you have the mess to sort out once they leave!
; For each one of my houses, I always keep spare paint used for the initial painting
of the house, bathroom tiles and floor tiles for property repairs and touch ups.
; I do not allow any painting of the property by my tenants, even of the Magnolia
type, as I have experienced paint-splashed PVC windows, radiators and carpets.
If the paint needs touching up I go and paint it myself!!
THE BEST PIECE OF ADVICE!!
KNOW YOUR COMPETITION! You must remember there are many buy to let
properties on the market so yours must be one of the best to ensure it is always let!
Good Luck! – and if you have any tips you wish to pass on, please e-mail me at firstname.lastname@example.org.