You’ve purchased your first property, and you are ready to secure tenants to provide some supplemental income for yourself.
Also, perhaps your property needs improvements before you can rent it out with ease.
And let’s not forget the process of advertising the property and finding the right tenants in order to set yourself up for success!
Below we will explore some of the crucial points a First Time Landlord should look at.
As excited as you may be to become a new landlord, try to detach yourself emotionally and remember that you should always treat it like a business.
Keep things professional with tenants, closely manage your finances, and thoroughly screen tenants in advance of letting.
As a landlord in the UK, you are required to ensure that tenants are safe by providing a smoke alarm on each floor, carbon monoxide detectors in rooms with a coal fire or wood burning stove, a gas safety certificate for each gas appliance, compliant electrical devices, and clean water supply.
Local authorities will assess the condition of the property using the Housing, Health and Safety Rating System (HHSRS).
In addition, landlords must purchase an Energy Performance Certificate (EPC) before letting a property, which must meet a minimum E rating, or landlords will face a penalty of up to £5,000.
Finding the right tenants
You know the old adage: location, location, location! If you have not yet purchased your property, carefully evaluate potential investments in relation to nearby attractions.
Once you have the property, where do you find the best tenants? Most prospective tenants begin their apartment search online, so check into which rental portals are most popular in your area.
Next, you’ll need to create a compelling listing.
The more information you can provide, the better, such as details about the unit’s layout and finishes, building amenities, and information about the area.
Invest in high-quality photos that portray each unit in the best light.
Price and tenant demographic
Make sure the rental prices you set are based on careful research into fair market rates for your area. These are typically based on location, amenities, etc., but will shift depending on the economy.
Consider your bottom line: fixed expenses (mortgage, taxes, insurance, money for repairs/improvements) vs. desired profit.
Location not only determines the appeal, and therefore price, but also the target tenant demographic in your area: Is it young professionals, corporate tenants, families, empty nesters, or are you likely gearing toward student accommodation with universities and colleges nearby?
Your target audience will guide how you finish the units, as each demographic is looking for different things; for example, furnished units might appeal to students, while families are looking for outdoor space and extra storage, and young professionals and empty nesters respond to upgraded finishes.
Set up a screening process
Rental applications are the first step in the screening process. These should gather basic information including reason for moving, current address and landlord, employer information, income and references.
When the applications come pouring in, you’ll need to take time and sift through to identify the best possible tenants. A screening process is essential, and should include a credit and background check which closely examines their credit score, particularly for late payments.
Finding trustworthy tenants can be a challenge, but with a background check software, such as Checkboard, the process can be much quicker and easier for both the tenant and landlord.
This software confirms the tenant’s identity via photoID and liveness detection and connects to their bank account, getting rid of having to provide bank statements.
All information is confidential and securely stored.
Air-tight rental agreements
Once you have selected a tenant, have them sign a rental agreement that clearly communicates your expectations and includes legal protections for you as the landlord.
Be very specific about what is allowed and what is not.
Also indicate your business hours and availability, and any fees that tenants could incur, such for as late rent, and which utilities are covered by you or the tenant.
By outlining all of your expectations very clearly, your tenant knows exactly what to expect, which helps you avoid issues down the road.
And of course, you must follow through and enforce your own rules, lest tenants try to take advantage of your leniency.
For procedures like this, Legislate would be the best tool to create, review your rental agreement and ensure it complies with applicable laws.
Should you hire help?
If being a landlord is your side income stream outside of a full-time job, or if for some reason you lack time or resources to be constantly on call (you plan to have multiple properties, or you don’t live nearby), then it might be worth investing in some help.
Letting agents will advertise the property for you, show units to potential tenants, and handle the screening process.
A property manager can handle all of these tasks as well as be the ongoing point of contact for tenants for arranging repairs and maintenance and dealing with other day-to-day tasks that you might not be able to provide.
Letting agents and property managers present an additional cost, so carefully examine your budget and decide if it is worth the investment.
Make sure all of your paperwork is up to date and abiding to current legislation. Another must-have for landlords to protect themselves is a liability insurance.
This protects you from liability claims from potential accidents or damages, for example, burst pipes or theft.
If a tenant sues you, insurance will prevent you being out for the full cost.
You can also require tenants to purchase low-cost renters' insurance, which helps you avoid potential litigation if their belongs are damaged.
While being a first-time landlord can be challenging, there are plenty of resources available to make the process easier.
Always make sure that you check for the latest platforms and procedures that get accuracy and efficiency.
Platforms such as Checkboard, which allows you to screen tenants quickly and inexpensively, and Legislate, which creates contracts and helps ensure you are complying with local legislation, can help substantially alleviate the process of starting out as a new landlord.