Becoming a landlord is an opportunity to earn a great income, be a leader in your community, and positively impact the lives of others.
To get started, you’ll need to invest a bit of time and money to maximise your earnings potential.
Here’s how to start a business as a landlord.
1. Purchase a Property
If you already have a property to let, skip to the next step. If not, you’ll need to search for a good investment property. To find the right spot, you have to know what renters consider valuable. According to Zillow, the most attractive qualities of a rental location are:
- A walkable neighbourhood
- A safe area
- Easy access to the city centre
You’ll also want to search for a property that isn’t far from where you live. It’s important that you stay near your rental property if you plan to manage it yourself. Otherwise, you’ll be taking a lot of unexpected rail journeys in order to satisfy your legal obligations to your tenants.
2. Understand the Legal Requirements
Becoming a landlord is a professional occupation that comes with legal requirements. For example, many landlords need a license, most notably HMO landlords (an HMO is commonly known as a flatshare).
Once you are licensed to rent, you must register your property with the local council, take care of tax documents, and ensure that the property is safe for tenants. If you are unsure of the legal requirements, you can always seek HMO Advice to get the right information.
The safety of a property is not based on your opinion. There are strict legal requirements outlining what is considered a hazard. These range from the obvious (electrical hazards) to the not-so-obvious (uneven stairs). Violations can result in fines from the city and legal action by tenants.
3. Get Landlord’s Insurance
Landlord’s insurance covers many of the unexpected costs associated with letting property, including theft, fire, legal fees, medical expenses, repairs, and loss of income. It’s critical to purchase this insurance, as rental properties tend to depreciate faster than single-family homes. Tenants are not responsible for paying for most repairs and replacements, but insurance will cover many of these costs.
A single bad tenant can result in a huge loss of income due to damage or unpaid rent. Without insurance, you’ll have to choose between taking a loss or accruing litigation costs to pursue the tenant. Insurance removes this dilemma and protects your income.
4. Prepare the Property for Rental
You want your property to be as attractive as possible before you list it. At the very least, the property needs fresh paint, cleaned floors, and a full inspection. You should also consider investing in renovations that could raise the value of the property (and increase the rental price).
Don’t just consider your feelings on what makes a home attractive. Consider who will live in the home and design your space around that. For example, HMO design is much different from designing a space for a single occupant or a family. Large common spaces and remodeled bedrooms may be more attractive to HMO tenants, while families might prefer a modern kitchen.
5. Advertise Your Space
Now, it’s time to list your flat and accept applicants. The easiest way to list your space is to post online. These are popular portals where potential tenants from all over the UK seek rental properties.
You can list your space in the local paper or place ads around the university campus if you’re planning to rent to students. Local Facebook groups are also popular places to list your property, especially if you want to rent to someone from the local area.
6. Screen Tenants
Finding the perfect tenant isn’t easy. Think of it as hiring an employee at a company. You need to accept applications, perform background checks, call references, and conduct interviews. The process is lengthy, but if you find a good tenant, you’ll enjoy a relatively labour-free passive income in the long term.
Consider potential tenants’ ability to earn and pay, but don’t forget to consider social aspects as well, especially for HMO properties. You want your tenants to get on well. If not, it will result in higher turnover and more work for you.
Start your Journey as a Landlord on the Right Foot
Becoming a landlord is a lot of work. But the good news is that it gets easier as you go. The toughest part is the beginning-finding a property, renovating, interviewing tenants, etc.
But if you get that right, you’ll enjoy smooth sailing and passive income for years to come. Make sure to follow the steps above and you’re sure to have a rewarding experience as a landlord.