If you are thinking about investing in buy-to-let property, then you need to do the math to make sure that it all adds up. It is not going to be worth the investment if you aren’t getting back the money that you have paid out or make any profit after mortgage repayments each month. So the decision to take on this kind of investment is a big one, and shouldn’t be rushed into. Having said that, it can be a lucrative way to invest your money, giving you a profit each month, and then ending up with various properties that you will own after a time. But if you’re thinking about going down this path, make sure that you check out some of the pitfalls of becoming a landlord, so that you’re going into the whole process with your eyes open and so you don’t make a big money mistakes.
Poor Tenant Referencing
If you don’t want to ever experience a poor tenant, then you simply never let one into the home. However, that isn’t going to make good business sense, as they are the ones that can make your money. You just need to make sure that you’re doing plenty of checks on the tenants, though. Things like a guarantor, employer reference, and a reference from a previous landlord are all good ideas to check. If you don’t, then you’ll never know how they’ll care for your home and if they will be paying you their rent.
Not Keeping It Legal
As with most things, there are some legal requirements that you as a landlord will need to adhere to. First of all, are you completing the right checks? Landlords are required in some instances to provide gas and boiler safety certificates when each new tenant arrives. You are likely to need to keep the tenant’s deposit in a particular bank account or scheme, rather than make it accessible to you. It does keep changing, though as in Scotland, as of this month, there have been some private residential tenancy changes that you would need to be up to date with. So don’t just think you can buy and house and quickly rent it out. You need to make sure that you’re doing it all in the right and legal way.
Failure To Do an Inventory
Before, or just as a tenant moves in, an inventory check is a way to make note of the condition of the property at the start of them moving in. It is a document that shows both parties what the property needs to be left like once the tenancy agreement is up. If you don’t do one, or fail to do a thorough one, then who knows what kind of state the home will be left in after the tenant leaves. It can cost you a lot of money if you don’t do one, so make sure you commission a check before and after, usually with the tenant present.
Have you had experience as a buy-to-let landlord yet? What other pitfalls are there?
