Buy-to-let landlords: Make sure your rental property doesn’t turn into a nightmare

Buying property to rent has always been seen as a good investment. There are always people who need or want to rent property; in fact, the recession actually increased the number of people renting. This figure has been steadily increasing for several years as people are unable or unwilling to take out a mortgage. Unfortunately, as with any investment opportunity, there are pitfalls which you must be wary of and prepared for:

Make sure your rental property doesn't turn into a nightmare

Empty property

An empty property will not be generating any funds to cover the mortgage costs. However, you will still need to pay the mortgage, insurance and possibly other bills such as maintenance. It is difficult to predict when or how much you will be hit with an empty property but you can take steps to reduce the risk. You should always have a proper tenancy agreement drawn up. This will ensure your tenant gives you adequate notice and allows you time to find a new tenant. You should also consider who is renting your property, students or short term rentals can be satisfactory if they can be combined with holiday rentals; if not you may find yourself out of pocket.

Tax

Tax is due on the profit from your property business. There are a variety of expenses which can be offset against your income to alleviate some of the bill, but you may still be liable for tax and you must be aware of this and prepared for it. It is advisable to seek professional advice regarding your tax obligations.

Hidden costs

Buying the property and paying the legal fees is only the first step. You must be aware that you need to pay out on property insurance; possibly including contents. You will also need landlord insurance and have maintenance and annual surveys to pay for. It is essential to be ready for any unexpected costs by having a contingency fund which will allow you to cover the cost of any of these things; without having to borrow money.

Location

The location of your property is essential to your success as a landlord; so you might want to look twice before looking for land for sale in Turkey. Properties in desirable areas, near utilities, schools and employment will be much easier to rent than those which do not have easy access to these amenities. The reputation of an area is also an important factor; you should visit any venue at several different times of the day and on different days to ensure it feels safe and welcoming. If you prefer to do the majority of repairs yourself then you should consider a property near your own; for ease of access.

Make sure your rental property doesn't turn into a nightmare

Tenants

These are essential for your business! However, you must vet every tenant carefully to reduce the risk of having one which does not pay the rent, or worse, damages your property. You should ask all perspective tenants for references and you should check that they are legitimate. You should also talk to them about their move and why they have chosen your house or the area; their answers can help you to get a feel for how long they are likely to stay.

Guaranteed rent

There is several business which offer guaranteed rent schemes. They stress that they will take care of everything and guarantee to give you a set income for a set amount of time. In return you effectively sign the property over to them to manage. In theory this is an excellent idea and there are some companies which provide an excellent service. However, there are also some companies which actually offer rents guarantee insurance schemes, although they will advertise as rent guaranteed. In truth, these insurance schemes will have their own terms and conditions and may not pay out as quickly as you need.

Make sure your rental property doesn't turn into a nightmare

There have also been incidents of a guaranteed rent company simply not having the funds to back up its offer; subsequently many of these firms go into administration. This can cause serious complications for landlords. You will not receive the rent you thought was guaranteed and you may also face a long and difficult process through the courts to reclaim your property! If choosing a rent guarantee scheme, be sure to check the firm out thoroughly, they should have a good reputation and have been trading for a considerable length of time.

 

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