Tips For First-Time Landlords: How To Maximise Profits & Spot Star Tenants

If you are looking at buy-to-let opportunities, there is no doubt your goal will be to maximise rental income. Many believe that setting rent as high as possible will help them to achieve this. However, if you are not careful, you could end up deterring great tenants and sinking to the bottom of the market. An empty property is not making you any money at all. Therefore, the best chance you have to maximise profits is by keeping in line with the market and following our tips for first-time landlords. 

1. Know Your Legal Responsibilities

Jamie Hynes, the partner of Seymours in Dorking mentions, “there are plenty of laws out there put in place to protect landlords and tenants alike. They allow you to create a mutual agreement and ensure each party is benefiting. Understanding your obligations is an essential step even before seeking out your first tenant”. 

Creating & maintaining a safe environment.

One of the most important aspects of your life as a landlord will be ensuring that the property is habitable and safe for your tenants. This will include keeping up with the maintenance and repairs as well as ensuring correct smoke and carbon monoxide detectors are installed on each floor. 

“Everything you install, says Jamie, should follow industry regulations and be paired with the correct certifications. It is absolutely essential you meet all safety standards. Otherwise, you could be looking at hefty fines, bans for letting properties or even a criminal conviction”. 

As well as this, creating a habitable living arrangement also entails a safe and working water supply and ample heating. If any of this should fail while the tenants are living there – it will be up to you to implement repairs and exercise your right to enter the property in order to carry out checks. 

Finally Jamie concludes his thoughts with the exterior of a property. “It will also be your duty to ensure roofing, chimneys, drains and other elements are in working order. Any repairs or maintenance similar to this will be your responsibility. As a result, you should ensure you have the time and funds to do so in a timely manner”. 

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Jamie can be contacted on 01306 776674 or you can get in touch here.

2. Understand The Costs Involved

One of our top tips for first-time landlords is to realise the outgoings associated with managing a property in this way. It can be exciting to know you will have income in the form of rent to look forward to each month, but proper research needs to be done to maximise return.

Firstly, if you haven’t already purchased a property you wish to let – you may not have considered the sale costs.

• Surveys and valuation fees
• Mortgage agreements
• Stamp duty
• Legal fees such as solicitors 
• Income tax

As well as this, you will have to think about the day to day costs of becoming a landlord. It will mean paying into things you haven’t had to before and making arrangements for extra insurance. 

• Landlord’s insurance
• Rent insurance
• Safety checks
• Repair and maintenance fees
• Mortgage interest
• Letting agent costs

When you make the decision to take on tenants, it should be clear now that it’s not going to be a quick and easy source of income. There may be many considerations and problems to face along the way (even before welcoming them in). 

With this in mind, carefully auditing and consolidating your finances as well as what you are expecting as profit will help you organise and manage the property better. Although, if you’re looking for some extra support and advice, our unmatched services can lead you in the right direction right from seeking out the perfect tenant. 

3. Create Your ‘Star Tenant’

Before jumping into the market and hunting for people wanting to rent in the local area – have a think about the kind of people you would be willing to have as tenants. At the end of the day, they could make or break your experience as a landlord and so making the right choices are crucial. 

This process is almost like creating your own imaginary friend. But proper consideration into this area will give you the best insight into the types of people you’d be looking for. As well as this – it will help you realise how to best present the property in order to attract them. 

For example, students and young couples are often in the market for flats or houses to let. If it is their first home away from their parents – it’s unlikely they’ll have the furniture to bring with them. This is where a furnished property with fitted bedrooms and living rooms will appeal most. It makes it much easier to move in quickly and begin living. 

However, if you would prefer older tenants who have some experience renting or even owning their own property – it is likely they would want a blank canvas to fill with their own assets. 

Whatever you decide, it is good to keep in mind the reliability of the tenants. Especially in terms of paying rent; you need them to be prompt with payment and to be sure they will look after the property as laid out in their agreement. 

Furthermore, if you are looking for long-term renters, another top tip for first-time landlords would be to consider the lifestyle of your preferred tenants and how long you could expect them to stay. Finding good ones can be tricky, so the longer they stay around – the easier it will be for you!

4. The Price Is Right

Mark D’Costa says, “to make sure you are being competitive with rental fees, we recommend researching prices in your area. Although you want to maximise profits from your income – advertising the wrong price could be the difference between a 6-month vacancy or some really reliable tenants. Our team’s knowledge of the local area means we are constantly aware of the property market and average house prices. Because of this, it can be beneficial to enlist some advice from the experts to get a better picture of what you should be charging”. He goes on to say, “on top of this, you will of course need to reconsider the above points. Taking into account day to day costs and other fees associated with renting will also influence your prices”. 

 

Mark is the resident partner of our Seymours Staines-upon-Thames office.

While these costs may fluctuate – it is important to remember that with the changing property market, you are able to adjust rent prices accordingly. As long as it is set out in the agreement and you give ample notice – you can ensure your profits are being maximised in line with inflation and other increases. 

However, setting the right price will see no benefit if you cannot trust your tenants to pay the correct amount on time. While there may be some exceptions you are willing to make arrangements for, it is expected and agreed in your contracts that they should process payments on a given day. This is exactly why it is so important to follow our next tips for first-time landlords. 

5. Screen Your Tenants

This is the process by which you can request background checks on potential residents. The benefit of this is gaining insight into their credit score, criminal background, eviction history and more. 

Why is this important?

• You can make sure they will pay rent on time.
• Reliable tenants will look after your property.
• You do not want tenants that are likely to cause disturbance to neighbours.
• Being aware of possible disruption could save you money and time.

While carrying out this process, you are entitled to a lot of information. Some of this can be used to reject an applicant. However, there are certain factors that would be considered unlawful discrimination.

Poor credit history or background of unpaid rent would definitely be grounds for refusal. So it is key that you use any information you uncover to make a just and fair decision. As such a critical part of your journey, more information surrounding it can be found here. 

Alternatively, search for your local Seymours branch for more advice and support in letting your property and keeping an eye out for those star tenants!

Extra Tips For First-Time Landlords

As you can see, there is plenty for you to be thinking about! But don’t fret, becoming a landlord can see great financial benefits in the long run and be a really fulfilling experience. To make sure you get the most out of it, here are a few extra things you can consider and do:

• Walk through the property and ensure it is presentable, safe and fitted with regulation detectors and the correct equipment.
• Ensure you have a number of copies of the key so that each tenant and yourself has access. 
• Leave instructions for each appliance. 
• If you’re concerned about subletting or considering the option – read our blog that explains more about it. 
• Ensure your tenancy agreement is sound and signed. 
• Ensure the correct insurance is in place. 

So, when you decide to start this new lifestyle as a landlord, we are ready to give you as much advice as possible and help you along the way. Make sure you keep all of your paperwork to hand as you move through each stage and communicate regularly with your tenants. 

If you want to get in touch, you can fill out a contact form today or visit our website to book an appointment and find out more. We keep our processes simple and transparent and won’t try to baffle you with small print or jargon