WHY, AS A LANDLORD, YOU SHOULDN’T LOVE YOUR RENTAL PROPERTY
Buy your home with your heart and your rental property with your head! With your home you fall in love with it when you walk in…sound like you?
Most people will buy their home because they love it, not because it will make them money. You buy your home because you can picture you and your family living there and having good times. Maybe it is where you will raise your children and have family gatherings; maybe it is where you will retire! The fact that you can make money over time is incidental. You buy the property because you LOVE it.
A rental property should be bought because it can make you money. The location should appeal to tenants. Probably close to stations and amenities for flats and good schools for houses. The area may not be the area you would choose to live in but you have to consider who would want to live there and what sort of property these people would want.
A popular strategy for landlords and investors is to buy in what is known as ‘growth areas.’ These are areas that you may not wish to live in but that are up and coming and can get a good capital growth return in a short time. Only a few years ago Penge was not that desirable and considerably cheaper than its neighbour Beckenham. Now the prices in parts of Penge are more than the BR3 post code. Look out for places where the council are spending money on new pavements, investing in the infrastructure etc. these could be the up and coming places of the future.
Rental properties need to be tenant friendly; basically, neutral décor, modern kitchen and bathroom and compliant with rental legislation. Realistically, this means it must be safe for tenants to live in. When looking at an investment property consider what it would cost to make it tenant friendly. Maybe it needs a new bathroom and kitchen, maybe they just need a spruce up and re grouting and painting but all costs need to be considered.
A good local agent will be able to assist with the rental price giving you a report on what similar properties have let for in the area. Some areas have hot spots where properties let for over the average price because of school catchments, proximity to stations and a variety of other reasons. Sometimes if a property is quite spectacular and is finished to a high specification it will let for more money and in a really short space of time.
If the figures do not stack up then this is not a good property to buy as an investment. Do your homework before launching into being a landlord and take advice. There is plenty of advice and help out there…you could always ask your local friendly estate agent!