The idea of becoming a landlord is constantly pushed in the media as an easy way to make money. In this article we look at the mechanics of being a good landlord and ask whether it really does offer such a great money making opportunity.
The concept behind becoming a landlord is simple and familiar to millions - you get yourself a mortgage, purchase a property and then rent it out to tenants. The rental income covers the cost of the mortgage and the property rises in value, thus increasing the value of your investment.
It all sounds so straightforward - what could possibly go wrong?
If you are thinking about setting yourself up as some sort of property magnate then you need to consider how much money you can afford to put into the venture, what sort of risk you are prepared to take and how much time you will be able to spend looking after your investment.
Recent interest rate rises have left many landlords concerned about the viability of their property investments - it's important that you are not caught out.
The first matter to consider for any budding property entrepreneur is what your business plan is. You need to consider how much of a return you are looking to make and over what period of time.
The reason this is so important is because property prices and rental yields won't always increase. You need to think about how you would react in the face of falling property prices.
So it's important to consider your business plan in full. You also need to consider how you are going to go about finding tenants and manage the various aspects of the tenancy. There are a number of legal requirements that you'll need to be aware of - many landlords hire a letting agency to manage the lets on their behalf.
No matter what route you take, you need to make sure that you are aware of your legal requirements. This is vital for ensuring that you operate within the terms of the law and will also be extremely useful should you have any future disagreements with your tenants.
Don't forget that you'll also need to pay to maintain your property when you are renting it out. Not all tenants will treat the property particularly well, so make sure that you have enough money set aside in your budget to take into account the running costs.
There's also a decision to be taken on how maintenance will be carried out - are you intending to do all work yourself, or will you be needing to hire specialists.
All of these factors will influence the amount of time and money that you spend on your investment.
As you can see, becoming a landlord is not as simple as it may first seem. The key to success is to plan well from the outset. If you do so, there's no reason why you should not have a blossoming property portfolio.
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