Ross Thompson from Belvoir! West Bridgford discusses the common issues that new landlords face.
I know you’re keen to get out there and start earning money from your new investment property, but continuing on from last week’s blog, I’m going to show you how to market your property at the right level.
“I should try to get the highest possible monthly rent for my property.”
Let’s imagine that you approach a reputable lettings agency in your area. If they are any good, they will have very experienced staff that know what the market in your area is like, right down to street level or less.
They will know what price the market is likely to support, after considering things like size, quality, parking, transport links, desirability and local amenities.
They will give you a value, or a narrow range of values for the rent that they expect you could earn – but ultimately, you are the customer, and they will market it at whatever you like.
So let’s say the valuation comes back at £1,100 per calendar month (pcm). You may have been expecting a little more than this, so you decide to have the property listed at £1,200pcm, against advice.
Now you may be lucky, and a suitable tenant, having passed all the appropriate checks I mentioned earlier, will come along promptly and be happy to pay your asking price. Over 12 months, you’ll earn £1,200 more than if you had taken the agent’s advice, right?
Probably not. For that to happen, someone has to move in immediately, which is unlikely, and if the higher price does put off prospective tenants for anything over one month, you’ve lost out on a whole month’s income – that’s £1,100-£1,200 lost… Go past the one month figure, and you’re now losing £1,100-£1,200 pcm in potential income. But if you market the property at £1,100 pcm, and it moves quickly, you could be much better off in the long run.
As always, there is no right answer, but I would advise two things: trust your lettings agent (assuming you took the time to carefully choose a good one in the first place!), and consider the type of tenant you are going for. Students can move every few months, young professionals might move every few years, and families with children in good schools may stay much longer.
The longer someone stays, the longer you might benefit from that higher rent – but there are exceptions to all things, and that nice young family might move in six months for a new job abroad, or move to a cheaper rented property because they are struggling to meet your higher rent. Generally, it doesn’t pay in the long run to be greedy.
So imagine you consider all this, agree a price with the agent, and market the property. You have asked for a thorough inventory (please tell me you got a thorough inventory!), and shortly the agent will start bringing people around for viewings. If the property is empty, this should be simple – just make sure it has been thoroughly cleaned beforehand, especially the windows as people want to get a good feel for the atmosphere and view.
Make sure nothing is left in the property which will not be included as part of the rent – you can’t leave beautiful curtains up and then whip them out the day before move-in and hope no-one will notice. If there is still a tenant in place, viewings can be trickier, as you have very little control of how clean and tidy they make the place before a viewing. You also need their express consent to enter the property for each viewing, as the law considers this their home, not yours, until they move out. This means that it pays to remain on the best possible terms with your tenant so that they don’t affect your chances of letting the place swiftly at the correct price.
Congratulations on making it this far – by now you’ve avoided many common pitfalls, secured a good agent, created proper contracts, asked for a professional inventory to be drawn up, found and referenced a good tenant and agreed a good price. This is where the hard work starts to really pay off. Next week your tenant will move in, your agent will get all the paperwork ready for your signature, collect and secure a deposit, and make arrangements for regular rent payments to reach you. All of the immediate jobs are complete, so now, for extra brownie points, it’s time to plan ahead to minimise your chances of problems in the future.