Tell-tale Signs You are Not Cut Out to be a Landlord

For those looking for a continuous way to bring in income, even post retirement, being a landlord seems the most obvious choice.  Property investing can be risky, but can also provide a good return on investment. With property value appreciation you can generate a long-term profit, with a fractional equity contribution.  However to be successful as a landlord there is much involved and to be aware of before making the commitment.  So what do potential landlords need to consider before moving forward?

Do you have the right attitude?

Being a landlord is about more than just moving a tenant in and accepting the rent every month.  A landlord needs to be compassionate yet strict.  Being a landlord is a business and therefore needs to be approached in that manner.   If the thought of evicting a tenant leaves your stomach turning, being a landlord may not be for you.

Do you have the time?

While a rental property can be a great source of passive income, being a landlord can sometimes be more than a part time job. When letting a property there is a lot of work associated with marketing, conducting viewings, accessing potential tenants, and then setting the new tenants up.  A landlord is required to pull potential renters credit reports; get their criminal record, if applicable; assess personal and professional references and previous rental history. Once tenants are in the property, a landlord is required to be available to their tenants if there are any maintenance issues.

It is the responsibility of the landlord to care for the property itself.  Items such as the heating, electrical appliances provided by the landlord, windows and plumbing issues are your responsibility. Having basic knowledge to fix these goes a long way to improving profits. You can hire out a contractor to take care of them, however you need to know you can trust them to complete the repairs as needed to a good quality. These calls can be few and far between but still take time to deal with.

Overseeing budgets, understanding finances, and tracking income and expenses relevant to each property requires a basic knowledge of bookkeeping and will take time every month. If you’re not prepared or have the time to dedicate to addressing maintenance issues as they arise  as well as tracking the finances, being a landlord may not be for you.

What about the risks?

Owning rental property comes with risks – markets may change and rental income and voids periods may vary and should be factored.  A landlord needs to be able to weather those challenging times. Regular long-term renters reduce those the risks; short term lets or holiday lets may generate higher income but occupancy may be more varied and various jurisdictions (as well as leases) may restrict the terms of these types of rentals.  Regardless of occupancy, as the owner you will still be responsible for mortgage payments and other associated taxes. Be prepared for ongoing maintenance of the property such as gas servicing and plumbing issues,  decorative updates between renters. Therefore, you need the financial stability to weather various issues.

Being a landlord can be financially rewarding, but it does involve considerable responsibility and financial risk in order to serve your tenants effectively and maintain your property efficiently. Be sure to consider whether you have the right mental attitude, time and have considered all the associated risks.

If you need help considering a buy-to-let investment, don’t hesitate to contact us at +44(0)208.450.4187 to discuss investing and our property management service.