With many industry experts predicting a bumper year for residential landlords, potential new investors with a lump sum from redundancy payments are looking to enter the business. They would be well advised to research carefully before proceeding.
Inviting prospect
It is without doubt that the well documented job cuts in the Public Sector has seen many high ranking managers leave their jobs with handsome pay outs. The attraction of walking into an industry that is said to be at its most lucrative for many years and that on the face of it does not require many skills, but does require a lump sum, is proving enticing for many middle aged people.
Not quite so simple
They should however, be aware that there is much more to being a landlord than buying a property, purchasing landlord insurance, and locating a tenant. A successful landlord needs to be a successful business person as well. From the outset new entrants to the business should be on their mettle.
Bargain for a bargain
First of all they should purchase their property at the right price. At the moment there are plenty of bargains out there, the stagnation in the housing market has made sure of that, but there still may be room for manoeuvre on any price. A new landlord should ensure he gets his property at the very best price. Even bringing down the price by a couple of thousand pounds may pay such extras as solicitors and agents bills.
Property Insurance a must
Once a property has been secured in the purchase sense it should then be secured financially in the insurance sense. It is imperative that a new landlord organises landlord property insurance that will protect him fully. He should consider a policy that offers cover against malicious damage, accidental damage, rent arrears, legal costs and maybe void periods.
Finding a tenant
His next job is to secure a tenant. He has two things to consider here. Advertising for a tenant can be costly if using an agent, but they do take the hassle out of finding a client and will usually come up trumps quite quickly. Taking care of the advertising yourself should prove cheaper but more time consuming. You can however, advertise in shops around the local area and in local newspapers. Tenants are in good supply at the moment so DIY advertising may well pay off. If you manage to secure your own tenant then it is important to get sound legal advice on drafting a landlord/tenant agreement before the tenancy begins.