Property management can be a tricky business at the best of times, and expenses can start to add up quickly, which is especially unwelcome when you don’t see them coming.
With a bit of planning and some wise investments, there are a few ways you can keep costs down and protect yourself against unwanted surprises.
Here are our 10 money saving tips for landlords.
Keep track of the mortgage
Mortgage payments will be one of the biggest expenses for any landlord, so it’s worth looking around for the best possible deal. Interest rates are relatively low at the moment, so locking into a long-term fixed-rate mortgage may save money when interest rates rise in the future.
A 2-year or 5-year fixed rate deal also gives you peace of mind that the mortgage repayments will be the same each month, allowing you to balance your books with a lot more confidence. Keep track of when the fixed rate period finishes, as dropping onto a variable rate could make a huge difference to repayments, and leads to a lot of uncertainty.
Do you need an agent?
Hiring a letting agency to do all the heavy lifting can make a landlord’s life much easier. It can also be an unnecessary expense, however.
If you have the time to invest in managing a property yourself, it can make it much more profitable. However, it becomes your responsibility to ensure everything runs smoothly. As our recent survey discovered, landlords need to be prepared for phone calls from their tenants raising the most trivial of problems, often at rather inconvenient hours.
At these times, it’s useful to refer to a well drawn out tenancy agreement. If a lightbulb has gone in the property, remind the tenant that it’s their responsibility to replace it (if that is indeed the case). Future uncertainty can often be avoided with a little foresight.
Keep an inventory
Are you providing tenants with a fully-furnished or part-furnished property? If so, it’s worth spending some time putting together an inventory of all the items provided by you. If that generic coffee table needs replacing further down the line, having a note of exactly what it is and where it’s from will make it much easier to find another one.
A carefully recorded inventory benefits landlords and tenants, as it ensures that both know what should be left in the property at the end of the tenancy, and what condition everything was in at the start.
Spend the right amount on furnishings
When furnishing a property yourself, there’s a balance to find between keeping to a budget and providing the right furniture for prospective tenants. It depends a lot on the local market and what type of renter your property is aimed at. Low quality furniture may put some people off a house or flat, while the risk of damage to more expensive pieces may not make it worthwhile.
Put yourself in a tenant’s shoes. Ask yourself, ‘Is this what I would expect if I’m paying £X a month in rent?’
Upgrade to LED light bulbs
LED light bulbs are incredibly energy efficient compared to their incandescent counterparts, so upgrading all of the bulbs in your properties could bring energy costs down significantly.
It will mean incurring some upfront costs to replace the bulbs, but these can be recouped in a matter of months, thanks to the energy savings that LED light bulbs provide. They also last many times longer than traditional bulbs, meaning that once you’ve replaced them, it will be years before they need changing again.
This case study describes a project undertaken by technology company Phillips and lettings agency Unite to install LED light bulbs in hundreds of properties across 28 university towns and cities.
Catch problems early
There will be times when there is a maintenance problem in a property that is not the tenant’s responsibility to fix, or those that require some professional intervention.
Things like leaks, odd smells (especially gas smells), mould and/or condensation should all be looked into as soon as possible after the tenant reports them. If left untreated, many ‘minor’ issues can develop into serious problems. Leaks from the bathroom could seriously damage the ceiling below; a blocked waste pipe could overflow into the property.
If dealt with early, most problems are quick and cheap to resolve. If left untended, they might be neither.
Sometimes your property might develop a problem, but the tenant just doesn’t let you know. To compensate for this, make sure you have regular property checks written into the tenancy agreement. Remind the tenant 24 hours beforehand that you’re due to visit to check everything is ok.
Forming relationships with local tradespeople can pay dividends in the long run, but do your research first. Read online reviews, and check they have the right qualifications. If they are dealing with gas-related problems, for example, they must be Gas Safe Registered.
Ask other agencies and landlords about which tradespeople they use. They might not be obliged to answer, but their recommendations could give some indication about the reputation of particular businesses.
Finally, ask a lot of questions before you hire someone. Ask about previous work, costs, and quotes. You can even request the contact details of previous employers to get some honest feedback. If the tradesperson is reputable and their work is of a good standard, you should be able to tell by this point.
Don’t leave properties empty
It may be an obvious point, but the longer a property is left empty, the more money you’re losing. Be proactive and start advertising your rental property as soon as a tenant informs you of their intention to leave. It’s handy to have property listings already written up ahead of time, so it’s just a simple case of sending them to agencies or uploading them to the web when the time comes.
This is one occasion where using a rental agency is a benefit, as many offer rent guarantees, meaning that you receive rent payments even while the property is empty. These guarantees will usually come in the form of an insurance premium, so costs will vary, but it could protect you from a sudden dip in income.
Take out insurance
While we’re on the subject of insurance, ensuring that you have a comprehensive home and contents insurance policy in place is a must. There are a huge variety of products on the market today, so shop around for the best quote. Make some notes about what you need a policy to cover. Once you’re in contact with an agent, they will inevitably upsell other products, but stick to your guns. If one of their products sounds appealing, do a little research to determine if it’s right for you.