Rental property businesses are one of the most popular ways to start in the property business. They also have the potential to generate some of the highest returns for property owners.
If you have some capital to use or the means to get a second mortgage, here are four steps to set up your property rental business.
Do some research
The first thing you need to do is understand the market, the area you want to buy in and how you will make money from the property. For example, if you are getting a mortgage to buy the property, you need to consider how much this costs and extra costs involved. Then you need to look at rents in the area – can you charge enough to keep within the market but make money after you have paid basic costs and your income tax?
Understand landlord regulations
You will also want to ensure you are up to date with all the regulations that will apply to you as a landlord and what your responsibilities are. The local authority can be a good place to start for this information as there can be differences in different parts of the UK. Considerations will include things like regular safety inspections of gas and electricity, checks of electrical appliances and general upkeep of the property.
Self-managed or get help?
You next want to decide if you want to self-manage the property or get some help. Doing it yourself may save you some money but also places the burden on you to get everything done. So if the tenant has a leaking pipe at 3 am, you need to take the call, arrange an emergency plumber and even sort alternative accommodation if the burst is severe enough.
On the other hand, if you use a company like https://www.factotum.co.uk/ to handle the management for you, you may not make quite as much profit, but you don’t need to be hands-on with the property. They handle those 3 am emergency calls, collect rent and handle regular upkeep scheduling.
Furnished or unfurnished?
One of the final steps before advertising the property is to decide if to rent it furnished or unfurnished. Landlords who rent a property they once lived in often offer furnished or partly furnished because the items are there. Others add specific items like white goods as this can enhance the rent. Remember you will need insurance that covers any of your belongings in the property if you go furnished.