First Lets – Tenants can make or break your investment property profits
As a property investor, there are three crucial things you must do to make certain that your investment property makes the capital gain and income to meet your financial objectives:
- Buy in the best places to invest in property UK
- Get the best tenants
- Manage your buy-to-let like a professional
When you boil it down, successful property investment is a simple equation:
Best location + best tenants + best investment property management = maximum profit
As investment property managers, our buy-to-let investor clients rely on us to make sure that parts 2 and 3 of the equation are handled professionally, effectively, and efficiently. In the next few articles, I’ll introduce you to the basics of getting the best tenants. You’ll learn about the rental application process, the types of questions that we’ll ask of applicants during the interviewing process, and the right-to-rent laws that all buy-to-let landlords must observe in the UK.
In this first part of the series, you’ll find out the difference having great tenants can make to your investment and a few pointers as to how to get the best.
The difference between the best tenant and the tenant from hell
When your investment property is tenanted by great tenants, they’ll look after your property, be reliable with paying the rent and take their tenant responsibilities seriously. If the tenant has any property problems that need dealing with, they’ll report them straight away (we make this easy with our online repair reporting system). Generally speaking, the sooner repairs are made, the lower the cost of the repair.
So just how much can a tenant from hell cost you?
In a 2015 survey conducted by Access Legal, damage and unpaid rent cost buy-to-let investors almost £5.5 billion every year. £4.5 billion of this is for repair, replacement, and redecoration costs. A third of buy-to-let landlords also reported that their properties suffered from a lack of cleaning and basic hygiene (one reason we recommend a property inspection regime).
If you need to evict a tenant, not only can it be a long and difficult process (you’ll need to stick to the rules for the buy-to-let landlord to evict nightmare tenants), it can also be a costly one. The average cost of eviction is around £1,500. And that’s before you count the cost of the ensuing void period, clean up, and maintenance bill.
Stress-free, hassle-free, profitable property investment is yours when you get the best tenants and combine with investment property management services that monitor those tenants.
Six tips for securing the best tenants
To get the best tenants, you have to do some work. These six tips help to keep the tenant-finding strategy on track:
1. Understand and keep up to date with the law
There are ways of doing things right, and ways to get them wrong. As a buy-to-let landlord, you’re responsible for making sure you comply with various laws, including those on discrimination and the right to rent. Mishaps when it comes to legal requirements can be very harmful to your wealth.
2. Know how and where to market your property
There are plenty of avenues to advertise your property. With a national network and a local presence, Ezytrac uses marketing channels that include:
- Current ‘best’ tenants that may be looking to move
- Local networks of agents
- Local press
- Respected online agencies (beware of scammers on ‘free to advertise’ sites)
We also have a consistent stream of new tenants, which we add to our list of ‘tenants-in-waiting’.
Our tenant-finding strategies work so well that 95% of our properties under management are tenanted within two weeks of becoming available.
3. Use a rental application
It is essential to getting the best tenants. It’s documented proof of the applicant’s details and allows you to collect other information needed. As ever, there are limits to what you can ask, and how to ask – don’t get caught out by not knowing the law.
4. Interview the tenant/meet them in person
A written application only tells you so much about a person. You – or your letting agent/investment property management team – should meet prospective tenants in person. Our interview/viewing process gleans a lot more information and gives us a ‘feel’ for what type of tenant the applicant will be. It’s an invaluable part of the process of getting the best tenant.
5. Do background checks
An applicant’s rental history can tell you a lot about the type of tenant they’ll be. Their current employer will confirm the applicant’s employment capacity and length of employment. A credit check will provide evidence of their financial standing and responsibility.
See our straight facts on the tenant vetting process for more information.
6. Always use a tenancy agreement
Having done so much hard work to find the best tenant, make sure you have a written agreement that states the terms of tenancy. Even the very best tenants can go bad. They may get divorced, or lose their job, for example, and suddenly their financial situation changes.
A written tenancy agreement makes sure that you and the tenant are on the same page when it comes to your responsibilities, and is your proof should you ever need it in court – a rare occurrence if you start with the best tenants, but a possibility, nonetheless. (Make sure the 10 essential tenancy agreement terms and conditions are covered in the contract between you and the tenant.)
Our investment property management services help ensure that you get the best tenants and your property is monitored throughout the tenancy. It’s the hassle-free way to make sure your property investment is performing.
Contact me or one of the Ezytrac team today on +44 1522 503 717. Discover why we’re one of the largest and fastest growing investment property management companies in the UK today.
In my next article, I’ll examine the rental application and what questions we ask your prospective tenants.
Yours in effortless property management,