I was chatting to a landlord the other day who started telling me how she wasn’t making as much money as she used to from renting her property. After digging a little deeper I uncovered some of the reasons behind this and thought I would share them with you as I am sure these can’t be unique…
Not investing in your property – what I mean by this is, assuming you have gone to the trouble of finding a property in a good location and making sure it is attractive to your target tenant profile, why wouldn’t you maintain it to keep it that way?
I know landlords often like to spend as little as possible on maintenance but some things such as painting the exterior and changing furniture are essential over time and should be considered part and parcel of your overall cost of ownership.
I see this all the time where we contact a landlord suggesting that the property needs a new carpet or whatever or even reporting a broken shower and we get the “well it was find when we left” response, ignoring the fact that that was three tenants and five years ago. After all, you wouldn’t buy a nice new car then not service it would you?
Not investing in your tenant – this may not seem as obvious but what I mean by this is that you need to show an interest with your tenant and show them that you care about their comfort and happiness in your property. Why? Because whilst it is your property it is their home , which means that, it MATTERS to them.
Not using the right people – if you’re trying to save money you may decide to tackle certain repairs yourself or for that matter use untested tradesmen. But trust me in the long term this will cost you money unless your very sure of your skills, additionally tenants do get nervous about the landlord wondering around their home. That’s a point to always remember, your property, their home, just bare it in mind.
Not being proactive about rent reviews – I’m amazed by how many self managing landlords don’t diarise to periodically review the rent. I’m not saying to increase it without thought every year but at least take a good look at it and arrive at a considered decision. It’s much harder to agree a rent increase of £100pcm after three or four years of no increases rather than a £25pcm increase as part of a series of regular reviews.
Spending too much of YOUR time being involved with the property – given that for many landlords property is not their number one source of income, it would suggest that their main source of income is more lucrative. So if your main job is that of a solicitor and you charge your time out at say £100 per hour, why would you be dealing with the routine maintenance? In fact, even if your time was only worth £10 per hour if you actually measured all the time you spent on dealing with your property you would find that very soon your time had clocked up into many hundreds of pounds. If not then I might politely suggest that you are either the luckiest landlord on earth or you’re not doing everything you should be.
Sticking with properties which are essentially not profitable – some properties will never generate a decent cash flow whatever you do with them. Some will also not increase in value as you might have initially thought. If you have such a property and the situation is unlikely to change then bite the bullet and ditch it. Not growing your portfolio– another thing I am amazed by is how many landlords do not take full advantage of their equity to grow their portfolio. A good mortgage broker is invaluable and can often reveal ways to release cash for future purchases.
Plan for the future, think about your pension and how property might form part of that.
