Young property investors are a force to be reckoned with. By starting out on the property ladder at a young age they’re giving themselves a huge opportunity to grow their money.
One property can often lead on to another, and once you’re renting out a portfolio of flats or houses, you’re in a very enviable position!
But does every young property investor make their fortune this way? Sadly not. Here are some of the common errors and how to avoid them…
We’re all guilty of hoping for the best, but when it comes to buying property you really need to do the sums. If you’re buying to let, the rent needs to cover the mortgage payments as well as all the other costs: repairs, furniture, agency fees... Is this amount a competitive rent for the area? If not, you won’t be able to attract those all-important tenants.
Before you buy any property, do some detective work. If you’re buying to let, you need to have a typical tenant in mind and make sure you meet their needs. Young professionals will need a parking space or commuter links nearby; young families will want to be near a school and park. By ticking the right boxes your property will be more appealing. Remember, you need to attract tenants quickly to make the most out of your investment.
As a landlord, there are a number of very important things that you need to know and do – and not doing them can be a criminal offence. Essential tasks include organising an annual gas safety check for the property; checking that tenants have the ‘Right to Rent’ a property; and putting the tenant’s security deposit in an approved scheme.
Failure to complete these and a number of other tasks can result in a fine or even a prison sentence – and you can banned from renting out properties in the future.
A lot of young people buy property with the help of their parents or friends. Something that’s often overlooked is the important of having some form of contract so that everyone knows what they’re committing to.
Avoid tricky negotiations with a friend or family member who suddenly wants access to the money they put into a property. If you’ve signed a contract up front, everyone knows where they stand.
A further form of protection that can really save your bacon is insurance. You usually need buildings insurance as part of your mortgage agreement. Make sure you keep it current – as a fire or accident could wipe out all your investment in a flash.
There’s a reason why landlords request references from new tenants – make sure you follow them up! A quick call to the tenant’s past landlord could reveal that they’re slow to pay the rent, that they hold noisy and destructive parties, that they caused issues with a neighbour… this behaviour could cause you problems and cost you money. Make sure you rent to someone who will treat your property with the respect it deserves.