Problem Tenants- No problem!
June 7th, 2011
Being a landlord is not always going to be easy and there will be times when things won’t run smoothly with tenants, so what can you do?
Check, double check and check again.
Many potential problems any landlord is going to encounter stem from not doing the correct background checks at the outset. This may sound simple but it is amazing how many this is not done as many landlords are anxious to let their property as quickly as possible.
Always ensure you know the background of your tenant, their rental history, their employment situation and their credit status. Even first time tenants should be a able to provide good solid references, but don’t take these at face value; remember, you can always undertake your own background checks through companies that specialise in that area, including checking criminal records.
If all of this seems a little too much and you don’t know where to start, engage the services of a good Letting Agent who will be able to do all these checks for a small fee.
Maintain a good relationship
It is imperative that you have a great relationship with your tenant and this starts on the first day you have any dealings with them, even before they move in to your property. When you are showing them around prior to the rental, note any issues they may have and if you agree to repair or change something, ensure it is done before they move in. It is important for you to remain consistent, courteous and professional at all times.
Pre-empt any potential issues
Visit the property from time to time to check for any maintenance needs and attend to them quickly, leaving your tenants with outstanding or recurring problems can cause resentment and distrust. You can minimise the problems of damage & maintenance by using durable hard wearing materials, such as washable paint throughout, use carpets in dark colours and stain protect them, or use good quality vinyl. Speak to the neighbours; this is a great way to find out if there have been any noise or anti-social behaviour problems that can be sorted out before they get out of hand.
Keeping up to date with what is happening with your property and tenants can avoid any problems before they arise and the main thing to remember when dealing with your tenants is, to remain consistent, courteous and professional at all times.
April Sees Rents Soar
May 20th, 2011
April saw average property rentals payments rise in England and Wales to a record breaking £692 per month. LSL property services have reported a rental increase of almost 1% on March’s figures and an increase of around 4.5% on the same time last year. In monetary terms this means landlords are charging almost £30 each month more than they were last year.
As the availability of local social housing is contracting due to government spending cuts in the social housing budgets, the market for good quality private rental accommodation is expanding to fill the gap. This expansion is fantastic news for the first time landlord looking to get into the rental market, with interest rates and property prices at an all time low there has never been a better time to utilise your savings or equity in an existing property to boost your income. With up to a 15% return on your investment Happy Homes Investments can help you get your savings working for you again.
Call us today for a free consultation.
Can investors still get into buy-to-let?
April 10th, 2011
The outlook seems bright for those considering looking to dip a toe in the property investment market as the continued shortage of good rental properties available and high tenant demand due to first-time buyers struggling to find the larger deposits required by many mortgage lenders, has meant that the current buoyant state of the rental market is likely to persist for some time.
Historically Buy-to-let mortgages have always come at a premium so for many balancing the income from the property against the expense of the mortgage has given them cause to steer clear of property investment, but with a growing rental demand come higher rents and rental income.
‘The good news is that, although buy-to-let lenders have tightened their criteria with higher deposits and rental cover calculations, rising rents make it is easier for landlords to meet these demands,’ says Melanie Bien, director at broker, Private Finance.
Steering clear of high street lenders and going through a specialist broker with access to ‘limited distribution’ mortgage deals, can uncover some gems. Mortgages for Business for example, is currently offering a 3.99% two-year discounted tracker in return for a 25% deposit, for all types of landlord.
Bear in mind however that, while fixed rate buy-to-let deals are available, they tend to be disproportionately expensive – and interest rate rises are looming large on the horizon. Credit Scoring requirements for the most competitive buy-to-let deals are also pegged high so it’s worth applying for a copy of your credit file through one of the credit reference agencies if you are in any doubt.
Private landlords turn down young tenants
February 10th, 2011
The National Landlords Association have surveyed a third of its members who let to tenants on housing benefit. Of this group, 31% said they would reduce such tenancies now, while less than 1% said they planned to increase such tenancies during 2011.
Many private landlords had expressed their concerns even before the General Election, about the Government’s plans to pay housing benefit to tenants rather than straight to landlords since this had caused a growing rental arrears problem.
One of the key changes planned for next January will be to encourage younger tenants to live together in shared properties rather than more expensive one-bedroom flats. The Shared Accommodation Rate currently limits the benefit a single person under 25 can receive to the average rent charged for a room in a shared house.
There are also not enough shared properties to accommodate the increased demand the Coalition’s proposed cuts will trigger; Shelter says 87% of local authority housing officers it surveyed already had difficulty finding places for under-25s on the shared accommodation rate. It says this shortage will become acute when the net includes those up to the age of 35.
The Government has defended its proposals on several grounds. One argument is that the cut in benefits might encourage more families to take in lodgers under the rent-a-room scheme, where some of the income is tax-free. Steve Webb, Liberal Democrat Pensions Minister, has said, “As young people start to realise they cannot get benefit for a flat on their own and start to look for lodgings, another family who may have lost income through redundancy might wish to let their spare rooms.”
At Happy Homes Investments we always advise using a fully qualified and reliable letting agent to ensure the reliability of your tenant.
Working out your Return On Investment
January 14th, 2011
This is an extremely important calculation to make, only by doing this you will avoid the trap that many investors fall into that of purchasing a liability rather than an investment.
Robert Kiyosaki (motivational speaker and author of the “Rich Dad, Poor Dad” series of books sums up the definition of an investment perfectly “To be an asset it must pay you cash every month, AND appreciate in value”
Far too many “investors” concentrate on the later part of this quote and forget about the income, many are enticed by the promise of a huge growth in the value of their property and are left with a cash flow negative property (outgoings and commitments higher than rental income) that they cannot sell, there is no longer the guarantee that a property will immediately increase in value as soon as you have done any alterations or repairs, Many investors are then left with a liability which they have to pay out cash for month on month. The results of which are:-
Reduction in your standard of living, an investment is supposed to enhance your lifestyle not restrict it.
Problems should your other income streams fail through unemployment, dividend payments; this may force you to sell your property at a loss causing more financial problems.
Increasing your portfolio becomes impossible if you are already subsidising 1 property at £200 per month do you want to increase this to 10 properties and £2000 per month.
It really is important to do your homework and ensure you purchase a property that gets the balance between income and growth right and the only way this can be done is to follow the steps laid out to you throughout our guide.
1. Find the right property
2. Pay the right price
3. Keep refurbishments within budget and timescales
4. Factor in any hidden costs
5. Ensure you have tenants ready to move in as soon as the property is ready
At Happy Homes Investments we ensure these points are covered every time for every investor, as we want to make sure our Investors buy a good solid investment not a liability.
Finding your tenants.
December 14th, 2010
The first question any tenant will ask is “how much is the rent each month”. This is one question you need to give a lot of thought to, charge too much and your property will be stood empty and this is the last thing you need when you have got a mortgage to pay. Charge too little and you are not fulfilling you investment properties potential.
There are various way you can go about setting your rent many of them have pitfalls so don’t just go with the one source. So where can you turn to
Letting Agents.
The Letting Agent will have a vested interest in what rental you charge don’t forget they take a percentage each month
Adverts in the paper.
These can only give you a guide line, and can be between £50-£75 per month out; specifics of decoration and facilities in the property can demand a higher rental
Estate Agents.
Like the Letting Agent they have a vested interest in selling the property and can easily inflate any potential rental income
Personal Viewings.
This is the only sure fire way of putting your rental into the correct bracket. Take time out to go on a few lettings viewings preferably in the same street as your own property, compare the fixtures and fittings along with the decoration against that of your own property and an absolute must is to look at how long this property is taking to be let, if this is over 4 weeks then it is probably overpriced.
Don’t forget to review your rental charges on a regular basis and ensure all rises are suitable for the type, locality and condition of the property
Working well with your solicitor
September 14th, 2010
In June we looked at building a relationship with the Estate Agent but perhaps more important than your relationship with the Estate Agent is your relationship with the Solicitor, don’t get me wrong, when a solicitor is working for you they are Working For YOU, but what you want to ensure is yours is the first file they pick up in the morning AND the last one they look at in the evening. If your relationship is not as strong as it could be this could lead to the following: -
Deals taking longer than they need to.
A solicitor can if they work at it get a deal through to completion within 2 weeks (Happy Homes record is 8 days)
A solicitor can also delay a deal by up to 5 months either by good negotiation for your benefit or dragging their heels to your detriment.
Deals falling through.
If a solicitor is not chasing all the parties involved it is possible for the deal to quickly sour and leave you without the property
Hampering your relationship with your letting agent.
Letting Agents like to have a firm date they can pass on to prospective tenants, if your purchase is delayed this delays everything down the line, you could risk loosing good tenants as the Letting Agent will soon find them another home.
The vendor taking an alternative offer.
If things are taking longer than expected, the Vendor rightly or wrongly could start looking at other offers being put in front of them, again this could result in you loosing the property.
There are a few easy steps to take to help you build a good relationship with your Solicitor: -
Use them as much as possible
Sit down with them at the start and outline what you are expecting from them and what they are expecting from you.
Get all the necessary forms from them in advance; this can be done before you even instruct them to work for you.
Try to get The Vendor to use a solicitor your solicitor deals with on a regular basis, this way each will know what the others requirements are and you may even be able to speak to both solicitors to move the process along (this does need the vendors permission to do this)
Use a recommended solicitor that knows the Buy to Let market, a good one Happy Homes works with and can strongly recommend is www.Fraserbrown.com
Letting Agents, what to look for.
July 1st, 2010
Once you have purchased your Buy to Let Property you need to make the decision “do you get an agent or do you go it alone.” Going it alone can be time consuming and a legal mine field if you have not got all the documents, agreements, do’s and don’ts laid out beforehand. Don’t forget this is your property that someone else has got rights over; this alone is a good enough reason to take on a Letting Agent.
So what should I look for in a good Letting Agent?
The first thing to do is take a look at what associations they are members of , the main ones to look for are ARLA (Assoc of Residential Letting Agents), NAEA (National Assoc of Estate Agents), NALS (National approved Letting Scheme), or RICS (Royal Institution of Chartered Surveyors). All these associations are bound by a code of conduct that helps protect you as their client.
What will my Letting Agent do for me?
The services a Letting Agent provides varies from agent to agent, it is always advisable to sit down with your agent and outline exactly what you want them to do, this can be as little as just finding you a tenant to fully managing the property. Having your property fully managed can save you a lot of time and energy in the future as they will carry out all the necessary inspections, report to you any problems and if agreed up front send out trades people to deal with any minor or emergency repairs without you needing to get involved.
How much will all this cost?
Fees, like services vary from agent to agent, the cheapest may not be the most economical and the most expensive may not be the best. In general a Letting Agent will charge a percentage of your monthly rental income usually around 10-15% depending on the level of service they are offering.
Building a relationship with the Estate Agent
June 14th, 2010
Estate Agents have a legal and moral obligation to act in the best interests of the vendor; after all they are the ones paying their fees. No Estate Agent should ever advise a client to accept an offer which could be detrimental to them so whatever your relationship with them do not expect this. Where a good relationship with the Estate Agent can be invaluable is: –
In a rising market.
When house prices are rising and there is a shortage of property on the market, the vendor may have accepted your offer but if you have not exchanged contracts any higher offers that come in the Estate Agent must pass these onto the vendor. A good relationship could see the Estate Agent let you know when if any offers are received, or helping you re-negotiate your offer and making sure your offer is the one the vendor finally accepts also the Estate Agent will be more receptive to progressing the sale at a quicker pace to exchanging contracts by making sure any obstacles in the way are dealt with rather than being left on the desk.
In a declining market
When house prices are falling and there is a glut of properties on the market, you will find Surveyors will start to down value properties, your relationship with the Estate Agent will become invaluable if you find yourself in the position where your purchase has been down valued and you need to re-negotiate your price down, remember the Estate Agent must at all time act in the vendors best interests, so your relationship with the Estate Agent is vital if you want them to convince the vendor that your offer is the best offer they will receive.
Over the years Happy Homes have built up excellent relationships with Estate Agents and this enables them to offer, exchange and complete on the purchase of properties within excellent timescales reducing the amount of worry and hassle for its clients.
How to Rent out Your Home
February 26th, 2010
The property slump, recession and the phenomenon that is Buy-to Let has led to more and more accidental landlords. These are home owners who for whatever reason have decided to rent out their property rather than sell. Here are a few things they had to consider:
1] Do your maths: Do all your figures add up? Does your rental income cover all your houses outgoing costs? Don’t forget your tenants will be paying the utility bills and Council Tax.
2] Go it alone or get an Agent: letting Agents take the hassle out of renting out your property; they will find a tenant, collect the rent, arrange repairs and manage the rental from start to finish. What they will also do is charge a fee, and this can be anything from 5%-15%. Do your homework and choose a good agent not a cheap one.
3] Let your current lender know: You need your lender’s permission to rent out your property. If you do not inform them, you could be in breach of your mortgage terms and conditions. The majority of Lenders are not going to object, so what have you got to lose.
4] Know the rules: It is vital to know the rules and regulations, now you are a landlord. This may not be an investment property but you may still be liable for tax. Don’t forget you are now responsible for gas, electricity and fire regulations, Energy Performance certificates, Tenancy Deposit Scheme, etc.etc. etc.
5] Don’t forget Insurance: Your buildings insurance will be invalid as soon as you rent out your property, so this will need to be taken out as a landlord, and don’t forget to get cover if your tenants default on their rent.
Happy Investing!