While life as a landlord has become much more complex over recent years, money is still to be made.
As the media have reported endlessly over recent times, rents are rising at an unprecedented rate. It means that despite your costs increasing, this can be offset by current market conditions.
However, market conditions are only the tip of the iceberg, and despite what some landlords might believe, there are other ways to boost your profits.
Today, we’ll look at some of these in detail.
Have a strict rent review schedule
As a landlord, you are legally entitled to increase your annual rent. Many landlords choose not to increase their rents, fearing it will lead to their tenants leaving. While this is a valid concern, it is often overstated.
The reality is that most tenants understand that rents will increase over time, and as long as the increases are reasonable, they are unlikely to look for a new home.
What is a reasonable rent increase?
A good rule of thumb is to increase your rents in line with rents around the area. This will keep you covered from a legal perspective.
While this might seem like a small increase, it will ensure that your tenants feel like they are getting value for money, are less likely to look for a new home, and avoid the dreaded void periods.
Let’s not forget that gradual increases are more likely to be accepted than huge rises every few years.
On the subject of void periods…
Void periods are one of the biggest drains on a landlord’s finances. While it is impossible to avoid them altogether, you can take several steps to minimise their financial impact.
Perhaps the most obvious is to ensure that your property is in good condition. A well-maintained property is more likely to attract quality tenants who are less likely to move on at the first opportunity. Furthermore, if you’re the type of landlord who responds promptly and fairly to any concerns your tenants raise, they are more likely to stay put.
Think carefully about using a property management company
For many landlords, the idea of using a property management company is an attractive one. After all, it frees up your time and means you don’t have to deal with the day-to-day running of your rental property.
However, it is important to remember that property management companies will charge you a fee for their services. This fee is typically a percentage of your monthly rent.
While this might not seem like a lot, it can quickly affect your profits. You may also consider a hybrid solution, using a company to market your property initially but looking after the ongoing maintenance yourself.
Regularly review your financial commitments
The big one here is your mortgage deal. After all, interest rate fluctuations can significantly impact your profits, so always ensuring that you’re on the best mortgage deal is crucial.
Of course, this isn’t your only financial commitment as a landlord. There’s also your buy-to-let landlord insurance and any other policies you have in place.
It is essential to review all of these regularly to ensure that you are getting the best possible value for money. Again, taking a passive approach to being a landlord is one of the surefire ways to see your profit margins crumble.
