A buy to let investment property is no longer the goose that laid the golden egg. Various government policies, combined with rising house prices, have made it increasingly hard to make a profit. But all is not lost.
By following the tips below, you can make your properties more attractive to tenants and reduce your expenditure. It’s a win-win for landlords everywhere! And the good news? Most of these tips are easy to implement and won’t cost you an arm or a leg.
1. Buy a cheap property in a high-demand area
The right property is the difference between success and failure. It’s common to view properties in your neighbourhood when you are looking for the perfect investment property, but there is more to it than that. The top areas for buy to let in the UK are a winning combination of high demand and cheap property prices.
University towns and cities are always popular, as there is a steady supply of tenants, but according to research carried out by Zoopla, Rochdale, Glasgow, and Wigan are the top three locations for investment landlords, with rental yields of 9%, 8.6%, and 8% respectively. Bottom of the league was St Albans with a paltry 3.65%.
This illustrates just how important it is to do your research before you invest in a buy to let property. Yes, it is easier to invest in buy to let properties in your area, but consider investing in a different part of the country if rental yields are significantly better.
2. Target the right tenant
Once you have found the right property, your next task is to find the perfect tenant. Think carefully about what type of tenant you need. It’s pointless targeting students if your property is a high-end apartment in a luxury development. Conversely, high-flying young professionals won’t be interested in an ex-council house on a rough estate in Middlesbrough.
The property and your target tenant need to be a good fit. Spend a bit of time assessing the pros and cons of different tenant types for your target area. This is time well spent.
3. Screen tenants very carefully
Tenant screening is vital. This helps you to weed out unsuitable types, such as tenants who can’t afford to live in your property or people with antisocial behavioural issues. Remember, if you inadvertently give a tenancy to a person who fails to pay the rent, your rental yields will soon hit negative figures.
Use a professional tenant screening service if you manage your own rentals. And if you use a letting agent to find tenants, make sure they are doing their job because a bad tenant is ultimately your problem.
4. Conduct group viewings
When something appears to be in demand, we automatically want it more. Even if that item is not really worth having. It’s known as the paradox of scarcity. Black Friday is a good example of this type of behaviour. If you have ever watched with amazement as people fight over cheap TVs in the electrical aisle, you’ll understand what we are saying here.
Frame something in the right way and people will want it all the more. This is why flash sales are so effective – and also why double-glazing salesmen will try to convince you that their prices are a strictly time-limited offer, guaranteed to expire in 60 minutes unless you sign on the dotted line.
Group viewings feed into our chimp brain. We see other people viewing a property and it triggers a primal competitive instinct. Sure, the place isn’t that wonderful, but if the other viewers seem super interested, it must be worth having!
You are more likely to find a tenant if you arrange group viewings. Plus, it is easier from a logistical perspective if you are the one conducting the viewings. Have an open house for a few hours on a Saturday or Sunday. Advertise it on social media and encourage people to share the post with anyone who might be interested in renting your property.
5. Look for a low-maintenance property
It stands to reason that a low maintenance property is a safer bet. The more money you spend on repairs and upgrades, the lower your profit margins. Older properties tend to require more maintenance, but new builds are not always constructed to a high standard. Use your common sense here. If there is evidence of rising damp and the roof has more holes in it than a slab of Swiss cheese, walk away.
6. Raise the rent
Raising the rent is a no-brainer way to boost your rental yields. Always monitor local rents to make sure you are pricing your properties competitively, but don’t hike the rent too much or you risk having a long void period between tenancies. Also, be wary of putting up the rent if your tenant is long-term and reliable. It’s not a good idea to upset a good tenant for the sake of an extra £20/week.
7. Shop around for a mortgage deal
We are all guilty of apathy when it comes to mortgages and other financial products. Searching for new deals and going through the hassle of applying to another lender takes time and effort, right? Yes, it does, but that’s always time well spent.
Do a bit of legwork; you could save a packet on your mortgage repayments. Once your fixed rate or discounted deal comes to an end, your lender will probably put you on a variable rate. Why pay more than you need to?
Put a reminder in your diary three months before your deal comes to an end. Search for a better deal or talk to a mortgage broker. You know it makes sense.
8. Keep accurate financial records
Tracking income and expenditure is a bore. You’d probably much rather sip a G&T in the garden than update your accounts. But, sadly, it’s a necessary evil. For one thing, HMRC requirements state landlords must keep accurate financial records for up to seven years. And for another, it’s sensible from a financial perspective.
It is very difficult to tally up tax-deductible expenses at year-end if you didn’t record them. Each expense that slips through the net is money down the drain, which chips away at your rental yields.
Use accounts software with an app, so you can scan receipts on-the-go and track everything in real-time. Alternatively, invest in landlord software like Landlord Vision that combines accounts with management capability. It’s the smart way to run your business.
9. Investigate all possible tax reliefs available
We all have to pay taxes, preferably on time, as our tax money helps to fund the NHS, schools, and other public institutions, among other things. Unfortunately, tax is not a sexy subject, unless you happen to be Chancellor of the Exchequer. Because of this, some landlords don’t pay too much attention to tax and how it affects them, aside from dutifully sending off their self-assessment tax return at the end of the year.
But this is a mistake! There are tax reliefs available to landlords, such as the ‘wear and tear’ allowance and annual investment allowance. Not claiming these and any others you are entitled to is silly.
If you have no clue about tax relief and would rather stick pins in your eyes than read a tax book, speak to an experienced tax accountant and let them sort it out for you.
10. Cut expenditure
OK, so this is another no-brainer, but an awful lot of landlords spend more than they need to.
Sit down and examine your annual property expenditure. Aside from the big stuff, like mortgage payments, what else are you spending money on? Are there any areas where you can save money? No, we are not suggesting you delay upgrading your properties or skip a boiler check this year, as that wouldn’t be sensible at all. But what you could do is try to negotiate a better deal with your letting agent or do your own painting and decorating, rather than pay Fred from down the street to slap some paint on the walls when a tenant moves out.
This is another of those tips that is easier to implement if you’re tracking your income and expenditure.
11. Switch to the HMO model
HMO management is not for the faint-hearted, but it is often more profitable if you can handle the extra admin. Instead of letting a four-bed house to one family, you turn one reception room into a bedroom and rent it out to five couples or singles. This generates more income.
Of course, HMOs require more management, and in many areas, you will need an HMO licence, but it is worth looking into.
Things to consider include finding a suitable property, what type of tenant you want to target (students, benefits claimants, etc.), whether you want to be a hands-on manager or pay someone else to manage the property, and the extra regulation associated with HMOs.
In addition, consider whether your area is already saturated with HMOs – this may be the case in a busy university city or rundown seaside town
12. Let furnished properties
Furnished properties attract more rent because they offer an all-inclusive option for people who don’t have the money or inclination to furnish a house. The good news is that you don’t need to blow a small fortune at John Lewis or Ikea to kit out your property. As long as you provide the basics, such as beds, a sofa, dining table and chairs, etc., you can legitimately advertise your property as “furnished”.
Since rental properties are subject to more wear and tear, it’s fairly pointless spending big bucks on expensive furniture, although new beds or at least new mattresses are recommended each time a tenant vacates. Instead, look for solid second-hand items that are not too hideous. It’s not difficult to pick up cheap second-hand sofas on sites like eBay and many are in good condition. Just make sure any upholstered items you do buy are fire-rated.
13. Add an extra bedroom
Look for properties that offer the option for a further bedroom, so you can charge more rent. For example, many older properties have larger rooms that can easily be sub-divided to make two bedrooms. It isn’t a huge job to build a partition wall, although it’s a good idea to check with your local planning authority before you make any structural changes. Consider the merits of an attic conversion, too.
Even turning a second reception room into a bedroom is an option if you want to maximise your rental income.
14. New kitchen
Upgrading the kitchen is one of the best ways to add value to a property. It’s also a good way to make a property more attractive to tenants. Most people want a nice kitchen in their home. It doesn’t need to be hand-crafted from solid oak, but it does need to have ample storage, be modern and clean.
Consider upgrading your kitchen if it’s looking a bit worn around the edges. If you can do a lot of the work yourself, it will cut the costs significantly. Relatively cheap flat-pack kitchens are available from all good DIY stores. Add a decent sink and taps, plus a neutral worktop and tiles. It’s best to keep it plain and simple, to appeal to the maximum number of prospective tenants.
One additional point worth making is that it is a good idea to rewire a kitchen prior to the install. If it isn’t already, you can then put the kitchen on a separate ring circuit, so if an appliance blows a fuse, it won’t knock the whole house out.
15. New bathroom
Bathrooms are also worth upgrading if yours is firmly stuck in the 1970s. Most tenants want a nice, modern, clean bathroom, so it’s a useful selling point.
Throw out the hideous avocado suite and upgrade to a nice white suite. Ideally, add a separate shower if there is enough space; if not, a shower over the bath is sufficient, but make sure if you include a glass shower screen, it’s well fitted and watertight.
16. Use contract cleaners at the end of a tenancy
Cleaning is a major issue for landlords. Not all tenants depart in a mist of lemon and bleach fumes. Some have no clue about the merits of a toilet brush and the oven may contain more food residue than the local kebab shop.
Unfortunately, a dirty property is unlikely to appeal to prospective tenants. Therefore, it is worth hiring contract cleaners to come in and do a thorough job before re-advertising the place. They will spruce up the property in half the time it takes you to do a mediocre job, which is money well spent.
17. Energy efficiency measures
Energy efficiency is a hot topic these days. Tenants don’t want to rent a property with more air gaps than a colander and they sure don’t want to spend most of their take-home pay on gas and electric over the winter.
The government’s Green Deal is no longer available, but installing energy-efficient double-glazing, uPVC doors, and adding more than the minimum loft insulation will make a difference to a property’s energy efficiency rating, which makes it easier to charge a higher rent.
18. Replace carpets
Old, worn carpets make it harder to find a tenant and achieve full market rent. Replace those hideous 1980s monstrosities and fit neutral beige carpets or hard-wearing laminate instead. Your tenants will thank you.
19. Decorate in neutral colours
Neutral should extend to the décor, too. Buy a load of magnolia paint and decorate every room in the same neutral style. A tastefully decorated property is easier to let, and as every landlord knows, fewer voids mean higher rental yields.
20. Low maintenance gardens
Gardens can be problematic. Plenty of tenants want a garden for little Chardonnay or Travis to play in, but they don’t actually want to get their hands dirty with a spot of gardening. Nor do they want mowing the lawn to detract from their hectic weekend social life. And who can blame them!
Still, you can’t afford to let your garden slip into David Attenborough wilderness territory, although the local wildlife may appreciate that. Nor is it a good idea to concrete it over, even if it makes life easier.
Your best bet is to create an attractive but low maintenance garden where tenants can entertain in the summer (quietly, of course), let their kids play, and exercise their pets (assuming you have given them permission to move in with their pack of mutts).
Get rid of the lawn and replace it with paving stones or gravel. Use weed control membrane to keep weeds to a minimum. If you want to introduce some greenery, build a few planters and add some low-maintenance perennials. Tenants are then free to add their own pots and hanging baskets.
21. Add patios and decking areas
Following on from the previous point, building a patio or decking area is an excellent idea. An outdoor seating and entertaining area is a great selling point, and if your tenants are smokers, they can puff away outside without running your carpets and décor.
Plenty of people look for an outside entertaining area, in the hope of a hot summer with plenty of opportunities to burn some burgers on the BBQ. It’s especially popular with families, as they can sit outdoors with a few beers while their kids play.
22. Add white goods
It is customary to provide an oven and hob, but why not go the extra mile and provide a fridge-freezer, washing machine, dishwasher, and tumble drier?
Lots of tenants don’t have enough cash to buy white goods when they move into rented accommodation. They are forced to buy second-hand or pay silly prices on weekly rental deals. You can attract a wider field of prospective tenants if you include white goods. Pay for an extended warranty on appliances and you needn’t worry about expensive repairs.
23. Install blinds
Curtains and blinds are another extra that tenants might not be able to afford to buy, yet they need them, especially in bedrooms.
Make your property more attractive by fitting neutral blinds in bedrooms and living rooms. Curtains don’t suit everyone, but blinds go with most types of décor. Wood-effect Venetian blinds are readily available from home furnishing stores like Dunelm or even Argos, so you don’t need to spend a fortune.
24. Boost security
Depending on where your property is located, security might be an issue. We are not suggesting you install a state-of-the-art home security system, although for top-tier tenants, this is a must-have, but a small CCTV camera, strong locks, and a secure perimeter fence and gate are advisable.
Modern CCTV cameras are relatively inexpensive and can be linked to a smartphone app. Remember, extra security will give your tenants peace of mind, which is important for single mothers/lone females and older tenants.
25. Replace exterior doors
Old wooden exterior doors often look shabby and are not all that secure. In addition, come winter, the wood swells up and the door is difficult to close.
A modern composite door looks attractive and is more secure. They shut easily and are better quality doors are well insulated against heat and cold temperatures. This is definitely money well spent if it makes your property more secure.
26. Install fitted wardrobes and cupboards
Storage is often an issue, as modern homes tend to lack much in the way of storage. Not all tenants can afford to buy a wardrobe either. In addition, moving wardrobes out when the time comes to vacate a property is a huge headache.
Make life easier for tenants by installing fitted wardrobes. You don’t need to splurge on expensive designer wardrobes – a simple sliding door system isn’t that expensive to install if you have a good joiner on speed dial.
27. Keep on top of maintenance issues
Maintenance is a headache for homeowners, but the responsibility for repairing broken gutters or leaking pipes doesn’t fade away once you let someone else live in your property, sadly. As a landlord, you must keep on top of repairs and maintenance. The Homes (Fit for Human Habitation) Act decrees that rental homes ‘…are safe, healthy and free from things that could cause serious harm.’
Not only are you liable if you fail to keep on top of maintenance issues, but it makes it much harder to ask a fair market rent when a property is damp, mouldy, and generally unpleasant.
Have a handyman on your contacts list and ask your tenants to let you know when things need fixing. And when you do get that phone call, don’t dilly-dally around!
28. Accept pets
Pets are a divisive issue for some landlords. There is a general perception that pets are bad news. Cats and dogs can be immensely destructive if left home alone or allowed to run riot. One elderly moggy is unlikely to be too much trouble, but a pack of slavering pit bulls could be a cause for concern.
The problem with banning pets is that you eliminate a large group of potential tenants. Plenty of people have pets. Owning a pet is good for our mental health, especially for older folk. If you refuse to allow pets, your tenants will either look elsewhere for a more understanding landlord or sneak their furry friends in behind your back.
Rather than implementing a blanket ban on all pets except for goldfish, ask for a larger deposit to cover any potential damage and write a clause into the tenancy agreement to say all pet-related damage must be paid for by the tenant. It makes it easier to find a tenant and thus minimises void periods.
29. Consider offering inclusive services such as SKY, Cable, and Broadband
Some tenants find it very hard to manage their finances. Make life easier for them by offering an inclusive rental package with rent and extras such as broadband all rolled into one convenient sum. You can even tack on a bit extra to cover “admin”. Not only will you be in pocket, but your tenants will then have an easier job managing their outgoings since one lump sum comes out at the same time each month rather than several.
30. Boost kerb appeal
Don’t underestimate the power of kerb appeal. When marketing a rental property, it pays to go the extra mile by boosting kerb appeal to attract anyone driving by or living in the neighbourhood. Simple things like a tidy garden, clean windows, hanging baskets, etc., all make a difference. When a property looks cared for, it’s automatically more attractive.
Think about it: would you want to live in a house when a shabby front garden, broken blinds in the window, and rubbish piling up in the porch?
31. Ditch the letting agent and manage your own properties
Letting agents are a significant annual cost. Most charge between 8% and 20%, depending on the area. This is money that comes out of your pocket.
Most landlords use letting agents to manage their properties because they lack the time and/or the confidence to do the job themselves. If time is an issue, then it’s probably sensible to stick with a letting agent. And if this is your first buy to let property, it’s understandable that you might want to hand over the job to an experienced professional, but think about it: are you absolutely certain you can’t manage your own properties?
Why not give it a go? Even if you reduce the level of service you pay for, for example, using an agent to find a tenant and set up the tenancy, but then managing thereafter, it will save you money.
There is a lot of support out there for landlords, so you won’t be left to sink or swim if you take over from a letting agent.
Go on, you know you can do it!
32. Look after long-term tenants
Long-term tenants who look after your property and pay the rent on time each month are worth hanging on to. Do your best to hang on to these desirable individuals. As long as you have perfect tenants living in your property, life is golden.
Take care of your tenants. Be courteous and responsive to issues and offer to upgrade kitchens and bathrooms in a timely manner if required. And don’t be in a huge rush to put the rent up each year. Sometimes it is smarter to keep the status quo rather than being greedy and chasing a short-term profit. After all, your rental yields won’t benefit much if your lovely long-term tenant decides they can’t afford to stay any longer and hands in their notice.
33. Be a nice landlord
Our last tip is a simple one: be a nice landlord!
Whether you are conducting viewings or dealing with a long-term tenant, be nice at all times. You don’t need to splash out on expensive hampers at Christmas or pop over with a bottle of wine when it’s your tenant’s birthday (note: that could be construed as creepy), but it costs nothing to be nice.
Nice landlords find it much easier to find and keep tenants, which is in your favour. However, don’t mistake being nice with being a doormat. There are some tenants who will take advantage and milk your kind nature for all its worth. So, be nice but professional and don’t overstep the boundaries.
As you can see, boosting rental yields isn’t just a case of cutting expenditure and hiking the rent. It’s a multi-faceted approach that involves treating your tenants well and making your property more attractive. If you tick all these boxes, you should have no problem minimising rental voids and maximising rental income.
We hope you have learned a thing or two from this article. Feel free to let us know if you have anything to add and we will update it accordingly. You can leave a comment or reach out to us on Twitter or Facebook. It would be great to hear from you!
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