Are you thinking about ways that you can increase your monthly income? If so, then you should consider investing in property. Whether you buy to let or buy to sell, this could be a great way to give yourself an extra cushion of cash. In fact, it’s true to say that many people make a fortune through this type of investment. However, it’s also not all sunshine and roses. You need to be prepared for some of the issues that you will most likely face and guarantee that you have the right solution in place.
The End Of Tenancy Nightmare
It is up to you to go into the property once a tenant leaves and see what the condition of the place is like. Sometimes you are lucky and you have had wonderful tenants who have left the place exactly how they have found it. However, what is more likely is that the condition of the property is less than ideal, meaning that you have to complete a lot of work on it before it can be rented out again. If this is the case, then you likely need to employ the services of painters, carpet cleaners, and in extreme cases handymen to fix anything that is broken. Hopefully, this is never going to happen to you, but it is a common occurence and one that you need to be fully prepared for.
The Empty Home Conundrum
One of the issues, when you rent a property, is that there will be times when it’s empty. When you rent a property, an empty property is just bleeding money. You’ll have to pay a variety of bills on it but you won’t be getting any income and that includes tax as well as energy bills. Even if you turn everything off, you’ll still have money coming out and none coming in. This is particularly important to consider if you are renting to students who will be out for the summer. You need to make sure that you are considering this in your budget. It’s important to check that you are charging the right amount to maintain profitability. As well as this, do think about hiring a management team. With a management service, you can make sure that when a tenant does leave the property can quickly be filled up with someone new. Essentially, you’ll be able to keep the gap between two different tenants filling your property as small as possible.
The Rainy Day Fund
Property owners should always have what is known as a rainy day fund. What this means is that you have some money put aside that you can use if there are any issues with the property. You never know when something is going to go wrong, so you need to ensure that you have around 10% of the property value on hand at all times to cover any of these expenses. Without this, you could find yourself in a bad situation if something in your property breaks or is damaged and needs replacing as soon as possible. This is going to be particularly important if it could be construed as dangerous or harmful to the health of anyone around.
The 24/7 Service
As a landlord, you are responsible for anything that breaks or is damaged in the home. For that reason, when things go wrong, you are likely going to have your tenants calling you at all hours asking you to fix things. This can be a nightmare in itself so to avoid a problem like this you should again think about hiring a management team. Instead of getting the phone call to fix a broken down washing machine at 3am when you are trying to sleep, the team will get this call. Now, you are going to be in charge of ensuring that this team do their job effectively because if they do not, it is you that will get in trouble with the law. As such, if you do decide to opt for this choice, make sure that you are hiring a team you know you can trust.
We hope you see now that there are some issues that you need to be prepared for when you invest in property. If you’re not careful, these problems can certainly take your budget through the wringer. It can also mean that your investment isn’t anywhere near as successful as you hoped. The general rule of thumb here is to hope for the best and prepare for the worst. In doing so, you can guarantee that you will have the right measures in place to tackle these problems head-on.