A landlord’s number one goal is to scale. The number one limitation is efficiency. As your portfolio grows, so do the responsibilities. And you’re just one humble landlord – how can you be expected to multitask effectively? Thankfully, it’s not rocket science. Here’s insight from one property expert to another, to ensure your portfolio prospers efficiently.
Locate good quality homes
There’s a temptation to invest in properties that have already been renovated. This could eat a chunk of your bank account. It might be more economical to invest in a doer-upper. This enables you to increase the rental value and make a higher profit. A win-win.
A recently refurbished property looks much more attractive than an old one. It’s also likely to be more compliant with upcoming legislation – one less thing to worry about. Plus, the maintenance costs will be much lower (and energy prices these days look rough)…
The location of a property is as important as the quality. Not sure which area is hot right now? Check out Aldermore’s “buy to let” city tracker. Turns out Bristol is a landlord’s utopia.
Before you invest, adopt a tenant-first approach. Consider the amenities and local facilities. What will appeal most to their needs? This should guide both the area and type of property you invest in.
Revise and get advice on your buying strategy
Similar to locating good-quality homes, you also want to keep on top of market trends. If it’s a renter’s market, you could go in below the asking price and pay in cash – an offer they can’t refuse.
The average UK rental yield is 3.63% and you want to aim for the 5-8% mark. Buying a property below market value (BMV) might have more investment potential. Use the Rental Yield calculator for a rough estimate of what you could earn from an investment.
However, it’s unwise to purchase multiple properties at one time. Consider if there are void occupancies or a severe maintenance issue, like a fire. This could mean not being able to repay the mortgage and thus having to sell. Or worse, become bait for the loan sharks.
You want to ensure your rental income provides a sufficient ROI after outgoings, such as landlord insurance. Speak to a mortgage adviser who can guide you on buying loans and help decide what’s right.
Diversify your property portfolio
It’s important to have several properties under your belt that will appeal to different tenants. Think about investing in residential or commercial spaces, HMOs or studio flats.
Having a diverse portfolio will enhance your business. From here, you can decide which properties are more profitable or ineffective. Widen the net to attract more fish, savvy?
Screen for good tenants
Treat the hunt for good tenants like a job interview: are they the right person for your home? Factor in their lifestyle or criminal records, and avoid leasing to potential troublesome tenants. Also, consider the longevity of a tenancy; it’s much easier to facilitate a recurring long-term tenancy than multiple short-term lets.
To make your life easier, always share an inventory list and some general house rules. These “Dos and Don’ts” will highlight what tenants’ responsibilities are, limit petty maintenance requests and keep tenant satisfaction high. Again, give them irresistible reasons to stay in the property, so you can focus on growing your portfolio.
Hire the right support
You might be hellbent on doing everything yourself – but this could be halting your efficiency. For instance, offloading your taxes onto an accountant could free up tonnes of mental space (and energy). Filling out Landlord Tax Returns is both time-consuming and mind-boggling. Leave it to the professionals so you can focus on managing your portfolio efficiently.
Maintenance and repairs in rental properties are the biggest pain in the derrière. Worse still? Not having reliable tradespeople on your books. Make sure you have a trusted list of contractors who specialise as a gardener, electrician, plumber or cleaner.
It may be worthwhile to hire a virtual assistant (VA) to organise investor meetings or tenant viewings. This liberates you from being the jack-of-all-trades and triples your time. Now, your property portfolio can prosper. Hooray!
Consistency before growth
Scaling your property portfolio will be easier when you have all the right systems in place. As they say, don’t run before you can walk. Make sure you’re in a financial and logistically safe position before taking on more properties.
You might consider hiring a property management company to deal with maintenance, rent or tenant disputes.
Alternatively, you could use property management software which gives you full control through automation, saving you up to £25,000 per year. Far cheaper than outsourcing! Landlords can double their property portfolio in under a year, without compromising on the quality of their service.
- Scaling your property portfolio becomes more difficult as responsibilities multiply.
- Having key systems in place for repairs and maintenance, communication with tenants and property compliance is paramount.
- Investing in property management software allows you to scale efficiently whilst maintaining control.
*Disclaimer: please note this blog is only intended as a guide, and is not to be taken as legal advice*