Becoming a landlord can be a great way to earn some extra income. But it’s not for everyone. There are a lot of things to consider before taking on the responsibility. Here are 5 things to think about before you go to down the path of renting out your property…
1. Can you handle the responsibility?
Owning a rental property comes with a lot of responsibilities. You’ll need to make sure that the property is well-maintained, that taxes are paid, and that the mortgage payments are paid regularly. You’ll also need to comply with laws regarding rental properties, including keeping the property safe and well-maintained. In essence, letting out your property is a business project that requires time and energy.
2. Can you afford the upkeep of the property?
In addition to your mortgage payments, you’ll also need to budget for repairs, maintenance, and other unanticipated expenses that may arise. It’s a good idea to have a decent contingency fund in case anything unexpected occurs. It is always better to be prepared rather than being caught off guard and finding yourself unable to cover any costs.
3. Do you have the time to dedicate to being a landlord?
Being a landlord takes time and effort. You’ll need to screen tenants, collect rent, handle repairs and deal with maintenance issues, and more. If you don’t have the time to dedicate to being a landlord, then becoming one might not be the right decision for you.
4. Are you prepared to deal with difficult tenants?
Not every tenant is going to be easy to deal with. You might have tenants who don’t pay rent on time, who cause damage to the property, or those who are generally difficult to deal with. You can ask a letting agent to handle as much of this responsibility as possible, but even then, you’re not fully protected against a renter not paying their rent on time. If you decide to go ahead, look into landlord insurance which typically covers loss of rent, damage to your property and claims made against you in the event of injury or property damage.
5. Is being a landlord really for you?
Be honest with yourself about whether you have the time to dedicate to property management duties. Carefully weigh these pros and cons before making your final decision about whether or not becoming a landlord is the right move for you and where you are in life at present. If for instance, you have a very demanding job with long hours, or you’re taking care of a sick relative, you may not want the added responsibility and time commitment on top of your existing responsibilities.
Ready to take the next step?
If you’ve considered all of this and you’re confident you could handle the responsibility of being a landlord, you’ll need to apply for a mortgage. The application process for a buy-to-let mortgage is similar to the process for a normal residential mortgage. You will need to provide proof of income and ID. You will also need to have a decent deposit saved – most lenders require at least 25% of the purchase price as a down payment. It’s important to seek advice from an experienced mortgage broker so that you get the best mortgage deal for you.
Call us today if you would like advice and information on getting a buy-to-let mortgage.