One of the most important challenges for a landlord, as it is in any business, relates to finances. Being a landlord is expensive, and you have a lot of outlays to consider. Therefore, you need to consider what income you must generate to ensure you enjoy a sufficient return to make being a landlord worthwhile.
Are you generating a suitable return from your rental property?
A recent study undertaken by Howsy suggests the average buy to let property generates an annual return of just £2,000. Anyone hoping to retire on this sort of income is in for a rude awakening, but as part of a property portfolio, this return can be enticing for many landlords.
Of course, it is possible to obtain a better return than the average return. There are many ways landlords can provide a better service to tenants, and generate greater income. We aim to help you find the optimum way of serving tenants, and ensuring you provide the best service as a landlord.
When it comes to costs, you must consider the importance of putting money aside to cover repair and maintenance work. Costs such as monthly mortgage payments and set fees will be clearly defined, and these will be the payments you allocate funds to. However, it is often the unexpected costs which cause the most problems for landlords, which is why letting industry professionals must consider saving money for repair work.
Allocate funds for repair and maintenance work
An industry guide is to budget 1% of your property value on annual repairs. Of course, this will vary across the country, and it will depend on the quality of your property. In South West London, property values are higher than in most parts of the country, which means South West London landlords must allocate more money to repair and maintenance work.
This seems unfair, but of course, if you want to maintain a high value, it stands to reason you will need to allocate more money to the process. Also, landlords in South West London can charge a higher rental fee, which means that these things are relative.
Calum Brannan is the CEO of Howsy, and he said; “The buy-to-let sector can be a minefield for the amateur investor and now more than ever, it’s imperative that you do everything you can to maximise the return on your investment. Of course, things can go wrong and having the budget available to fix them is a must. In the worst-case scenarios, a cash pot equal to one percent of your property’s value might not be sufficient, but it should cover you for most eventualities and is a good benchmark to start on.”
At Holmes Estate Agents, we are keen to provide South West London landlords with as much support as we can. Contact us today to see how we can help you.