7 common mistakes novice landlords should avoid

by Amer Siddiq of Property Portfolio Software

With so many favourable articles of late proclaiming the positive merits of investing in buy to let properties, a novice landlord might be forgiven for thinking that owning a rental property is an easy way to make cash.

But the reality is somewhat different. The potential for earning a healthy profit is almost certainly there, but there are also many pitfalls on the road to becoming a successful landlord. So before you acquire a massive headache, learn how to avoid common landlord mistakes:

Mistake #1: Get a letting agent

If you know nothing about letting property, consider paying a professional letting agency to manage your property. The fees will bite into your profit margin but in the event of any problems, they are first in the firing line.

Mistake #2: Don't rush into choosing a tenant

Never make the mistake of assuming a bad tenant is better than no tenant. An empty property might be highly undesirable, especially if rental payments are required to cover a mortgage, but a bad tenant could end up costing you thousands in damages, plus they may run up huge rent arrears and then abscond.

Mistake #3: Vet your tenant

On a similar note, ALWAYS check references thoroughly. Just because a tenant appears to be nice and respectable, it does not automatically mean they ARE nice and respectable!

Mistake #4: Get permission from your lender

If your property is subject to a mortgage, ensure the lender is aware you are letting it. This is a common mistake people make when letting their home for periods of time. A failure to do so could invalidate any insurance policy you have on the property.

Mistake #5: Get landlord insurance

Do not be tempted to cut corners on landlord insurance. A good policy might prove to be essential if you fall victim to #2 on our list.

Mistake #6: Get a deposit

Always ask for a decent deposit to cover the cost of potential damage to the property. Eexpensive cleaning and repair bills at the end of a tenancy are a big problem for many landlords.

Mistake #7: Draw up a clear tenancy agreement

Overdue rent is a very common issue faced by landlords, so make sure you have a clear tenancy agreement drawn up with the rent due date highlighted to avoid confusion. If a rent payment is late, take immediate action to resolve the problem.

About this Article:

This article has been provided by Amer Siddiq from PropertyPortfolioSoftware.co.uk. They provide award winning property management software to help landlords get better organised.

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Published on: May 17, 2012

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