When you think about the problems that anyone involved in running their own business may encounter, you’ll typically find that managing cash flow and sticking to a budget may be fairly high on their list.
Almost everyone these days may need to tighten their belts a little and landlords are no exception. Here are some tips on how you may perhaps be able to make a few savings …
Money, money, money
- probably like no other business, when you are a landlord it is worth doing your sums – again and again;
- this starts from the word go, when you are choosing your property or properties and determining the rental yields, calculating your expenses, and casting around for a buy to let mortgage;
- make sure you know about all of the allowances that you may claim to help reduce your tax bill. These could include your costs for letting agents and the like and for purchasing replacement furnishing for your letting property, etc. The HRMC website is a useful source of information on this;
Choosing a property
- don’t just head for the local estate agent when trying to find a suitable property – check out local property auctions, as these are often a major source for some real savings;
- when buying your property, you may need to spend a bit of time researching the area and the type of tenants you are likely to attract to that location -vacant properties will cost you money;
- the better you can fit in with prevailing market conditions then the more likely you may be to find suitable tenants for your property. For example, offering a property as ideal for a young family in an area with no parks or schools nearby may not provide you with the results you expect – no matter how well presented or attractive the property actually is;
- buy to let mortgages are at almost record low rates of interest, suggested a piece in the Daily Mail’s money pages on the 11th of March 2019 – but only if you make sure to shop around for the most competitively-priced deals;
- it may certainly repay to review your current mortgage arrangements on a fairly regular basis, to discover whether there are alternative loans which might save you money;
- another essential which is worth keeping under review is your landlord insurance;
- when setting out to purchase buy to let insurance cover for you property make sure that you compare some let property insurance quotes so that you can select the policy most appropriate for you. You may wish to look out for policies where you may be able to attract a lower premium by agreeing to a higher voluntary excess;
- note that what some landlord insurance providers offer as part of their standard cover – such as the inclusion of subsidence insurance and malicious damage by tenant – others may not;
- to help you in that search, consider consulting a specialist provider such as ourselves here at Cover4LetProperty;
- of course, you want to maximise your rental yield, but remember that tenants in your area are only going to be prepared to pay the market rent;
- don’t be unrealistically greedy, therefore, but pitch the rent at a level you know you are likely to sustain – or you may find yourself with more, and longer, expensive voids than you might otherwise have;
- shop around for the most reliable and professional lettings agent who is well-placed to advise on achievable rent levels for your particular type of property in your area – it is in their interest, too, to maximise your rental income and keep voids to the minimum;
- you may cut the costs of letting agent fees entirely, of course, if you are prepared to put in the hard work of selecting, reference-checking, drawing up and signing the tenancy agreements;
Read our Guide to choosing a letting agent for more tips.
- keep your décor neutral – people have widely varying tastes when it comes to décor and it may be better for this to be bland and inoffensive rather than a statement about how many primary colours you can have in the one room. If your tenants want to brighten things up a bit they can do this with their own possessions and their own taste (and own money). More important for letting success is to ensure that your property is clean, freshly decorated and well maintained;
- you have certain legal responsibilities for ensuring the safety of your tenants with respect to the gas and electrical supplies and appliances in any let property – and that means having them inspected on a regular basis;
- by combining both gas and electrical safety inspections at the same time, with just one visit by a suitably-qualified team, you may minimise disruption for yourself and your tenants – and save money into the bargain.
Important: Trying to save money by cutting corners and making do may typically not be a sound approach in the long term, particularly where matters of safety are concerned. So, for example, regular checks of electrical appliances, gas boilers and heating systems, are a legal requirement and are not something that you can just decide not to do to save a few pounds here and there.
You CAN save money
Saving money on the essential expenses you need to make in your buy to let business may take careful forethought and planning but is likely to go a long way in helping you turn a profit. Fortunately, there are a number of ways in which you may achieve those savings.