Many people have a dream of owning a second property to let out to earn a lucrative return from for their twilight years. When people hit their thirties, they consider the future more than what they used to. Living in the present is spontaneous, fun and exciting, but it can also lead to financial uncertainty come retirement. This is why people choose to take some of their savings pot to put down a deposit on a second home. Letting out a home isn’t all unicorns and lollipops! There’s an awful lot of stress and plenty can go wrong. Read on to see if you have what it takes to be a landlord.
Having the cash ready to put down a deposit on a new pad is one thing, but having the financial means to keep a property is another. It’s important that you don’t stretch yourself too far financially. You need to consider if you can afford the mortgage repayments if you don’t have a tenant for two or three months. And what would happen if you didn’t vet your tenants effectively enough, only for them to fall behind on their payments to you? It’s crucial that you look into every financial aspect of owning a second home, from the loan to the rental yield. The rental payments that you can recoup each month need to cover your home loan repayments plus leave you a little something extra should you need to carry out an appliance repair, get a patch of damp sorted or clean the carpets come the end of a tenancy.
While most tenants will be pleased to have a landlord with a stand off approach, leaving them to get on with living in a property, they will still need you to be on hand if a problem arises. Will you be able to take a phone call in the middle of the night if a water pipe bursts? And can you organize an electrician at short notice if an electrical fault is spotted? If not, don’t worry. However, you will need to factor in the financial cost of relinquishing these landlord duties to a management company. You can’t simply purchase a pad, let it out and then become invisible. You need to be a decent landlord and treat your tenants with the respect that you expect in return.
f you need to recoup some money quickly, then investing in property in the current climate probably isn’t your best bet. You’d be better off having a punt on stocks or Forex. However, if you’re willing to build equity and remain in bricks and mortar for the long game, you could have a property that is let out nearly one hundred per cent of the time, and you could end up with a fully paid off asset within ten years. After this decade is up, you can then choose to earn the rental yield to line your own pockets, or you could sell your dwelling and pocket the cash.
Being in the property game is not for the faint hearted. It’s difficult to work out where to buy, how much money to put down as a deposit and how to ensure that you secure decent tenants. However, with research and by following this guide, you can have what it takes to become a landlord.
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