Is it a good time to become a landlord?
That’s a really good question especially as many Landlords seem to be selling up. Becoming a landlord right now might seem like jumping onto a sinking ship, but that might not be the case if you
are smart about your investment and you have realistic expectations.
So, in my opinion, the answer is “yes, if you are clever”. Let’s look at what being a clever landlord means in today’s property market.
How has the pandemic impacted the rental market and landlords?
The Pandemic has not been kind to Landlords, much of the legislation passed in 2020, regarding the rental market seems to have favoured tenants. For example, the minimum 6-month eviction notice period, which has led to some tenants choosing not to pay rent under notice. In this case, the landlords have been left trying to recover rent arrears while unable to speed up the eviction process.
Overall, the situation has left many Landlords in a vulnerable position with trying to recover rent arrears and difficulties over evictions. This is a particularly significant problem for those landlords who have buy-to-let mortgages and those who rely on their rental income and a significant portion of their livelihood.
Is now a good time to buy a rental property?
If you add the crazy world of property sales into the mix, stamp duty, high demand and the wonderful news items over bidding wars for property leading to inflated prices, then the question really is, is it a good time to become a landlord?
So, the property market, right now property is moving very fast and its selling and rather inflated prices. Therefore, if you are looking to buy a new rental property that is ship-shape and ready to rent you are likely to end up paying over the odds for it. However, you can be smart about your purchases, if you have time and a good imagination you can find deals on properties that are by no means ready to rent but which could become and great long-term investment.
If you are looking to do this, we would suggest talking to a letting agent, or 3, early on to find out realistic rental values and the cost of upgrading any property to buy. This way you can ensure your investment is a sensible one.
However, the flip side of the pandemic property market is a growing market for shorter-term ‘’executive rentals’’ for those who are looking to relocate to the countryside and need a rental property while they are looking to buy a house. These types of rentals can be very lucrative but are unlikely to be a long-term income stream for most landlords.
How can a landlord do well in the current property market?
Seeing landlords selling up, left, right and centre might scare off some budding property entrepreneurs. However, it is worth considering that with Landlords selling up that there may be the opportunity to buy a property with a tenant already in situ. Remember that up until 31st May 2021 all tenants had to be issued a minimum of 6 months’ notice, since 1st June this has now dropped to 4 months but it will still affect the Landlord’s ability to sell with ease.
Most people buying property are looking to move into the property so rental properties which have sitting tenants are often priced somewhat lower than the equivalent empty property. This is ideal for those looking to become a landlord. Currently, I would say that 30% of the enquiries we receive for properties are from tenants where their landlord is selling, it does make you wonder where the market is going.
The key to being a successful landlord in today’s property market is knowledge and smarts. When looking for rental properties to purchase you need to be tactical and realistic about the value of your investment. Buy with your head and not with your heart. You need to be confident you know the value of any property you are looking at and be confident that you know what changes can be made to improve the rental value of a property in a cost-effective and strategic way.
If you know your area, if you know the rental values, if you set your budget, and you think carefully when it comes to any work that may need doing on a property then there are still good deals out there.
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