The specialist team at McCartan Lettings loves working with landlords to help them make the most of their property investments and to maximise profits. There are a number of measures landlords can take, including regular reviews of their property portfolio. We’ve come up with eight top tips to help you make more money on your property investments in 2016.
1. Review your property insurances annually. Buildings and contents insurance is a highly competitive market and making sure you have the right cover at the best price is essential for every Landlord. Make sure you have adequate cover for the property being let, paying particular attention to any restrictive clauses that may stop you being able to make a claim. Go for a specialist Landlords’ policy. By spending an hour shopping around can save hundreds of pounds a year.
- Review your mortgage products 6 months before they expire. Interest rates are still looking to remain low for some time and there are some great BTL options around. By getting independent mortgage advice and avoiding your mortgage falling into the standard variable rate, can save you hundreds of pounds in additional interest fees a year. An independent advisor will be able to give you options for all the major and lesser known lenders, so you can really pick the product that best suits your needs. Now is the time to be fixing your rate and planning for the next 5 years, whilst the rates are low.
- Review the rental income you are receiving. Do you have a long term tenant? Are they paying under the market value? By reviewing each property and each tenancy annually, even a £25.00 increase per month in rent will bring an additional £300.00 income in per year on that property. Important note: Rent reviews should not be done too frequently and should be in line with local market values. Generally increasing the rent by more than £25.00 per month may result in the tenant wanting the leave; it’s not worth risking losing a good tenant as it will cost more to have an empty property and to pay for a new tenancy agreement.
- Plan for tax. No-one likes paying tax, and you certainly don’t want to be paying more than you need to! No matter how small your income, all income must be declared by law to the Inland Revenue (HMRC). Make sure you use the services of a specialist tax planning adviser or take advice from a regulated and qualified chartered accountant (you can off-set their fees against tax too) A tax advisor should be planning for your future tax liabilities and looking to reduce them, not just telling you how much you owe at the end of each year. Do not get caught short by the major changes coming into effect in April 2016.
- Be organised and systematic. Treat renting your property like a business, and systemise it. Keep all receipts, no matter how small the amount, to potentially off-set against tax at the end of the year. Keep clear records of every property inspection, check in and check-out report, and conversations. Maintain a record of all your contractors and have copies of their professional indemnity insurance up to date. Keep an excel spreadsheet of your cash flow, so you always know where you are with your finances.
- Regularly maintain your property, don’t leave it until something breaks down. Annual servicing of boilers, cleaning gutters and regularly reviewing the property’s maintenance needs will not only keep tenants longer, (as they will see you are caring for their home and they’re not being inconvenienced with problems) but also keeps unexpected and expensive repairs to a minimum. Plan to renew kitchens, bathrooms and boilers every 10-15 years. By keeping £50-£75 a month aside for large expenses will ensure that when the rooms need to be renovated you have the cash in place to cover it.
- Plan to refresh the property at the end of each tenancy. By giving your property a one-coat freshen up of paint and a professional clean will ensure you get the best rental income, to the best tenants and your new tenants will want to stay longer. Your carpets and appliances will last longer and you will be minimising the need for expensive one-off full redecorations.
- Use the services of a managing agent. A managing agent, could save you hundreds of pounds a year in lost work time and in making costly, avoidable mistakes. If your time is more profitable being spent doing what you do best, then investing in a managing agent will earn you more money than the cost of their fees. A good letting agent will take on the day-to-day hassle of organising maintenance, contractors and speaking to tenants. Costly mistakes can be avoided, such as forgetting to check the rent is paid on time, whether the deposit has been submitted correctly along with the prescribed information. A good managing agent will be ensuring maintenance is scheduled, by organising regular inspections of the property thereby avoiding costly unexpected bills. A small leak left for a few months v being caught early, can cause more damage to your property than you would imagine. Difficult tenant causing you stress? Even the best tenant on paper may rub you up the wrong way with their constant demands; a good letting agent will be trained in how to deal with difficult situations and be able to negotiate the best outcome for all parties – leaving you stress free. A good letting agent will also have invested in a software system that will not only be compliant with client accounting, but will also be used for recording important conversations, and detailing what maintenance has been instructed and authorised. And of course you can off-set their fees against tax too.
If you want to speak to a professional, dedicated letting agency who can help you to maximise the profits on your property investment, call us today on 01792 430100.