For a lot of people, the idea of becoming a landlord is rather appealing. Having someone essentially pay the mortgage for you as you take a little profit sounds like a rather nice thing to be able to do. But there are some things you might want to consider before becoming a landlord. Let’s have a look at some of the things!

Things to Consider Before Becoming a Landlord

Do you have the money?

The most obvious place to start is money. And by that, I simply mean do you have enough? Remember, when buying a property on a buy-to-let mortgage you’re going to need a bigger deposit than a regular mortgage. Usually, you’re talking a minimum of 25% LTV. According to the UK House Price Index the average house price in the UK as of Oct 2021 is £268,349. Do you have over £50k spare to front a deposit on a house?

Not only do you need a hefty deposit to get going, but what if it takes you 6 months to find a tenant? You want to be able to afford the mortgage payments on a property before you jump in to becoming a landlord. The last thing you’re going to want is to put yourself further into debt trying to keep up with the mortgage payments. And it doesn’t stop there…

Think about the running costs of a property

Of course, every landlord wants the dream tenant that not only pays on time but also keeps the property in good condition. But you have to consider the fact that you might not be so lucky. Not only could you miss out on rent payments from a tenant and have the hassle that will follow, but you may also be left with property repairs and maintenance. Not only from poor care from a tenant, but also from regular wear and tear that comes with owning a house. Oh… and not to mention landlord insurance. That’s another regular cost you’ll have to take into account, so it might be worth it if you compare landlord insurance to make sure you get the best deal possible.

Changes in the economy

Before jumping in to a mortgage on a buy-to-let you’re going to have to consider where the economy might be going. We’ve had historically low interest rates for quite some time now, but what happens if the interest rates start jumping back up? Bank of England interest rates have already gone up to 0.5% and another rise in the near future is certainly on the cards to calm inflation. So think about how those interest raise increases might effect you in the long run. Can you increase rent to offset it? Can you afford the higher payments?

Also… what happens if the property market suddenly takes a dive and you’re now unable to sell due to the price drop and loss from selling? Can you hold the property through back economic turns and ride it out? You’ll need to think about it.

Think about the long game

For most people, property is a long term investment. And that’s what becoming a landlord should be. Even if you don’t make a profit on a property on a month-by-month basis, what you will hopefully have is a property paid for by someone’s rent payments. Then you can retire with an house as a sellable asset. Think of it like a nice little pension pot. Either that, or it’s a little bit of income on the side once the mortgage is cleared.

Think of the market you want to target

As a landlord, you’re going to want tenants and, as a result, you should think about how to get the tenants that you want, depending on the area that you’re trying to invest in. For instance, in an area that’s closer to schools and easy transport links, focusing on family homes might help you see the best results, while young professionals might be more attracted to energy-efficient new builds in areas that are close to commercial and industrial areas. Know your audience so you know how to maintain your property and market it more effectively.