Updating post from Reddit.
Hi all, I am soon becoming a first time landlord as I am inheriting two properties both of which still have around 30% LTV mortgage remaining. I will be keeping the properties for my own reasons but was looking for some general advice from other landlords regarding staying on top of things. From my research, areas which landlords struggle to stay on top of appear to be 1. compliance (up to date, EPCs, gas certificates, right to rent etc) 2. Keeping accounts organised and ready for year end with maintenance receipts etc.
These are some examples and definitely not exhaustive but it would be great to hear what common issues you face are and what solutions you have. Would also be great to hear of anything important I should be aware of that may be commonly missed?
Open a bank account specifically for these properties. Pay for everything via the accounts. Take a photo of every bill. Use an accountant. Makes life so much easier
i use my regular acct, but currently only one and (JUST) less than taxable.
What do you mean by less than taxable? You are getting less than £1000 a year in rent?
Assume they mean under the personal allowance and no other income
QuickBooks is really easy to use and you can upload and allocate receipts
Use a local agent for a fully managed service ( but dont think youre then ‘hands off’…youre still responsible for any agent youve engaged cocking up) and take at least a year getting your head round your own obligations. Most reputable agents these days also link into your local council for council tax etc so any void periods should be efficiently documented. (Youre responsible for council tax for void periods)
If you cant make a profit, even using a fully managed service, then rethink your position as a landlord.
When youre more familiar with laws, regs, right to reside, deposit schemes etc then maybe consider using agents just for a tenant find, referencing, inventory, safety certs and deposit management etc, with you managing the ongoing maintenance requirements (if you have a phone book full of good reliable trades).
Never start out as a new landlord and DIY in todays climate. Youll have crap non paying tenants, you’ll break numerous laws you havent a clue about, and find youre then desperate to sell in less than 2 years with a non paying sitting tenant you cant get rid off. Again, if your properties cant afford a fully managed agency service, with roughly 2 months void periods each year, then dont even contemplate renting them out.
Thank you, this is very helpful. I did want to try my hand at DIY which is why I have been researching into the process. I will definitely consider getting an agent to manage it until I am fully ready. Out of curiosity, how do you go about keeping up to date with laws and what your legal obligations are as a landlord? Is there a newsletter or group you are signed up to that keeps you informed?
I am thinking it is one thing to learn the process but then it is another keeping up to date with all the changing laws and regs...
I'm a novice landlord (well, I've been a landlord with one property and only had two different tenants.) Early on I joioned the NRLA as I was worried about a legal issue and they answered it for me. Direct Line does my landlord insurance and send regular emails with updates re legal issues and they also have a legal helpline.
NRLA is a good start, however you choose to use them. (Courses, or just advice etc)
And maybe sign up for PIMS free email newsletter which makes an interesting industry read usually tackling latest updates on stuff. Youll be fine, but it is a very broad knowledge base you need, on taxation, landlord and tenant law, property amd ‘social’ law (you may have anti-social tenants), day to day management etc so just enjoy the learning curve.
There are great tenants out there, but plan for the worst and youll enjoy the best.
Thank you - I will certainly look into these! Another question I have is regarding organisation and tracking. In terms of keeping all certificates and compliance up to date as well as tracking rent, are you simply using excel? Or is it more of a manual, printing everything and keeping it in folders? I am quite interested if you have found a easier solution to this
Its only 2 properties OP and isnt going to generate that much admin. I have a box folder for each property and everything gets shoved in there. My self assessment tax returns have always been done on whats called a cash basis rather than whats known as ‘traditional accounting’ and I think (someone here will know for sure) that HMRC have now defaulted to cash basis returns anyway.
What that means is your income is only accounted for and counted when you actually receive it into your bank, rather than say presenting a tenancy agreement for 12 months and assuming that future income. Cash basis is a very straightforward way of doing things so monies in and monies out are simply recorded when they actually happen.
Yes an easy spreadsheet is fine for this. At most, and in a good year, youll have 12 payments in for each property. Then simply have a few columns for outgoings, mortgage interest, agents fees, insurance, maintenance, white goods purchases, repairs etc and simply record the amounts actually paid on the date theyre actually paid on. The very last 2 columns on mine are the dates of the safety certs. Your end of year tax return should take less than an hour for each property as you have everything to hand infront of you.
I actually tape a copy of each properties insurance certificate and insurers contact number on the inside of the lid of each file in case its needed asap, as to be honest, all the back up receipts just get thrown in the box. Theres not a high level of rocket science to my system. As long as theres a piece of paper (and yes Im old school, if its an online receipt for something, I print it out) backing up each entry, youll be as confident revisiting your accounts from 5 years ago as you were on the day you collated them.
Im sure some may keep electronic records only, but I like having the physical paper (which also has white goods guarantees etc). Each to their own, but theres no need to kick the backside out of this. A simple set of records is more than sufficient.
PS And to finish off, once my tax return is done, all the paperwork including a print out of the spready gets shoved into a thin plastic file pocket with the tax year and tax submission reference number perm marker on the front. I get about 6 years worth in a single box file, so dont go mad shopping in at Staples!
If youre intending finding and managing your own tenants then you need a whole separate system for applicants, rights to reside, referencing, possible guarantors, tenancies, notices, etc etc. I really wouldnt advise a newbie going in cold doing this.
Since its your first time, take a management agency (mine is very good, but i'm just lucky to have the best client manager (she quit now but still with them based on the agreement she got). You can always leave them and manage yourself.
I will be looking into this, what sort of fees do management agents take?
Around 12% and some are absolutely terrible!
When you get landlord insurance for your properties make sure it also includes legal insurance. Hopefully you'll never have to use it, but if you do, you'll be very glad you got it.
From what I have researched, it seems more common that landlords have legal difficulty with removing bad tenants. Is it common at all for tenants to take landlords to court? As I do not seem to have come across this as much
I wouldn’t pay for management for two properties, what for? They take around 10% of the rental income a month, just to phone you when there is an issue with the property anyway. You will end up paying the management fee and the fee for whatever needs fixing, save your money.
Use an agent to find tenants for you, complete background checks etc and sort out contracts anything else I would manage yourself. It is not a big workload if the properties are in good nick.
You will learn and build experience like any other process. There are so many resources on YouTube etc to learn from.
Yes, I was hoping to save the management fee. After you have found your tenants, do you use any software or tools to help streamline the management process beyond excel?
Personally I haven’t found there to be enough tasks to require a management software. But you could easily set up calendar reminders for expiry dates of certificates/contracts and a tracking excel. This year however when the renters rights bills eventually comes into force fixed term contracts will become periodic anyway so one less thing to worry about.
I would just suggest you carry out house inspections every couple of months and make sure you take wide angle photos of the rooms, close ups of appliances and soft furnishings this has definitely helped me in the past. Make sure the photos are timed stamped, this I would make a template inspection you can get them online and send to the Tennant after the inspection. Test the fire alarms etc. Again you can pay the estate agent a one off fee for these £80-100