Investing in property is a fantastic way of building your wealth and providing a sound base for financial independence. Unless you are planning to flip the property, that is buying and reselling for immediate profits, you will need to find a tenant to rent your property for regular rental income.
In this post I describe the steps to successfully get a tenant in your rental property. All this assumes that you have completed the purchase and you own the property legally.
Invite Lettings Agents to survey the property
Once you pick up the keys to the property, from the Estate Agent, make a list of at least 3 Lettings Agents, who could potentially let out your property. Ideally, they will be local to the property and one of which may be the Agent who sold the property.
Ideally the viewings should be all on the same day and in a consecutive block. This way you minimise your travel and time. It also means that the Agents will potentially see the other Agents coming and going. It will give them a sense of competition, which you can use to your advantage.
Whilst the Agents are viewing the property its good for you to have a set of pre-defined questions to ask, such as:
How much much rent will you get in the current condition?
Here you want to know how much rent you will get before you go to the trouble and expense of refurbishing the property.
What refurbishment would they advise if any?
A good lettings agent will know what the ideal refurb should look like, without going over the top.
What would the potential rent be after a refurb?
If you’ve done your due diligence before buying this property you should have an idea of the potential rents and what your yield and return on investment will be. Sometimes it may be only worth a minimal refurb such as new carpets and decorating. A full refurb may not actually get you the optimal return you desire.
What would be the ideal tenant?
Here you need to know what demographic your ideal tenant will be. Families, young professionals, etc. This will also give you a steer on what you need to do to the property and what you can charge for rent.
What would they charge you for managing the property?
Now we get to the nitty gritty. How much will they charge you and what services will they provide? Most lettings agents will have various levels of service from Tenant Find Only through to Full Management.
Will they negotiate on their charges? Will they offer a lower fee for multiple properties? Would it be worth playing several Agents against each other?
Pick the one you think is the best
Who gives the best deal? This is not the only criteria. Who do you get on with? Property, like every other business is a people business, so you want to make sure the relationship will be rewarding.
Check references out. Ask them for the contact details of other landlords and ask these landlords to rate the Agent.
Finally trust your gut instincts. With human interactions often we make valuable assessments subconsciously, which will give us a good or bad feeling.
Once you have made your decision and the necessary refurbishment is done, appoint the Agent and give the Agent your direct debit details for where you want the rent to be paid.
Once they have proved receipt of deposit and you have one month’s advanced rent, then hand over the keys.
Rent Increase
Rather than putting a clause in the Tenancy Agreement for an automatic percentage rent increase, put a clause in that states that rents will be reviewed annually. This way you can ask for a fair (to both sides) rental increase which will be based on the market rates at that time. Get the Letting Agent to write to tenant two months before one year anniversary and inform them of the new rental price. Then request them to change their direct debit payments accordingly.