Taking on your first rental property can be quite daunting to most first time investors. Here re some quick tips to help you make sure you are on the right track from the start.
1. The Right Location
No one wants to be stuck with a property in an area that isn’t growing or with little public investment. Ideally you should look for properties in areas undergoing growth and where demand is high.
Things to look out for are decent schools and amenities such as parks, shops, restaurants, and cinemas etc. Also things like low crime rates, good access to public transport and a thriving job market will help find quality tenants.
2. Buy or Finance?
There are various pros and cons when it comes to financing or paying outright for your property, and it all really comes down to your goals in the end.
Buying your property will certainly generate a good monthly cash flow. For example, take a property that costs €200,000 to buy. After taxes and costs you could see €9,500 in earnings, or a 4.25% return on the €200,000 investment in year one..
Alternatively an investor who finances and only pays 20% on a house, after taxes, mortgage repayments & costs etc, could possibly earn up to roughly €5,000 a year. Although there is less cash for the borrower, a 25% return on the €20,000 investment is much more desirable.
3. Avoid Costly Renovations
For seasoned professionals, taking a run down property and breathing new life in to and making a handsome profit in the process is certainly the way to go. However, as a first time buy to let landlord, it is advisable to keep things simple as you learn the ropes.
This isn’t to say you would not be perfectly capable of pulling it off, however like most things in life it takes time to perfect anything. Renovating a property and maximising profits requires a quality trustworthy contractor and as much knowledge of the industry as possible in order to efficiently allocate your budget.
4. Hire a Property Management Company
Being a landlord doesn’t stop at handing over the keys and checking the bank once a month for rent. Think 3am calls in the height of winter because a boiler has finally given in, or water not working just as you’ve settled in to watch the evenings football. All of these matters are your responsibility and the more properties you own, the more issues will arise.
The solution is to hire a property management company like KPM.ie . A good property management company will take the hassle out of being a landlord and handle all issues with professionalism and quality workmanship. Contact KPM today and let us assist you with your portfolio.
5. Seek wisdom From Other Landlords
Finding and keeping reliable tenants is an invaluable skill. You should think about joining a local landlord group or talk to some experienced landlords for guidance. This will reduce the chance of you making mistakes and so will hiring a property management company to handle tenants’ issues for you.
