How do I become a full-time landlord?
Do you have dreams of landlording full time?
Whether you’ve already bought your first buy-to-let or you’re saving towards it, if your ultimate goal is landlording full time, how can you make that happen for yourself?
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Sadly, there’s no speedy way to get there (unless you are lucky enough to win the lottery!) but there are some tried and true steps you can take so that you can wave goodbye to your day job and landlord full time.
Invest in your first buy-to-let
The very first step you have to take on your landlord journey is getting that first buy-to-let. After all, you can’t become a full time landlord without a few properties under your belt!
If you’ve yet to get that first property, book a call with our buy-to-let mortgage advisors – all of our mortgage advice is completely free. Let’s face it, buying is an expensive process, so you want to save your pennies where you can! This can help you understand what you need to do to get to the point where you can invest in your first property.
Some things to consider when you are making that plan:
- Location. Location is all in the property industry so make sure you find the right area for your property. Too far away and you will have to travel if there are any issues or you’ll have to outsource to an agent. You may want to consider an area that is cheaper so that you can invest sooner, or you may want to play the longer game and invest somewhere more expensive for a higher rental yield
- Do your research. Try to find out as much as possible about what tenants are looking for at the moment. For example, post pandemic, lots of tenants are looking for properties with a workspace as many work from home; others want outdoor space; while there are some that are looking for somewhere pet-friendly
- Consider maintenance. While an older house may be more of a bargain, it will likely require a lot of maintenance over the years. So take the time now to really consider how much you’d want to be involved in that – and how much you’d be able to spend on it! This will help you find the right property when the time comes
- Understand the finances. It’s easy to overlook the hidden costs of landlording, which can make a mess of your projected profits, so make sure you understand exactly what your outgoings are likely to be (as far as you possibly can!)
Be the best landlord you can be
Now you’ve got your first buy-to-let, you might be itching to invest again, but slow down for a moment! Take the time to really understand what you’ve taken on, so you know if this is the right path for you and that you do want to continue investing.
- Deposits. Make sure you register the deposit within 30 days of receipt or look into Deposit Replacement, which gives you more protection and is cheaper for the tenant. If you choose the traditional deposit route, don’t forget to give the prescribed information to your tenants
- Compliance. The last thing you want to do is end your landlord journey before it’s even started by overlooking your legal requirements. Make sure you have your Gas Safety, EICR and EPC and that your tenant has copies of all of these!
- Safety first. As well as legal certification, you are legally obliged to make sure that there is a fire alarm on every floor and a carbon monoxide alarm in any room that has a solid fuel burning appliance. You need to make sure these are in good working order before the tenant moves in
- Insurance. Once you’ve got the investment you need to protect it, so make sure that you have all the insurance you need. Buildings Insurance will cover any damage to the building; Home Emergency Insurance deals with (you guessed it!) emergencies like breakdowns or broken keys; and Rent Guarantee Insurance ensures that you can keep making your mortgage repayments, even if your tenant misses a payment
- Tax. No one likes to hear the word, but tax is something you have to think about now! You’ll need to do a self assessment tax return now you have an additional income. If you’re worried about this, you can check out our series of tax webinars
- Educate yourself. Take the time to learn as much as you can about the property industry. It can help you avoid pitfalls and keep you ahead of the game. There’s a lot of content on the Mashroom website, from news to Q&As and don’t forget those webinars!
Now, that’s quite a lot of stuff to remember and you might decide that you don’t actually want to do that with multiple properties, which is totally fair! Just give yourself the time to work out if this is something you want to to do on a larger scale
So now you’ve settled into your landlord groove and you know you want to keep doing this. In order to do this, you should consider releasing equity from your first investment in order to invest in the next.
This can sound like a scary prospect, but it is a tried and true method for investing in future properties. Give your mortgage advisor another call and they’ll be able to talk you through it so you can start planning again!
Manage your finances
Your finances are key to the success of this venture. You need to make sure you are on top of things and aren’t making any assumptions about a single penny. Our free Expense and Income Tracker makes it easy to visualise your income and expenses and make the best choices you can.
- Make sure your legal requirements are covered. There’s no two ways about it, you have to have your legal certification in place, so you need to make sure you are always budgeting for that. They can be easy to forget as EICRs and EPCs last for several years, but make sure you update to avoid fines! Our free Document Storage Tool saves all your certificates in one place and reminds you when they’re due to expire
- Cover yourself. We’ve touched on insurance and while it’s not a legal requirement, we consider it a necessity. Without insurance, you’ll be liable for any missed payments that Rent Guarantee Insurance might have covered or any breakdowns Home Emergency Insurance would have sorted out. Don’t take the risk of needing to cover expenses out of your own pocket – where you can insure, do!
- Check in. When things are ticking over nicely, it’s easy to let things slide and assume everything is adding up nicely. But have a regular appointment with your accounts just to make sure that is the case!
Ideally, you’d be able to keep repeating these steps – releasing equity and reinvesting – until you have a portfolio that brings in enough money to sustain you and your family, so that you can leave your day job. This takes time, so be patient! There’s no such thing as an overnight success!