Why Landlords FAIL: Disruptive Tenants
Property is a wise investment and has been for a long time. But it is possible to fail as a landlord, so our latest series will break down the pitfalls – and how to avoid them!
If you’re a landlord, you’re probably focused on the pros – investing in property can supplement your income, provide for your future and take care of your family after you’ve gone. But what about the cons – have you ever stopped to consider the various ways you could fail?
Landlords are struggling like never before – from new reforms that make landlording harder than ever, to the tax burden of Section 24.
We know it’s not a fun thing to think about, but you really do need to think about it – otherwise how can you protect yourself against it?
In this series, we’ll be covering the big ways you can fail, from disruptive tenants to pricey tax mistakes – we’ll be looking in more depth at the former today. Be sure to check back each week – you’re going to want to catch them all!
How to thrive in a struggling market
With everything on the rise, you want all the advice and information you can get to thrive in the current property market and not become one of the estimated half a million landlords looking to exit the sector.
And in order to thrive – you have to know the deepest darkest reasons why landlords fail. And here’s the thing – any landlord can fail. You could have been doing this for 20 years with multiple properties under your belt, only to be hit with something like malicious damage and an eviction that wracks up into the tens of thousands of pounds. We’ve had a landlord face £50,000 of debt, due to ONE bad tenant.
But understanding what can lead to failure means you can prepare for and avoid these pitfalls – allowing you to not only maintain, but also grow your investment.
Sound good? Let’s find out more!
What are the pitfalls?
The popular belief is that landlords live a champagne lifestyle off the back of their hard working and high paying tenants.
But, if that is the case, why all the headlines about landlords leaving the sector – which is, in turn, reducing the supply of rental properties for tenants and creating a competitive environment that is driving rents up across the board?
Earlier estimates predicted that half a million landlords would be leaving the sector, but a representative of the National Association of Property Buyers suggested that the figure could be much higher.
So why are landlords failing and looking for a way out of the sector? Some of the fails include:
- Legal issues
- Tax mistakes
- Disruptive tenants
- Expensive property maintenance
- … And poor financial management
Any one of these could destroy your business and leave you massively worse off than when you started. We’re going to break down every single failing – so stay tuned to learn exactly how to avoid them – our third video will send shivers down your spine!
But we’re going to kick off with the most basic mistake you can possibly make…
Getting the Wrong Tenant
This is the very first hurdle that you could fail at. The most important thing when it comes to renting is finding the right tenant; this is the person or people who will be living in and taking care of your property, so you want to make sure that they are the right person.
Well, the wrong person could:
- Fail to pay the rent on time or at all
- Fail to take good care of the property, resulting in damage that you’ll have to pay to fix
- Fail to let you know about issues in the property until they have grown to larger emergencies
- You could even find yourself with a tenant who is a con-artist or setting up a cannabis farm
We get it – you want someone in your property ASAP, you don’t want to have to worry about covering void periods… But trust me – remember that £50,000 a landlord had to pay? That was because he got the wrong tenant in who caused a huge amount of malicious damage to the property AND needed to be forcibly evicted… So yeah, to say the wrong tenant can cost you more than a void period is pretty accurate!
So how can you protect yourself from moving terrible tenants into your property?
DO NOT RUSH THE PROCESS! Take the time to vet the tenants thoroughly, get references and, where possible, aim to meet them yourself – gut feelings are definitely something to take into account.
Once you’ve chosen your dream tenants, the work doesn’t stop – sorry!
- Make sure they have all the paperwork they need to. We’ll be covering legislation errors next in this video, but get your relationship off on the right foot by doing everything you need to do off the bat!
- Keep lines of communication open. Make sure they know what to do in the event of an emergency and how to contact you if they notice anything wrong. You might want to avoid the latter so you aren’t bothered over trivial things, but trust us – knowing about and fixing a little leak, for example, could save you a lot of money compared to having to deal with a huge emergency leak or flood!
- Check in regularly. Inspect the property every 6 months or so, your tenants need to give you permission to do so, so make sure you ask in plenty of time. This is a great way to reassure yourself that the property is well-looked after, to make a note of any general wear and tear you’ll eventually have to address, to ask if there are any issues they’ve noticed that you need to handle and to check that they are happy in the property
But if it still goes wrong…
So that’s all you need to know about avoiding terrible tenants, but even with all of that due diligence, you may find yourself with someone you need to evict.
And this is where you can fall foul of failure once again, so we’ll be looking at costly legal mistakes in our next video. Make sure you hit the notification bell so you can tune in straight away!