If I Could Offer Only One Landlord Tip

Last week I was liaising with someone that is in the midst of the beautiful process of purchasing their first Buy-To-Let property. Whilst discussing his acquisition, I was asked, what would be my ONE golden tip for a new landlord.

Good question, although kinda’ impractical.

While I don’t believe there to be a silver bullet tip, I can almost certainly think of a few golden nuggets which I would offer before others. Essentially, one tip alone in this belligerent industry would be futile. But I still indulged him with my ONE tip; the one tip I would offer before any other.

I started writing this blog post with the intention of putting my tip on a pedestal, but the impracticality of it kept playing on my mind. That’s when I had my eureka moment.

I did something that I’ve never done before; I summoned the minds of industry experts (that I’m familiar with) and asked them to contribute. To contribute their ONE golden tip, allowing for a much more informative and useful blog post (hopefully).

I abruptly put together a very small mailing list (apologies if you were missed out, it really was abrupt) and asked the question. The feedback I received was brilliant. Although, some showed an initial enthusiastic burst of energy to contribute, and then never got back to me. Ouch! Dangle a carrot, why don’t you? But what was more surprisingly, a few people didn’t respond to my reach out at all, and up until this day, I’m not entirely sure why, since I’m extremely lovable and respected in this industry.

So without further ado, here’s my ONE golden tip congealed along aside the experts (you may recognise some of them or at least their associated company/website):

Adrian Thompson

From: Guild of Residential Landlords

Always get a home owning guarantor. This is normally a family member but it doesn’t have to be. I know that many landlords fear about adding a significant time to let a property but I find this to be unfounded. It may add a day or two but nothing more. The amount of rent being charged has far more impact on the length of time a property takes to let.

When a tenant fails to pay the rent or causes damage, there is nothing quite like the ability to go to a third party to claim these amounts. There may well be protests from the guarantor when a demand is made and I don’t purport it to be easy but ultimately the chances of getting paid are greatly increased and because they are a home owner, a charge can be placed against their property.

When taking a guarantor, there are a number of things worthy of note:

  • Ensure all adverts contain the requirement and this is clearly visible. This alone stops most rubbish tenants from even enquiring and there are no surprises for genuine tenants.
  • Always check on the Land Registry On-line that they are in fact a home owner. This costs ££.00 and is well worth the small fee.
  • Make sure the guarantee agreement is properly drafted and amongst many things, ensure it contains a clause that makes the guarantee continue into any periodic tenancy after the fixed term (otherwise it may end with the fixed term).
  • Make sure the guarantee agreement is made “as a deed” and is witnessed accordingly.
  • The guarantee agreement should always be signed before the tenancy.

Ciara Suvet

From: Royals Of Rent

I recently came across a new interesting service for landlords by a London letting agent (http://www.baseps.co.uk/services/maintenants/) which is providing property specific maintenance tutorials for tenants. The videos take you through the key elements of the rental and teach maintenance skills such as how to bleed radiators, how to use the heating controls, etc.

My advice for landlords – give your tenants a property maintenance guide to help them take better care of your investment. Ideally it would be an online document or a website that contains important information, regular checks to be carried out, tasks and tips.

I wish I had something like this when I moved into my first rental to help me save time and make sure I’m not forgetting something important.

Daz Bradbury

From: Open Rent

I know lots of landlords have trouble with pricing when using Open Rent. Many like to follow the model of an agent and price high, then accept a lower offer when / if it is made. Agents price high because their commission is a % of the rental amount, they have to bid for your property based on yield, and it also results in fewer enquiries for them to deal with. As a private landlord, you can follow that model, but a void period hurts you much more.

We’ve found pricing at your minimum acceptable rent results in more enquiries, which means a better choice of tenant, and if demand is high then tenants bidding against each other will quickly raise the price, or if it’s too high, then on OpenRent you can increase your price in seconds and see the impact. Hence, you get the best choice of tenants, at the best price, and with the least chance of a void. As a landlord going it alone it’s often easy to copy agent practices, but it’s not always the best recipe for success!

Jonathan Daines

From: Letting A Property

When advertising your property, it is often a false economy going for the maximum rental value. In this day and age, everyone is looking on ways to save money.

If your tenant thinks they can pay a cheaper rent for a similar property elsewhere in the neighbourhood, then they will more likely leave you at the end of the fixed term. The landlord may then have the threat of facing the dreaded void period, which can be very costly. By keeping an eye on the rental rates in your area, we would advise marketing your property just under market value i.e. the average for a 3 bed semi is say £1000, market yours at £950. The tenant will feel they are getting a good deal and therefore will stay longer – a tenant that stays longer keeps your overall costs down and your profit steady.

Mary Latham

From: Industry blogger at Letting A Property and Property 118.

Always buy the worse property in the best area that you can afford. You can always improve a property but you cannot improve an area and this can have a negative impact on your future property value and cause voids.

My best tip for protecting your investments would be. Join www.landlordreferencing.co.uk (LRS) and give every tenant a reference at the end of the tenancy. This will help landlords to avoid taking each others bad tenants and will give good tenants a better chance of finding a nice home in the PRS. To avoid taking the wrong tenant always ask LRS for a full lifestyle and Experian credit reference, they only charge £4.99 plus vat for this unique service and soon landlords will be able to get all that plus 12 months rent guarantee and legal cover for £90.

To be clear I have no commercial connection with LRS I support them because they are helping landlords to protect ourselves at minimum cost.

Roberta Ward

From: My Property Mentor

Always remember that buying a property or even renting out an existing home is a very small part of being a landlord. It’s really about whether you like and can cope with people and all the minute details such as rules and regulations, repairs and other issues.

Being a landlord is a people business. You’ll be dealing people on a daily business including tradespeople, agents and tenants to name a few. If you don’t like the general public and their attitude towards the property you rent them (which can often be unreasonable) , then it is not a business for you. Tenants don’t understand you are running a business, they just want somewhere affordable to rent that is fit for purpose.

Sam Collett

From: What Sam Saw Today

TRUST YOUR INSTINCTS. The property business is a people business and you need to trust in the people who you will be renting to. Credit checks, references and security deposits only give half the story – the rest is down to your judgement.

There have been two occasions in my landlord life where I failed to listen my instincts. On both occasions the applicants had passed all checks and references – but I had a “funny feeling” – instinctively I knew I should not hand the applicants the keys. Within weeks one tenant burnt down my building “accidentally” with 80 tealights, months later the other turned into a paranoid heroin addict who was convinced I was spying on her, trashed the property and left me with a whopping clean up bill.

There will NOT be a third time. From now on, if I get a “feeling” regardless of how stupid it sounds I refund all monies, apologise and cancel the application.

Tessa Shepperson

From: Landlord Law

The single most important thing about being a landlord is to choose a good tenant. Ideally this means someone who will be able to pay your rent promptly (or someone with a guarantor who can step in and pay if they don’t) AND someone responsible who has an agreeable personality.

If you have a responsible and agreeable person as a tenant, then even if there are problems you will normally be able to resolve them between you by discussion. However if you have a tenant with a difficult and unpleasant personality then you will probably have problems with them even if they pay their rent regularly.

So this means that you should have an interview with the tenant before accepting them as tenant to see if you like them AND carry out rigorous referencing. There is a shortage of good properties just now so there will normally be no need to accept a tenant who does not meet your standards.

The Landlord

From: Property Investment Project

First understand how mortgages work, then understand the different products available, and then get the right mortgage for you.

If sub-prime lending has taught us anything, it’s that mortgages can make or break us. While sub-prime lending fell on it’s knees when the market came tumbling in 2007, there are still products on the market today that can cripple any novice landlord if they’re not in tune with their finances.

Many landlords apply for eye-watering mortgages just so they have the means of getting onto the ladder. Dangerous. Assess your finances, make considerations for contingencies (e.g. vacant periods), and then decide whether a mortgage is practical for you.

If you’re working with a mortgage broker, ensure they’re recommended. Many brokers are just chasing the paper, and will try to flog a dead horse to put food on their table.

Mortgages are like tenants, they can be extremely costly, and if you get it wrong, they can drag you through a world of pain, and then shaking them off can be extremely difficult.

Personally, I go for interest-only mortgages, which allow for penalty-free over-payments, because I find them to be the most flexible option for me. I make over-payments on all my mortgages each month (my personal choice); that means I’m reducing my debt and building equity each month. I could get a “repayment mortgage” to effectively do the same, but they’re less flexible, because you HAVE to make the repayment. So for example, with interest-only mortgages, if my cash-flow is a little tight one month (e.g. a tenant falls into arrears), I can just cancel/postpone the over-payment and instantly reduce my monthly outgoing.

I would also suggest looking into remortgaging every now and then. Many borrowers just stick to the same product because it’s “easy”- but that can also be extremely expensive. Switching lenders can be relatively straightforward, and can save you a bundle in the short and long term. It’s a no-brainer.

Understand mortgages.

Vanessa Warwick

From: Property Tribes

The best way to never experience a bad tenant, is never to let one into your property in the first place!

One way to check a prospective tenant is to visit them in their current home.  This will give you a good idea of their lifestyle and how they might treat YOUR property.  You might also see that they have undeclared pets that have made a mess of their current property!

I would also like to recommend Landlord Referencing’s new £4.99 tenant screening product, that gives a snapshot of the tenant’s financial situation and also a lifestyle reference.

It’s a great tool for screening tenants at a very low cost to the landlord.

Finally…

I noticed that two of the experts independently recommended landlordreferencing.co.uk. That’s highly encouraging. Something to definitely consider.

I’d just like to thank everyone that contributed to this blog post, I genuinely appreciated it, and I generally appreciate very little in my bitter old age. Extremely useful contributions.

If anyone else would like to contribute their one golden tip, leave a comment, it would also be very much appreciated.

Like this post? Then maybe you should sign up to my FREE newsletter so you receive more like it!

16 Comments- Join The Conversation...

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Benji 29th May, 2013 @ 12:08

Top tip, don't believe everything landlord experts tell you, particularly if they are trying to flog you something.

Apologies to The Landlord for not responding to your email request, I've put you down as junk mail due to all the viagra sales spam I keep getting.

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The Landlord Avatar
The Landlord 29th May, 2013 @ 12:32

Just give me a/another serious God damn tip, Benji!!

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Benji 29th May, 2013 @ 13:41

As you've asked nicely..

(In addition to the above)

Don't just treat it as a passive investment.

When running property as a side line to the day job, spend a couple of hours a week actually working and learning about it.

In the early days, I didn't. Far to busy with the career and all that. I passed everything on to letting agents, lawyers, trades, accountant etc. -Nothing wrong with using professionals but you need to be firmly in control.

The extra few quid earnt working overtime (or in the pub) has been far outweighed by the tens of £1000's lost in the long run.

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The Landlord Avatar
The Landlord 29th May, 2013 @ 14:09

I knew everyone was wrong about you.

Nice tip, appreciated :)

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Adrian 29th May, 2013 @ 22:34

I'm deeply saddned to see mine not here. I guess you didn't like what i wrote but you'll tell me it didn't arrive. That's ok, I don't mind. :-(

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Paul Barrett 30th May, 2013 @ 20:44

A guarantor is pretty useless.
you are far better obtaining RGI on a tenant who fails but maybe achieved on a guarantor.
Should it all go wrong all you have to do is make a RGI claim.
bestinsurance offer this type of RGI cover with one simple £10 check.
Far better to have RGI on a guarantor than just have a guarantor.
Chasing a guarantor for recovery is a real pain and may take many months and hundreds of pounds to sort and that presupposes there is value in the property and no further charges have been applied to the legal title.
If you going to have a guarantor; why not just get RGI on the guarantor; makes life so much easier..
All you have to do is threaten the guarantor that if the rent isn't paid then a RGI claim will be made which will mean the tenant will have to surrender or be evicted from the tenancy.
Once a claim is made there is no going back and the RGI company will chase the guarantor for any monies paid out to the LL on behalf of the non -rent paying tenant.
Most guarantor who have property should pass a RGI check; so why not have the better RGI policy; after all it will only cost £99.00 per year.

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Benji 30th May, 2013 @ 21:32

@ Paul,

I must be psychic, I just knew you were going to chip in with RGI!
-but Mary beat you to it.

"A guarantor is pretty useless."

Absolute bollocks.

A non home owning guarantor, with no income or assets wrote up on the back of a beer stained fag packet can be a very powerful tool to have on a landlords side.

(Remember we talked about tools earlier?)

It can stop a tenancy from going tits up in the first place- if you can man manage people.

And no, I'm not suggesting that instead of RGI!

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Paul Barrett 31st May, 2013 @ 03:37

I am afraid you couldn't be more wrong about the efficacy of a guarantor without RGI in place on them.
Of course it is always worthwhile trying to get someone to act as a guarantor even though it is not worth the paper it is written on.
The guarantor is highly unlikely to know the law and a little bit of intimidation can be useful to make the tenant pay!
So something I would definitely use even though I know it is a waste of time.
I agree that to use a useless strategy which may well mug a guarantor into paying the rent or forcing the tenant to pay is a useful tool.
One will try anything.
But I can assure you that just having a guarantor without RGI on them is pretty useless.
Let us say you have a home owning guarantor with a decent amount of equity and they refuse to pay the tenant's rent.
Well you have to start the lengthy court processes.
Let us say before I manage to obtain a notice of interest on the legal title of the property the clever home owner obtain a voluntary 2nd charge or interest in favour of another individual for say £200000.
Then what use is the home- owning guarantor.
How long would I have to wait for the 1st and 2nd charges to be equal to the property value plus my rent arrears which i will have on the property title.
About 40 years.
I know how the game works as this is what I have done myself and believe me I owe far more than a few months rent!!
Civil recovery is a long and tortuous process and if you are up against clued up people it won't work.
However as you suggest one has nothing to lose by trying it on.
So the ONLY way to GUARANTEE that a guarantor will pay up is witha RGI policy.
Then it matters NOT if the guarantor doesn't pay as the RGI will pay out.
Then the RGI company will have all the hassle to attempt recovery of the insurance payout; but the LL doesn't have to bother.
Clearly if you can't get RGI on a guarantor it is worth trying it on.
One can always trade on a tenant's and guarantor's ignorance.
Obviously there maybe some ignorant guarantors who do not protect themselves against claims.
So as you suggest it can be a useful tool; but I wouldn't rely on it; so I will stick to good old RGI on tenant or guarantor.
I like dead certs!!!

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Benji 4th June, 2013 @ 14:12

@Paul,

You are missing the point.

I don't view it as a method of intimidation, use it to mug someone or trade on anyone's ignorance.

I see a Guarantor as someone to help keep a tenancy on track for the mutual benefit of all parties, well before things start to go seriously wrong.

Prevention rather than cure. It works out a lot cheaper in the long run.

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Paul Barrett 4th June, 2013 @ 23:30

I think as you know that a guarantor guarantees nothing unless they have sufficient worth which would be worth pursuing against in the civil courts.
This generally means sufficient equity in a property that would be worth applying a 2nd charge against and then enforcing it.
Also sufficient income or traceable and court seized assets such as savings accounts and also an income upon which AOE could be applied for the amounts required.
Of course the guarantor can become unemployed and then the issue is changed.
the problems with recovery from a guarantor are so many and various as to make it it a lengthy and potentially unsuccessful process.
I appreciate the theory of a guarantor which may well persuade those who are; to pay up.
I would not choose to rely on it as it would not assist the immediate cashflow crisis of non-rent payment.
I accept that RGI does not immediately pay out but it does address more quickly the immediate cashflow issues.
So yes a guarantor is fine if the tenant fails RGI but I would require RGI on the guarantor who should pass such a RGI check if they have the assets to act as a guarantor as far as I am concerned.
It would just seem silly to accept a guarantor who one would presuppose had the full wherewithall to meet any rent payment issues and to not have a RGI policy on that guarantor!!
So yes guarantors are a every good idea; but only if they are capable of managing such rent arrears issues if ever called upon and they can be held to account by courts if they refuse to comply with their guarantee.

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Adrian 5th June, 2013 @ 19:18

I was asked to provide only ONE tip for landlords so just because I didn't pick a tip that others may have chosen doesn't mean to say that all other tips are rubbish!
No where in my tip do I suggest RGI shouldn't be taken although reading some of these comments that may be hard to believe.
RGI companies will, in very many cases, insist on a guarantor before they will insure a tenant for one reason or another. In my experience insurance companies don't like loosing money so they must be doing something right by seeking this additional guarantee.
Even it you get RGI for £99, that is normally for only a set period (12 or 6 months) and so would need constantly renewing.
Everybody has different situations. For me, if I were to do RGI on all properties, the insurance bill would be in excess of £10k per annum.
I don't loose £10k per annum because I take home owning guarantors!
Before we became ruthless on taking guarantors we were loosing in the region of £15 to £20k per annum. For the last 6 or 7 years whilst we ruthlessly take guarantors that amount is virtually £0 (save for the odd small amount where arguing about value of damage isn't worth arguing further.) To suggest that guarantors don't work is frankly nonsense.
Every guarantor we have chased up has paid up currently. I entirely accept it's not always easy but with an efficient workflow it's perfectly doable and far easier than trying to chase tenants.
RGI only covers rent. In my experience, most tenants who are the type to not pay the rent are also the type that will damage or not take good care of the property. A guarantor fixes that problem.
RGI normally requires a deposit to be taken (something we don't take because we don't need to as we have a guarantor) and so the RGI doesn't pay the first months rent loss anyway. This means any deposit taken could not be used for damage even when RGI is in place. In addition, in my experience most tenants will not pay the last months rent where there is a deposit, meaning damages aren't covered.
I think the whole point is being missed. In reality with a good solid guarantor, the problems mentioned above don't happen in the first place. The chasing of guarantors for the money is rarely needed. The point is that the type of tenant who can get a home owning guarantor is the type of tenant that is more likely to pay. That combined with other checks and an admin fee, rent payment problems are rare. The fact that the tenant knows their parents (for example) are a phone call away should they not pay means we get paid without asking. In addition, if there are other problems such as noise and these start getting serious, the guarantor can be called upon to step in. Again this prevents other problems arising in the first place and reduces the requirement to serve possession notices and proceedings considerably. Most of our tenants stay with us for a good length of time (years rather than months) so the good ones aren't concerned about the guarantor being sat in the background where if there is no problem, they are not called upon.
All I can say is that it works for us. If it doesn't work for others that's fine.

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Paul Barrett 5th June, 2013 @ 23:49

Adrian I think you are absolutely correct with regards to the DD you carry about and that you tend to only bother with guarantors and NOT RGI.
Personally I think RGI is only really necessary for little LL who do NOT have the resources or cashflow to cover getting rid of a tenants.
Clearly you have more than enough off those resources; so for you RGI would be an expensive luxury!!
80% of PRS LL are little LL that CANNOT afford NOT to have RGI.
Your excellent DD is usually sufficient and the odd wrongun you get can be covered by your cashflow resources.
Little LL have little choice than to take a big risk or take out RGI.
I myself have been stung big time by wrongun tenants.
The last one I had did me for over £10333 but fortunately I had RGI and was paid in full and subsequently wasn't bankrupted; which is what would have occurred!
So I think RGI necessity is very much down to the robustness of financial facilities to cover the period it takes to evict a tenant and refurb for new tenants etc.
Most small LL don't have such robustness and therefore if they are savvy they should accept that RGI is an absolute requirement for them until their financial position improves to the point where they don't need RGI.
Of course every wrongun tenant they take on that stitches them up will have to be paid for out of reserves; but as you suggest the guarantor situation should hopefully cover things.
Personally I yearn for the day when my finances are sufficient for me to risk a tenant that doesn't qualify for RGI or their guarantor doesn't!
When you think it take roughly 6 months to evict and the losses that could occur if the guarantor doesn't pay up; RGI is quite a useful protection measure against defaulting tenants.
After all 1 missed mortgage payment will stay on your credit files for years and will stop all further credit applications for years and therefore damage future business prospects!
I would prefer to guarantee that wouldn't happen.
Even with RGI you still need some cash buffer as the RGI doesn't pay out immediately.
RGI if you don't know has to be renewed every year; but NO new credit checks are required and it would then be £89 per year.
Try bestinsurance.co.uk who I use they are very good.
Only a certified check is required.
This if everything with the AST remains the same.

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Andy 5th July, 2013 @ 08:20

My top tip is simple but works. Develop a tenant management scheme. I start with doing my own vetting, visits etc. Once a tenant is selected I then do my own inductions and introductions at check in. 6 weeks later I visit the property. I text occasionally to see if all ok. Any jobs the tenants ask for are generally done within days of asking. All communication is logged on a tenant management form. I take time to learn about my tenants, kids, pets etc in fact anything that helps develop a relationship. Visits are made every so often sometimes 6 monthly but it depends on the relationship and trust built. As soon as someone is a day late with rent I am in touch with them and without failure I get paid. Trust is two way and I find if a tenant trusts you they tend to look after things, you in turn tend to leave them alone. Not rocket science but a structured approach has worked for me.

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Mark 19th February, 2014 @ 16:05

“Always get a home owning guarantor. This is normally a family member but it doesn’t have to be.” – Actually it can be your friend or relative that should be a UK homeowner. It doesn’t even matter if your guarantor owns his home outright or has a mortgage. Your guarantor will have to pay the loan back if case if you can’t do it yourself. People should consider that this person can afford the monthly payments as well as having enough money to live his normal life.

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shuey 23rd February, 2014 @ 22:36

Personally I agree with you BOTH. Home owning guarantor AND RGI. Have used both in past successfully. The home owning guarantor pressure made the tenant cough up. With the RGI they paid out (albeit after getting me to produce all documentation 100% perfectly as per their terms and conditions --fair enough really).

However another situation im struggling with at the moment is a DSS tenant's guarantor has left his home and the tenant is now in arrears and says its no point going after his guarantor as they dont have any money either. My agent went around to the guarantor's address as recorded and there wasnt anyone around or if they live there any longer anyway.

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Parker Buchanan 5th December, 2016 @ 07:19

Thank you for sharing these advice , which are very helpful for investing money in property & Landlord inspection.

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