If I Could Offer New Landlords Only One Tip, This Is IT!

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.

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.

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. :-(

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.

@ 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!

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!!!

@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.

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.

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.

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.

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.

“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.

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.

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