What ‘type’ of Landlord?

There are two distinct ‘types’ of landlord, although the second tends to have four variants.

Take a look at both and you should be able to identify which ‘type’ you belong.

1.The ‘Buy To Let’ Investor – this is a person who has chosen to invest in property
whether it be for rental income, capital growth or both.

2. The ‘Accidental Landlord’ – this is becoming increasingly more common due to
factors such as :

• Relocation

• Struggling to sell your own home; but moving nevertheless

• Inheriting property

• Property speculator who has purchased a property off plan and is now unable to resell the contract;
subsequently being forced to complete on the property.

Who will your tenant be?

Now, irrespective of the ‘type’ of landlord that you are, your property will undoubtedly appeal to at least one of the four main tenant ‘types’ in the private rented sector.

The four main ‘types’ are:

1. Qualified Professionals; often preferring a high standard of property, in an A1
location with a wealth of facilities.

2. Working tenants who will still expect a high standards; an increase in HMO/ house
share type property popularity.

3. Students, for who a property in close proximity to a college or university will be
the main priority. Note: This type of property may be empty during summer months.

4. Local Housing Authority – a lower rent property that may be situated in a sub-
prime location. LHA benefit claimants will often receive a higher rental allowance especially if
they are considered an ‘at risk’ category

What to consider before purchase

Here are just a few things to consider before you choose to become a landlord; by doing the research now, they could save you making costly mistakes in the future.

1. The demand for the type of property by area – Speak to at least three letting agents to get feel
about demand. TIP – Give letting agents a call as a prospective landlord then call again in a few
days time and pose as a prospective tenant. Do the two stories “marry” from what you have been
told by the letting agent? Letting agents don’t always tell the truth!

2. Achievable rent (this has to be a realistic figure dependant of the time of year and the state of
the rental market and should always cover your mortgage payments by at least 130%.

3. The cost of marketing the property and the ongoing fees.

4. Can you afford to pay your buy to let mortgage if you have a void period and the property sits
empty.

5. The overall return on investment (this could be the annual return as expressed as a % of capital
invested and its return.)

Who will manage the property?

There are four methods of property management.

1. Self Manage – this is for the experienced landlord, who may often have a large
portfolio and the time to manage the day to day issues with individual properties.The plus side to
this approach, is the potential savings that can be made in letting agents fees – although there
can often be a trade off between time. Once you have a few properties this is often the most cost
effective solution.

2. Let Only – this is when you choose to use a letting agent to source and reference
potential tenants. After the tenant is moved in it’s then the landlords responsibility to manage
the tenant through the remaining tenancy term.

3. Let & Rent Collection – this is when the letting agent also collects rents on the
landlord’s behalf.

4. Full Management – this is when you appoint a letting agent to source tenants,
collect rent and manage the property throughout the tenancy. The letting agent will also deal with
any tenant issues. The downside of using this method is cost. Letting agents will charge 8-15% +VAT
of monthly rental income for this service.