Manage episode 267919858 series 2342556
Do you own single let accommodation, and are racking up unexpected costs each year but can’t figure out why? Or plan to start but want to know the cost involved? Listen in to today’s podcast where Mark takes you through all the hidden costs involved in single lets which will avoid eating into your profits. Learn the importance of finding great lettings agents that ensures your property is rented out quickly and with brilliant tenants, the benefits of purchasing your properties under a limited company and why it is imperative to shop around for mortgages and insurance brokers.
- The number one hidden cost of single let accommodation is poor letting agents. There are many poor letting agents across the country. The main cost being poor marketing, not finding tenants quick enough when your property is empty and not putting the work into getting the property into a presentable state. A good letting agent will get the property lent quickly and therefore get the rent in for you.
- The difference between a good lettings agent and a poor one is huge. You could lose up to half of the rent a year should you find yourself with a poor letting agent. A poor lettings agent may also not reference your tenants properly, therefore putting riskier tenants into the property which again will leave you with loss of rent or possible eviction costs.
- Another hidden cost is high mortgage costs and not shopping around sufficiently for a mortgage. It is always beneficial to create a relationship directly with the bank and as you get better you can go to a commercial lender and maybe they will give you a better rate. Take longer-term deals, not always with fixed rates, if you look at the costs and expectation of the market, often the average rate will be lower if you go on the variable.
- To help save on some hidden costs, it is a good idea to purchase properties under a limited company. If you put properties into a limited company you can always offset all the mortgage rates against the rent, and you will only pay corporation tax on the net rent after you have taken the mortgage rate off. There is a big benefit there, especially if you want to scale and grow.
- Not choosing the right type of builder for your refurbishment can rack up some high and unexpected costs. Focus on choosing individual tradesmen, try and source materials for them through LNPG, research the cost of materials this will all end up controlling the costs for you.
- Make sure you take out the correct HMO protection. Go to a broker (preferably one broker for the whole portfolio) and ensure you get the correct type of insurance so that when you do eventually have to make a claim, you will receive your payout.
“You have often got to kiss lots of frogs before you find a good one.”
“There is a very big gulf between a great lettings agent and an average lettings agent.”
“High mortgage costs can cost you in a big way, short deals sound great but they are not really protecting you against much at all.”
ABOUT THE HOST
Mark Homer is an entrepreneur investor. He has worked with investment since he was 15 years old using the laws of wealth! He is a spreadsheet analyst with an impressive following from major publications including BBC Radio, The Wall Street Journal, The Independent, and co-authoring the UK’s best-selling property books. Mark has always looked for the best investment vehicle, and at the end of 2007 with Rob Moore the co-founder of Progressive Property his joint portfolio produced more profit than any of the other investments he’d tried in the last ten years, combined.
See omnystudio.com/listener for privacy information.