The rental market in the UK represents big business for investors. With more than nine million people living in properties they don’t own, it’s clear that the appetite for the rented market isn’t about to dwindle any time soon, and investors are pouring into the sector all the time.
However, what the strength of the market does mean is that we’re now seeing more new investors than ever before. For these inexperienced buyers, the rental market can be a difficult one to properly and safely traverse, and as much as there is a strong potential for great returns, there are also pitfalls that can be difficult to avoid for newcomers.
For this reason, investing in managed properties from companies such as Experience Invest is a great way for first-time landlords to get their foot in the door of the rental sector. We take a look at just a few of the reasons for this.
Hands-off strategy
Although landlords are more common than ever before, the rise in the rental market has meant that there are fewer professional landlords than we had in the past. Almost nine in ten investors in buy-to-let homes are those who own one rental property, a far cry from the image of one owner with multiple properties of yesteryear.
These landlords, often newcomers to the rental game, are often time poor. Most have full-time jobs and very little time to dedicate to the actual process of being a landlord. Thankfully, buying managed properties means not having to give up too much time. The hands-off approach afforded by the rental market means that you simply need to purchase the rental property and sit back and wait for returns to come in. The management company deals with tenants, maintenance and any other issue, making the whole process a breeze.
Management companies also deal with a lot of the day to day stuff that can be a grind for a landlord themselves to deal with. Problems such as maintenance can waste hours in tenant communication, arranging contractors, making sure things are done and signing off on work. Should this role be taken on by a management company, it’s dealt with without the landlord even having to know in many cases, removing the stress and worry from buying to let. Therefore, fully managed properties can be an ideal passive income investment.
Even for landlords who do want to take a more hands-on approach, the rental market has areas where it’s easy to trip up. Unfortunately, in many cases, this can leave you in a legally risky place. For example, a recent survey found that as many as one in ten tenants across the UK do not have a proper and legal tenancy agreement in place with their landlord.
This is almost always down to a lack of experience. Landlords will use old templates from letting agencies, or simply guides that they found online to producing a shorthold agreement. However, these are often out of date, not complete or generally just incorrect, potentially leaving landlords without a leg to stand on if there are disputes with tenants down the line.
Working with management companies helps mitigate against this, however. Letting agents and other management firms will have years of experience dealing with tenants, legal documents and landlords, and can prepare watertight documentation around inventories, tenancy agreements and any other important issue, making sure that everyone involved in the process is properly protected from start to finish.
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