PROPERTY INVESTING | STARTER COURSE |
BONUS LESSON -
if you could only do one thing right?
Remember that your tenant is your business, the best product in the world is useless if no one buys it!
Prefer to read this lesson as a pdf?
Take some time with the below quotation and use it to fully understand the property cycle as demonstrated way back in lesson one. >>
“History doesn’t repeat itself, but it does rhyme.”
- Mark Twain
Take some time with the above quotation & use it to fully understand the property cycle, as demonstrated in lesson 1. It soon becomes evident that your property selection may not be the ‘be all and end all’, especially in the beginning.
There are ways to maximise your returns from day one, and some may need to get the best deal possible to maximise their return on refinance, so we’re certainly not suggesting you dismiss this.
We are categorically not implying that you simply buy the first property that you view either, but everything you’ve done up until this point, especially if you’ve had us to guide you along the way won’t have, in the wider scheme of things much significant consequence in 25 years’ time (the typical term of a leveraged mortgage).
Property success in one simple lesson!
We have often indicated that the property industry is a people industry, it is, in our opinion, pretty much all about people, at least at this stage of the journey.
If we had to choose only one piece of advice to pass on to you, it would be the need to get the tenancy absolutely, categorically, most definitely…..RIGHT!
This is why, even if you’re planning to be a hands-off investor and pass this over to a professional leggings agent, we repeatedly tell you to ensure you’re still fully educated on the process.
We’ve met hundreds of investors who have attended every course going who end up paddling up the river without the proverbial paddle because they haven’t understood the importance of this lesson.
R£NT, what to charge
Following the right system, you will already be aware of the possible rental income of your chosen property before you even view it. This is something you will have played with somewhat when working out your potential returns. Hopefully, you have a realistic or achievable figure based on accurate research so this, in essence, somewhat predetermined
In short, it’s not always the best option to squeeze as much rent as possible from your property. It can be counterproductive to stretch your tenants budget, especially with a long-standing tenant.
Of course, you don’t want to give the property away either we tend to use comps of recent rentals as our guide and stick to that.
Find the correct balance between good revenue and longevity.
The reason being when a tenant moves out, mostly & regardless of their term there is always an uplift or cash injection needed to get the property ready for re-letting.
This may come in the form of advertising, council tax, mortgage payments, tenant find fees, general maintenance or even cosmetic decoration.
A few extra pounds squeezed onto a tenant, accrued over two years can quickly disappear within a six week void period. This should be carefully considered not only when setting your rent but also when you feel its time to increase your rent – do you really NEED to rock the boat, what if it capsizes?
Suppose this: If we increase rent by an extra £25/month then we would make £300/year extra revenue. However, if that tenant left as a result because it was too much of a stretch for them and we had a 6-8 week void then this would cost Circa £500 in mortgage payments 6-8 weeks of council tax, so perhaps £200. We not only have utilities to pay but to transfer into our name, which is a laborious task as well as the possibility of repairs or cosmetic touching up. lets put a conservative accumulative figure of the above at £1500
This is the one thing that MUST be done it right!!
THIS is the instance time is NOT always money – If there was one thing that you could ensure was done perfectly it would be the tenant process from start to finish.
Your tenant is your cash flow; they are your customer without them you have no income, therefore no business.
This process, is the most overlooked part of property investing.
Would you employ a manager to run your business if you had no idea of their ability or experience?
Would you interview them & vet them carefully before you made any appointment?
Effectively by handing your investment over to a professional without understanding the process discussed in this lesson you are risking everything; your entire business is now in the hands of an unvetted, potentially unqualified manager.
what's the process and how can i ensure it's perfect?
Ok, so this can never be done perfectly, and you can never wholly guarantee the smooth running of a tenancy, but there are many measures we can show you that will help to eliminate the mistakes that others make, and offer the best possible chance of success. We have compiled our foolproof guide for you to follow.
See what we do for you guys huh? and for FREE!!
Can you imagine what else we could offer you?
Patience is a bitter plant, but it has sweet fruit, this is the underlying point of finding your tenant, in fact of the entire lesson here. It’s all too easy to rush out and sign up the first person who walks through the door. A little patience will go a long way to finding the right tenant and the right tenant can be a dream come true. Good steady, reliable rent is worth its weight in gold….. well almost!
Our Foolproof Guide ...
Once you are satisfied with their answers, it’s time to meet them at the property:
1) Ask the tenant to notify you one hour before the appointment to confirm their attendance, inform them that if they do not confirm this, then you will be unable to attend the viewing.
2) Get there 20 minutes early and put the heating on if necessary. Switch ALL lights on in the property, even during the day, any under counter lights, lights on electric fires, extractor fans etc
3) If the property needs a quick freshen up then open a few windows and spray some light fragrance
4) Remove all the junk mail and straighten the front of the house if needed
5) Note what time the tenant gets there this, coupled with the 1-hour notification will give an indication of their organisation
It is worth nagging you here & sounding like a broken record but doing this one thing carefully, adopting genuine patience can save you so much time and effort.
This is in essence what property investing is truly about. Forget the house selection, the price you paid and the fantastic refurb, its all useless if you don’t get the tenant right.
“A happy tenant is one that pays, for a happy landlord it’s one that stays.”
Its simple business sense, look after your customers, and they will look after you. It should be widely acknowledged as the first rule of business, it should be taught in ‘business 101’, and it should form the basis of ‘business for dummies’.
So why do people not get it? It’s obvious, right? It had worked so well for us over the years that it was highlighted as our main ‘chief aim’ when we first started with WiseOwl.
Customers are part of every business; every business has them and needs to understand them. I can’t think of a single business that wouldn’t fail without them.
NEWS FLASH, Property investing is NO DIFFERENT!! The tenants are your customers like it or lump it; you need to accept it! You’ve spent all that time and effort ensuring that you get the right kind of tenant so make sure you look after them while they are in your property.
Serve your CUSTOMER well, fix those minor issues and ensure they love your (their) home and love you as a landlord.
Let’s give you a minute to digest that, or to mutter under your breath….. well drrrr!!!
Take a minute, and continue once you agree with us…
You would be surprised how many landlords we meet who don’t understand this simple concept; they view their tenants as liabilities or headaches. If we had a penny for every investor we’ve met who didn’t understand this fundamental point, well… we’d have lots of pennies!
‘Make hay while the sun is shining’ and treat your customers, right, it’s not exactly rocket science.
Here's a summary of this lesson and your next steps to take ACTION!
You must take action right now. Go! Go! Go!
The reality is, the internet has made it incredibly easy (and cheap) for landlords to find and market their own properties without the use of a traditional high-street letting agents. One of the biggest enquiry generators for letting agents are UK property portals like Rightmove & Zoopla, but we don’t often use an agent in order to get our property on there, we can do it ourselves through self-service Online Letting Agents, the biggest being OpenRent.
Who is the right tenant for you? The tenant profile you choose will depend on your investment goals. The sort of tenants that suit you will depend on your goals, what you want to achieve from your investment strategy. It will depend on your ability to attract and manage very specific types of tenant. Frankly, it also depends on the amount of hassle you’re willing to put up with.
- It’s a common misconception is that letting agents provide us with a skill set which can’t be duplicated by the average person/landlord. We assume that they have an advantage over us by having all the trade tools and resources. It’s all nonsense. Make sure you understand this lesson fully to ensure your agent is doing their job.
- Choosing your tenant profile is relatively easy but, as your decision should dictate your strategy, it is important to take some time to consider the issue carefully. What is my personal preference? Do I mind which type of tenant rents my property? Do I have the experience – or do know that this letting agent has the experience and knowledge to successfully manage my particular type of property? How will this type of tenant affect the achievable rental yield relative to the area in which I’m investing? How will this type of tenant affect how I finance the investment?
Just asking yourself these questions will give you deeper insight into your ideal tenant profile. In turn that will help you plan your investment strategy.
1.) Understand your position and future goals with managing and letting your tenant. Start thinking about the type of tenant you desire as ultimately the type of property you buy will dictate who will be housed.
2.) Think about all the places where you could advertise for suitable tenants and explore all your options about getting this set up.
3.) If you plan on managing, devise a process or system to vet your applications to ensure they meet your criteria for a suitable tenant, it is often wise to document this process as a step by step system you can follow each and every time. Your confidence in selection of the ‘right’ tenants will develop with experience. If you are employing an agent then look at how they do this.
"In the end you should always do the right thing, even if it's hard"
- Nicholas Sparks
If you’re a property investor, you’ve likely heard of David Tarn (WiseOwl Property). His list of credentials is lengthy, and if he really wanted to, he could go on and on and on about his accomplishments.
But when people list out all their accomplishments in their bios, they risk sounding a little egotistical. This isn’t Davids style. Sure, you might impress a handful of people with all those laurels, but many people who read the bio will end up feeling either intimidated or annoyed. Think about it, why do you want to read about how great someone else is, don’t you see enough of that on Facebook?
To minimize the egoism that comes with talking about yourself, here are David’s accomplishments without sounding like bragging. David has been investing for almost 15-years and has built a hugely profitable portfolio. He owns a self-start lettings agency, mentors, trains and coaches very well and rides an enduro mountain bike like a pro. He is 1 part executive, 1 part entrepreneur, 1 part mentor and 4 parts proud dad. Too many parts, maybe that’s the maverick in him?