One of the most common questions landlords often ask of us is “I can’t find tenants – please can you help me rent my property?” or “what do we need to do to rent my property quickly?”.
Often we are shown the property of landlords who are struggling to find tenants, yet on many occasions we can tell within minutes of walking through the door, why they have had little interest. Usually with just a little bit of work, these properties can be made more rentable, without having to commit a large budget.
Some tenant find principles
Most tenants will view five or six properties before choosing one to rent; and will often make up their mind based on a single viewing. After considering the type of tenant you want to attract, you need to help them choose your property over the others.
To successfully rent my property it is essential you know your market. The location and type of property you have to rent will in most cases dictate the type of tenant you should try and attract. Which ever category of tenant you are after, it makes commercial sense to attract the best tenants you can. If you want professionals in your property then you need make your property appeal to the expectations of that type of tenant. If you are after students, LHA or house share; then your property needs to attract tenants who look for something different.
So if “how do I rent my property” is a question on your mind, here are some key pointers to help you rent your property quickly.
Rent My Property – Our Top Tips
1) First impressions: The tenants’ first view of your property is made as they walk up road or up the drive. How does your property compare with others on the street? How does it look through the windows (often the first things prospective tenants see are the backs of curtains and blinds)? Outside; a tidy garden, clear path, freshly cut lawn, clean walls and paint work, have greater tenant appeal.
2) Clear the clutter: If your current tenants are messy, consider waiting until they have left until you show prospective tenants round. New tenants often cannot see past the clutter and therefore struggle to see themselves living there. If previous tenants have gone and left clutter inside or out – get rid of it.
3) Re-fresh and fix: The decoration and presentation of your property will affect the speed of letting and the rent you will achieve. Pay special attention to the paint on the walls (plain paint is often best); the carpets and the floors. Clean and repaint where necessary; fixing any broken door or drawer handles and taps. You are setting a standard so you should refresh according to how you would like your property to be looked after (and grubby properties attract grubby tenants).
4) Focus on the kitchen: Many tenants look at the kitchen more than any other room in the property. If you are to spend money on any room in the house, make this the one you look at first. If your kitchen looks “tired” then a repaint and new cupboard handles can make a major difference for a minimal cost. Any loose doors need to be fixed or replaced. Appliances do not have to be new but they should be clean – especially ovens and hobs.
5) Do not worry about “white goods”: Your property should supply a cooker as a minimum; other appliances are beneficial but not essential. If there are not any “white goods” in your property then you may be best waiting until tenants view the property before deciding whether to supply them (you have to maintain them if you do). Some tenants already have their own. You can always state to viewers that you will supply if required.
6) The bathroom: The second most important room in the house is the bathroom. A “tired” bathroom will put many tenants off. It does not need to be new but it should be clean and clear of clutter. All units and bath sides should be firmly fixed; taps and showers should work smoothly. Showers are now a modern day necessity so if your property does not have one, consider installing an electric shower over the bath as your property will rent quicker if you have one.
7) Carpets and floors: If your property has old or worn carpets, with heavy patterns or dark colours; consider replacing them with more modern, plain carpets. A good choice of colour can brighten up a room and make it feel more spacious. An important room to look at is the living room. If your budget is restricted, this is the room to look at first. With the right choice you will recover the cost with the extra rent you will likely achieve.
8) Windows and views: You can never let too much light shine into your property. Make sure all windows are clean and any curtains are open when tenants are shown round; and remove any old net curtains. You should supply curtain rails but curtains are not essential as tenants often prefer to provide their own to personalise the property. If your property has good natural light then use it and if at all possible conduct viewings during daylight hours.
9) Lamps and shades: It is possible to improve the appearance of a room with new lights and/or shades. In many properties for rent these are old or have never been cleaned, contributing to a grubby feel. New shades can add that finishing touch. Subtle is best as anything unusual runs the risk of not appealing to the tenants taste.
10) Furniture: There is little difference in rent values for furnished and unfurnished properties. Smaller furnished properties can appeal to younger tenants; the recently separated; or students. Larger properties generally attract families who tend to bring more furniture with them. If you are willing to supply some furniture, don’t rush out and buy it in advance. Prospective tenants may not have the same taste as you and involving the tenant in the buying decision can be a plus point for your property over others.
11) The final clean: The last yet most important action to rent my property is the thorough clean. This means doing more than just going round your property with a vacuum cleaner. A full professional clean can transform your property from average to desirable. For less than a week’s rent, it will make your property stand out and attract a better quality tenant.
Rent My Property – Final Thoughts
All landlords hate to have an empty property but rushing to rent my property without investing time to refresh and prepare it, can mean your property is empty for longer. It is better to adopt the principle that you are competing with other landlords and you want to attract the best tenants you can in your target market.
When competing to rent my property, you are usually better to refresh your property as above – even if it takes a week or two to complete and comes with a small cost. It will help you rent your property to a better tenant, who is prepared to pay more rent. Your property may ultimately rent faster.
This article aims to educate the reader on the 5 fundamentals of professional property investing specifically focused on the city of Hull in the East Riding of Yorkshire
The topics covered
Return on Investment
When investing in property you can benefit by borrowing from the bank using the power of leverage. Typically, a buy to let mortgage requires you to put a 25% deposit down and the bank will provide the remaining 75% of the purchase price of the property. Where else can you get them to do that? Banks will lend you money to buy property. They are less likely to lend you money to grow your business and they definitely will not lend you money to buy stocks and shares. They understand that property is still a safe secure asset despite what the media says. To show you the power of leverage lets show you an illustration. You have 100,000 to spend on an investment property. The following scenarios show how you can spend that money
Scenario 1 – Buying 1 property worth 100K with all your cash
Buying 1 house without a mortgage. Put down 100K and buy the property outright. The following year inflation raises the price of that property by 5%. The property is now worth 105K. You now have a property worth 105K and an equity of 5K in that property.
Scenario 2 – Buying 4 properties each worth 100K with a mortgage on each
You put a 25K deposit down on each property and a mortgage for the remaining 75K, spending all your 100K across 4 properties not just 1 property this time. The following year inflation raises the prices of that property by 5%, the same as scenario 1. Each property is now worth 105K. However, now you have 4 of them so benefit from the 5K equity in each one. So you now have 20K equity instead of the 5K in scenario 1. You have still spent the same amount of money but have benefited from leverage of money from the Bank.
2-3 bedroom properties in Hull can be bought for between 40-100K. They offer a superb opportunity to leverage your cash
Return on Investment
The return on investment is defined below
Return on investment = Gain of Investment – Cost of Investment / Cost of Investment
In basic terms, how hard is your money working for you. You can choose to invest in a new business venture, shares on the stock market or property. Each wealth creation channel has its own return on investment together with its associated risk. As a professional investor you have to weigh up your appetite for risk and potential return on your investment. Lets revisit the 2 leverage scenarios and examine the return on investment
Scenario 1 – Buying 1 property worth 100K with all your cash
Return on investment (ROI) is 5% e.g. 5K/100K
Scenario 2 – Buying 4 properties each worth 100K with a mortgage
Return on investment (ROI) is 20% e.g. 20K/100K Hull is a great place to start your professional property investing career because of the great return on investment. The reason is that property prices in Hull are among some of the cheapest in the UK. So, the cost of your investment is lower. This means not only can your money go further ie. you could buy more properties but each of those properties will go up in price and if you’ve leveraged your investments with mortgages your return on investment will be even greater.
Hull gives a better return on investment than more expensive cities in the UK because property prices are lower
Of course, an investment property only becomes an asset if you are able to rent it out. If you can’t, that asset very quickly becomes a liability. A quick reminder on the definition of an asset and liability
Asset = Puts money in your pocket
Liability = Takes money out of your pocket
So, to ensure your investment property remains an asset you need to be confident that it is in an area of high rental demand. Hull is a hidden gem of a city. It is the gateway to Europe via ABP ports and P&O Ferries and therefore has a thriving export/import industry. Siemens are going to locate a large wind turbine manufacturing plant there cementing it’s status as a centre of excellence for Renewable energy technology. It is well connected by the M62 and has a broad manufacturing base. The Deep, the UKs only submarium has established itself as a tourist destination too. The University of Hull continues to grow and has a healthy student population around 25,000. However, due to the relatively low salaries in the region, affordability to buy a house is low. This consequently has led to a high demand for rental property.
The following post codes in Hull are great rental areas. HU5 is close to the University for students. HU7 and HU9 are great for families.
If your aim is to own 10, 20 or 30 properties and supply the deposits for each one you would soon run out of your own cash so how do the Professionals do it? Well, the answer is Other Peoples Money (OPM). They buy their properties at the right price. Money in property is made when you buy the property NOT when you sell it. Buying at the right price i.e. below market value or BMV as it’s called enables you to refinance with the mortgage lender at the Open Market Value and pull out most of your deposit cash. This enables you to recycle your pot of cash to purchase another property. However, in this market, the Council of Mortgage Lenders have imposed a 6 month rule that prevents you remortgaging unless the property has been held for at least 6 months. If you can demonstrate added value then you have a better chance of achieving the valuation you desire. On average Property Prices double every 11 years. This means a 100K property is worth 200K in 11 years time. When you sell this property you pay off the original 100K mortgage and then have approximately 100K profit. This means if you bought 2 properties you can sell one and pay off the mortgage on the other and still have 1 cash flowing property with no mortgage on it. Using this principle it can be scaled up to any number of properties you wish to buy. Getting a mortgage can be difficult in this current economic climate but not impossible. The money hasn’t disappeared. It is just in different places. The trick is to find the people with the cash.
Buy for cash
Some properties in need of refurbishment in Hull can be bought for as little as 20K. This means you need to buy them with cash as mortgage providers generally do not lend below 40K. It also means you can move quickly and not have to involve Mortgage Lenders and Valuers in the purchase. Once you have refurbished the property you can then get a surveyor to value the property with a view to placing a mortgage on it and get most if not all of your cash returned.
You can help people with cash earn more than they are getting in the bank by offering them a higher interest rate for borrowing their money to fund a deposit. You can then return their money after refinancing.
If you can’t get a mortgage then find someone else who can and offer to share the cash flow from a property. Get a lawyer to draw up an agreement between you and the host. Because property prices are relatively low in Hull, there is more chance of finding investors who are willing to lend you 10-15K for a deposit. Risks are reduced as the amounts on loan are less. Once you’ve done 1 deal with an investor and made them more money they will be happy to do another deal with you.
Hull property prices are low which leads to lower risk for Cash Investors when funding a deal.
With any of your investments we advise stress testing your investments at higher interest rates. Whilst we enjoy historically low interest rates it’s tempting to buy lots of property deals. However, interest rates have only 1 way to go and that is up. Test that your investment still produces cash flows at higher interest rates so it remains an asset and not a liability.
Test your investments at higher interest rates. Hull investment properties still positively cash flow at 8-9% interest rates at current rental values.
With any investment it is vital you know your exit strategies. With an aeroplane knowing where the exits are is vital in case of an emergency. Similarly, with investing you need to know where your exits are for getting out of the investment deal in an emergency.
Selling your investment
If for any reason you need to come out of an investment you can sell a property. The properties that will be easiest to sell will be the most popular type in that area. If you own an expensive, executive detached house in a desirable area the number of buyers is reduced and constrained to residential buyers. However, if you have a cheaper, investment property you can sell to both investors or residential buyers. This is important when considering your investment.
Know at least 2 exits when entering an investment deal. There are lots of investors in Hull and because of low prices they are affordable to residential buyers too.