Monday 22 May 2017
This week at Simple we’re talking about tenants.
The fact is that getting the right tenants in your properties could make all the difference to your bottom line - and getting the wrong ones could cost you dearly.
So how do you get it right?
According to Bindar Dosanjh, multi-million property investor and one of our expert blog team, it’s about taking your time, doing your research, understanding your end goal - and building sound relationships with the people who live in your properties.
She says: “So many of the landlords I work with jump into rental agreements because they’re losing money on empty rooms or empty houses - they just want to get them filled up, and get the cash flow flowing. The thing is that the cost of the wrong tenant is far higher - and far longer term - than the temporary hit you’ll take on an empty property while you’re searching for the right person to live in it.
“Never, ever, skip the references, and once you find them, don’t underestimate the value of a good tenant! If you look after your tenants, they’ll look after your property, and they are worth their weight in gold.”
You can read her top ten tips for finding tenants here.
When it comes to tenants, it’s easy to assume that the safest and easiest option is to go for reliable, working people and families on long term leases. Right? Well, not always.
From an insurance perspective, we can certainly confirm that different tenant types carry different levels of risk - and insuring the same property for a working family and for a family on benefits could make a difference in your premium of anywhere between £50-£500.
But it really does depend on the property, location and your individual investment strategy. As Bindar points out in her blog, high turnover isn’t always a bad thing, and some of the worst tenants on paper can actually be both reliable - and lucrative.
There is definitely money to be made from renting to different tenant types - so arbitrarily dismissing a pool of relevant, available people isn’t always in your best interests. You just need to think about the pros and cons - and make sure your insurance covers you for the worst case scenario.
Alex Huntley, Head of Operations at Simple Landlords Insurance, explains: “Far more important than the cost of your insurance is what you’re actually covered for - so it’s well worth checking what you’re insured for and what you’re not. If you’re working with riskier tenant types make sure your insurance includes malicious damage, legal expenses to deal with any tenant disputes, and rent guarantee so if something does goes wrong you’re not left out of pocket.
“Paying for that cover up front means you’ve got peace of mind - and the flexibility and freedom to think differently about who you rent to and where you invest.”
Take a look at our Simple guide to different tenant types to understand more about the implications of renting to different tenants.
We want to add value to landlords with interesting news and views! Our Hub includes information and opinions on the housing market from a variety of expert sources – please just be aware it doesn’t always reflect Simple’s opinion, or the products and services we provide.