How to start a rental business - Motherhood Diaries

Thanks to flexible working and the freedom to start your own business in the UK, parents are coming up with tons of business ideas like turning to the buy-to-let property investment market to either supplement their income, pay the mortgage or make a living from it. Starting out as a landlord/landlady, however, can be overwhelming. You’re probably thinking, ‘How can I start a rental business with no experience?’ or ‘What does it take to start a rental business?’ You need to think about screening your tenants, preparing your property for collecting the rent and taking care of maintenance issues – it’s not an easy gig. With a high level of attention to detail and experience, however, this job can be both gratifying and lucrative. If you’re just starting out, you might need a bit of guidance. Read on for tips on how to start a rental business.

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What you need to do before you rent out your home

There are lots of reasons to start a rental property business. You may be buying your dream home finally but you are not ready to part with your old house just yet. Or you’ve bought an investment property or rental properties, and you’re looking to go into real estate investing and create a side income. Real estate investment and property management is a great small business to earn a regular income, open up cash flow and long-term profits, and it’s also a good stepping stone into the prosperous property sector, which can offer you significant savings both now and later on in retirement. But there are a number of things you need to think when starting a rental business, like the type of equipment you’ll need (rent tools), where to start a rental business, what you need to start a rental business and the below which we’ll go into in more detail.

Weigh up your finances

What some business owners and property managers don’t realise about renting is that it can cost you, especially when it’s a new business and you’re just starting out as a landlord or a real estate investor. You must take into consideration things like taxable rental income with rental businesses, which will depend on how much you’re receiving. You may also need to consider your mortgage payments, although the monthly income you receive should help you pay it off much quicker than you intended. Check out this article here for more information on how to start a rental property business with no money.

You also need to think about maintenance and repairs costs, and whether you will offer these services to your tenants. Seasoned landlords would advise you to include it within the tenancy agreement, as this will prevent the tenants from causing any unnecessary damage to the property. If you’re not qualified to complete tasks like plumbing or other types of maintenance, you would have to factor in handyman wages. Outsource projects like commercial paving, tiling and general fix-ups. And, to make life easier for yourself, invest in couriers to acquire the materials needed, so you can spend your time tending to the more important matters at hand – your rental income!

Maintenance issues happen—you don’t want to scramble to find the funds to pay for them. Before you become a landlord, you need to make sure you have a financial cushion in place. If you find yourself underwater on your property, you’ve gone against any financial gains you were hoping to make. Besides things like burst pipes, roof damage, and other inevitable fixes, you might encounter nightmare tenants who don’t pay the rent. While you pursue legal action against them to recoup the rent, you’ll still be expected to pay. Take out insurance where necessary (compare landlord insurance here) and create a business plan so you’re prepared for the pitfalls that will inevitably ensue.

Prepare your property

Before letting out your property, consider making some necessary changes that will make your home stand out to potential tenants. You first need to register your rental business (check here for how to register a rental property business. The process will be different depending on whether you are renting commercial properties to start your business or operating from home.) You may need to conduct some repairs to ensure everything is working as it should when you open up the house for viewings. You should also maximise your space, especially if you’re offering to rent your home fully furnished, as you can move furnishings around and enhance the decor to make the property appear more airy and spacious.

Architectural house — Photo by **Sharath Babu** from **Pexels**

If you want to entice younger tenants, take some inspiration from contemporary apartments like those available at RW Invest. These feature everything from modern furnishings and minimalist decor to smart lighting and communal gardens. Essentially, it is what millennials are looking for in a property, which is why they have been selling like hotcakes and gained so much interest.

Choose your tenants wisely

Thoroughly vet your tenants - motherhooddiaries

Once your property is prepared and ready to rent, you can then start your people search. In recent years, it has become much easier to seek tenants due to the introduction of websites and apps which allow tenants and landlords to connect and find the perfect tenancy match. Social media is also a great way to check out the tenant’s social life and find out whether they’ll be partying until 3am every night or whether they’re a family who just need a place to live while they buy their own.

Once you’ve dwindled down a few tenant applications, it is imperative that you perform tenant screening. This includes checking their current and previous employment to establish whether their income is steady, which will offer you reassurance about monthly payments. Take advantage of credit reports for landlords from SmartMove to examine their financial credibility. Your background check should show criminal history as well; if a misdemeanour pops up, you can go with your gut on that one (depending on how serious it was and how long ago). However, you will likely want to avoid any tenant with a felony in his or her background. These checks are.// essential to protect both your home and yourself to avoid damage to your property or any issues throughout the tenancy.

If you live far away from your rental property, you will need to outsource this anyway. You might even consider hiring a property manager to handle the collection of rent, maintenance issues, and more.

Go high-tech in rent collection

Automating rent collection will give you and your tenant peace of mind.

“Whether you buy an online solution pre-made or hire a developer to create it, set up a payment system that accepts credit or debit cards, or even automatic bank transfers.”
rismedia.com

Most not only prefer the above way of paying rent, but they’d also like the option of paying with their phones. Some landlords are hesitant, however, because of the fees that can be associated with online payments. According to this HuffPo article, Stripe.com is a good alternative. This service processes the tenants’ online payments, and the charge is the same as PayPal’s fee. Where it’s better than PayPal is that it offers a free subscription service to automatically bill your tenants.

Establish an appropriate relationship with tenants

We’ve all heard the nightmare stories about the landlords who love to “pop in” on their tenants. This is never okay, even if you’re tempted to catch them doing something you disapprove of. You should trust that you have thoroughly screened them and, thus, make appointments anytime you want to discuss anything with them—it’s the law. Conversely, you can be friendly and approachable and go the extra mile with special touches. A holiday gift basket can go a long way in making a good impression, especially if it’s coming to the time for them to decide whether to renew their lease for another year. It’s very important to read up on how to start a rental business properly and learn how to be a good landlord so you can continue to achieve success in your properties.

If you’ve gone above and beyond during your tenant screening process, you’re already likely to enjoy a long and productive tenant/landlord relationship. However, you can follow the above tips on how to start a rental property management business and ensure that your landlord duties will go smoothly over the years.

If you are in the rental business yourself, what are your tips for a successful buy-to-let property business? Or if you’re wondering how to start a rental business yourself but your questions haven’t been answered yet, post your questions in the comments below and we’ll build the answers into the article.