Essential Recipes: Guest Baker - The Property management ProgrammeDigital Academy
This episode of the Your Recipe for Financial Success podcast was first published on 8th October 2020. You can listen again by heading to our Episodes page, or on your favourite podcast player.
Becoming a Property Investor
If you’ve had the idea of becoming a buy-to-let investor simmering away in the back of your mind, listen up! In this episode, we welcome another Guest Baker, property management expert Sharon Machon from The Property Management Programme.
Sharon shares some interesting insights into how both the current coronavirus pandemic and Brexit have affected the rental market. But she’s also been cooking up a fantastic new Property Management Programme which could be just the thing to whisk you into action.
Here are some of Sharon’s tips for property management success:
1) Be clear on why you want to invest in property.
What do you want to gain? What’s your objective? Is property actually the right investment for you? A property portfolio can help you protect your financial future and leave a legacy for your family, but it’s not free money. You’ve got to work for it!
2) Learn as much as you can before you jump in
Property can be a good investment. But it can be very expensive if you get it wrong. Do your due diligence, research it, make sure you speak to an expert before you just go and buy something. Sharon’s Property Management Programme could be the perfect introduction.
3) Have a plan for managing your property
Do you really have the skills, capability and time to look after it yourself? If not, find a reputable property management company or letting agent to look after it for you.
4) Think about rental yield and be sure to take into account all costs
The definition of a rental yield is annual rent divided by your purchase price. But that ignores lots of other costs – letting agent fees, maintenance, gas safety certificates…
5) Have a strict application process for tenant
Look for someone with a stable job, or the offer of a job, who can afford the rent. Carry out credit checks and/or consider taking a guarantor as well.
6) Consider taking out rent protection insurance
If you have a tenant and you’ve taken out insurance on them, if they fail to pay the rent you can contact the insurance company and the insurance company will cover the rent for you, and then pursue the tenant for the debt.
7) Consider whether you should become a limited company
From April this year, mortgage interest relief is now not a taxable expense at all so if you own property in your own name. Instead, you get a 20% tax credit. If you’re in the higher rate income tax bracket, you’re paying considerably more tax than you would have been doing a couple of years ago, on the same income. These tax rule only applies to private individuals, not companies. So, if you purchase property through a limited company, you still can have the mortgage interest as an allowable tax expense.
Sharon’s Property Management Programme is designed to help fellow property investors who are may be new to the industry, and want to learn to self-manage. It takes you through the whole process of how to get yourself ready, including all the legal requirements. If you’d like to know more, email info@ thepropertymanagementprogramme.co.uk
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