Over recent years, the buy-to-let property industry in the United Kingdom has exploded in both sizes of popularity. Right now, more newcomers than ever before are exploring the incredible opportunities out there for investing in quality properties and renting them out to make a profit. But at the same time, not everyone is as successful as they might be in their new ventures.
Opportunities for success have never been more abundant, but this doesn’t mean that it comes as standard or should be taken for granted. It’s an industry where an extremely careful balancing act must be pulled off at all times, in conjunction with an extraordinary amount of research, personal input or the advice of the professionals.
So just to look at things from a slightly different perspective for a moment, what follows is a brief introduction to some of the most common reasons why a buy-to-let venture may struggle, or perhaps fail outright.
1 – Poor Property Choice
First and foremost, the biggest mistake (not to mention the most common of all) is that of not selecting the right property in the first instance. The simple fact of the matter is that even when a property comes across as ideal and is situated in an area of high demand, this does not necessarily mean that it represents the right property for your target market. Absolutely every last detail with regard to the property, its size, its location and literally everything else across the board will play a role in determining whether or not you will find tenants to occupy it. There is a lot to take into account and making assumptions is never a good idea, which is why those entering the industry for the first time are strongly advised to seek professional advice and guidance.
2 – Poor Choice of Tenants
It’s often argued that the very worst thing any landlord could have to deal with is vacant inventory. In reality, however, this isn’t the case at all – poor tenants can be infinitely worse than having no tenants at all. When your property is vacant, you are of course not making any money and are still paying out on the place, but at least your investment is secure. With nightmare tenants on the other hand, you may find yourself in a position where not only are you not receiving any payments, but your property is slowly but surely being destroyed from the inside out. It’s natural to want to rush the process of finding tenants – especially in instances where landlords in question are looking after multiple properties. Nevertheless, choosing unwisely represents one of the very worst mistakes any landlord can make and throw the stability of their whole business into consideration.
3 – Insufficient Research
Another enormously common mistake is that of making the assumption that succeeding as a landlord is really just a case of finding a decent property and putting it on the market. These are of two of the most important steps in the process, but there is so much more to it than this – all of which must be researched both in advance and continually, on an on-going basis. Not only are government legislation and regulations changing all the time, but getting a grip of things like taxation, insurance and every other important matter isn’t something that can just be rushed. The more homework you do, the higher your likelihood of success – it really is as simple as that.
4 – Taking On Too Much
One example of a critical mistake made by literally tens of thousands of landlords up and down the country is that of taking on far too much. By attempting to tackle everything manually with no outside help and without the right property management software, it isn’t long before the line is crossed and the business becomes extremely difficult to manage. The right computer software can make all the difference in the world when it comes to rental property management, but there will also be times when third-party advice and guidance could be worth its weight in gold.
5 – Not Treating It Like a Business
Last but not least, one of the most common reasons why so many buy-to-let businesses fail every year is the simple fact that landlords in question treat it all a little like a hobby, rather than a business. If you intend to make any money whatsoever and succeed beyond the first few months, it must be treated as a business from day one. This means taking the expectations and requirements of your target audience into consideration above and beyond your own preferences, rather than simply conducting business as if they were guests in your own home.