Thread by @Dan_CharlesUK, Real Estate InvestingPart 2 of 3 Threads From My Experience, for Your [...]

Dan Charles

Dan_CharlesUK

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Real Estate Investing

Part 2 of 3 Threads From My Experience, for Your Benefit

Real estate (or property in the UK) is a popular choice for investment.

It’s simple, usually lower-risk & potential for massive gains.

Real Estate InvestingPart 2 of 3 Threads From My Experience, for Your Benefit Real estate (or property in the UK) is a popular choice for investment.It’s simple, usually lower-risk & potential for massive gains.

So you’ve covered buying in Part 1 – great work my friend!

It was tough but so is everything else worth having.

You made it.

Now it’s time to focus on becoming a Landlord & property manager.

2/ Managing Your Rental

You need to treat this as a business.

You’re a professional now!

Keep detailed records of rental income and ALL outgoings.

This is necessary for taxes and also your own sanity!

You can outsource the property management.

But this is expensive & eats into your bottom line.

And you will still get the call if the problem is bad enough.

But agents will usually offer a reduced service.

Which you may consider worth taking.

Examples:

Contract drafting & signing.

Advertising for Tenants & references. Rent collection. Holder of keys. Inventory.

All things they will do cheaply for you.

I’ve found going for their basic service has saved a huge amount of my own time.

Something to weigh up.

Maintenance can be a huge headache.

But one you really should be managing yourself.

It’s expensive to outsource this role.

So go for low-maintenance solutions.

Direct electric heating over gas central every time.

The Tenant pays the bills - my priority is ease of maintenance.

Electric panel heater breaks - £200 to fix.

Gas boiler breaks - £2,000 to fix!

Do yourself a favour.

Insurance is vital.

You must be covered on missed rent or problems out of your control.

Shop around for it. There are good deals out there.
But just like with cars, be careful not to get ripped-off come renewal time!

But really what you need above all else..

A good Tenant.

The area you buy in should be in demand.
You’ll find no shortage of people wanting to rent your place.

Your agent will do background checks & references.

These are vital.

But just make sure..

You get to know your Tenant and make them your friend.

I rented for years in my 20s.

We had bad Landlords.

I promised myself I’ll never be that guy.

So I’m fair with all Tenants.

And I’ve been ‘lucky’ to get this back from them all.

They say you make your own luck!

You want someone respectful who'll look after your property.

Heck – they might even decorate it for you!

Just make sure you approve paint colours first.

And offer to buy the paint..

But, managing your new income is key.

You have new outgoings to consider:

-Mortgage
-Service charges (common in apartments)
-Management & Agent fees
-Insurance
-Maintenance
-Tax on income
-Licenses

A separate fund to cover this works well.

If your monthly mortgage is £450 & your rental income is £800. Clearly that’s £350 profit each month.

Time for our old pal discipline!

Put this in a separate ‘property’ account and build it up over time.

When the bills roll in you’ll be nicely covered.

The real money is from capital gains.

The priority is to cover your bills.

Any income profit is a bonus.

That’s why it’s vital to look for growth potential when buying!

And to be willing to hold for as long as it takes.

Safe in the knowledge your income is strong!