So you have purchased a buy-to-let property. You have taken out landlord insurance. Pictures of your investment are looking good.
Now, you have to decide what type of tenants to target.
Getting the correct tenants is a vital component of the buy-to-let process, therefore you must weigh up the pros and cons of different potential renters.
Single renters- With trends changing, many people now leave it later in life to co-habit or get married. A number of people then are interested in renting a property on their own, and this type of tenant can carry a number of benefits. Wear and tear is likely to be minimal and an assessment of just one would-be renter is much easier than multiple occupants. However, a single-person is more likely to see their circumstances change, which could cause them to want to leave or see another person move in. If this occurs, you must provide a new tenancy agreement What’s more, they only have one income to pay the rent, which could lead to problems should they lose their job. Remember to take out rent guarantee insurance to prepare for the worst.
Families-If you are looking for more security, then securing a family of tenants could be the answer. Often, a family will include two working adults, so the chances of falling into rental arrears will be less. Families will also look to make your investment property their home, so will likely take good care of it. This said, maintenance bills are likely to be higher than if you were letting to a single occupant, with families with young children likely to cause more accidental damage. These types of tenants will also be looking for a good-sized garden and will have a longer list of requirements.
Students-Despite students notoriously being the tenant group that causes the most damage to property, there are a number of pros about this market. Any cleaning or maintenance bills can be wiped out by a higher rental return usually and you can chase guarantors should damage occur. You will have to be aware however that most students move on after one year, so there will be a lot of repetitive paperwork to complete. This is particularly important when considering your legal obligations, such as making Right to Rent checks.
Tenants with pets-As a buy-to-let landlord, you should consider letting tenants with pets into your property. These types of tenants are likely to stay for longer, as many residential landlords do not allow pets. Tenants with dogs for example can also provide added security. Of course, there is an added chance of the pet causing damage to your home and garden.
Houses in multiple occupation (HMO’s)-With the cost of living soaring, many people are looking to house share, from young professionals to divorcees. This is an attractive proposition, with the real possibility of higher rental returns. An increased monetary stream will negate the likelihood of rental arrears. On the other hand, you may have to make conversions or alterations to your property. In addition, complying with different legislations will also be more difficult and time-consuming.
Be sure to be clear on what tenants you are looking to attract and tailor your property accordingly!