It certainly pays to be a property investor – 40% of the people on The Times Rich List made their wealth through property, and the other 60% invested in property as a way of growing and protecting their wealth.
With demand for rental properties bigger than ever, many people are starting to look into the options available to them, and deciding whether to be a hands-on or hands-off investor is one of the decisions you will need to make.
What’s a hands-on investor?
A hands-on investor’s career is solely buy-to-let. These landlords want to be involved in all aspects of their property investments, from finding the homes and conducting viewings for tenants, to collecting the rent and dealing with general upkeep and maintenance.
The Assistant Managing Director of Lettings at Romans, Michael Cook, explains: “These investors look at property investment as a full-time job. In fact, it’s important to realise that it’s more than a typical nine-to-five job; it’s something you need to be involved in 24/7.
“Problems can occur at the most antisocial times, and as a hands-on investor, you need to accept that it’s possible that you will receive phone calls about leaking taps and temperamental boilers on Sundays or in the middle of the night.”
What’s a hands-off investor?
Hands-off investors want to reap the financial benefits of property investment without the associated stress and administration. These landlords prefer to leave their properties in the hands of letting agents, who deal with any problems that occur on a daily basis, collect the rent payments, regularly inspect the properties and manage all aspects of the lettings process in between tenancies.
Cook says: “More often than not, hands-off investors have an existing career or other projects which take up a lot of their time, so it simply isn’t feasible to also manage their property portfolio. With different levels of management available from letting agents, they can decide how involved they want to be, but ultimately, they want to be able to sit back and enjoy the benefits without the associated stress.”
The pros of being a hands-off investor:
- Less hassle – You don’t need to worry about the unpredictable, but sometimes unavoidable, problems that come with property management.
- More time on your hands – You can concentrate on your separate career or projects in your personal life, as property management can become a full-time job.
- You can build up your portfolio – A hands-off landlord can enjoy a low risk, low maintenance investment that makes building a portfolio of properties much easier.
Focus on profit, not a project
Hands-off investments are in huge demand. Even with letting agent fees, a hands-off investment on a property in a popular location with high rental yields can still make a sizeable profit. The appeal of this investment option hasn’t gone unnoticed by foreign investors either. A hands-off investor can own a high yielding property and generate a solid income, despite not living in the same part of the world.
Cook concludes: “Every investor is looking for something different, so it’s important to carry out thorough research and talk to an investment expert before you start the process of purchasing a buy-to-let property.”
Whether you go for a hands-on or hands-off approach, remember that your buy-to-let property must be protected against damage and loss. Our 5-star Defaqto rated Landlord Property Insurance includes 33 essential covers as standard, offering the ultimate peace of mind.
Additionally, ensure that your rental income is protected with Rent Guarantee Insurance. This cover will make sure you still get paid, even if your tenant falls into rent arrears – can you afford to miss out?