Just Become a Commercial Landlord? Here's Some Advice For First Timers...
Deciding whether to get involved in buy to let property investments is tough. There are lots of pros and cons to buying commercial property and investing requires a significant amount of homework and research. There are many things that you need to consider before you take your first steps as a buy to let investor.
A single bad experience a tenant who does not pay their rent, for example can taint your investing experiences almost before you have begun. Buy to let investment is not necessarily a path to quick riches and so you should be prepared to take your time and work at your business in order to make it a success.
Void periods are one aspect that you should plan carefully for. There will be periods when your commercial property is empty in between leases and so you need to make sure you have the cash available to continue making your commercial mortgage payments even if you have no tenants in the property.
As a landlord, you have a number of duties and responsibilities to your tenants. For example, you may be required to spend money on repairs or maintenance to the property. You will have to be on hand to fix leaking pipes or a broken boiler at any time of day or night which can be tough if the property is a distance from your home or you are away on holiday at the time.
As well as maintenance and repairs, you will also have to spend money on the upkeep of the commercial property. You often have to spend more on a commercial property than a residential property in order to keep it well decorated and a pleasant environment for your tenants.
To be a successful landlord involves much more than agreeing a lease and ensuring the rent is paid every month. With rent costs being very high, tenants expect a lot more from their commercial landlord than they may have done in the past.
Looking after your property means that you will have satisfied tenants who will want to stay in the property. The rent that they pay will cover your commercial mortgage meaning that you will profit from your investment if you are a conscientious, responsible landlord.
When deciding on a property investment, it is vital that you do your homework. Always carry out research to find the locations that are popular with tenants. For example, you may find that student lets or commercial properties in student areas are highly desirable and can offer excellent returns. This is because your tenants have a huge business opportunity to provide certain services in student areas.
And, as a landlord it is important that you take other responsibilities into account, such as the insurance on your property. Most commercial mortgage lenders will require you to have buildings insurance on the property in order that you (and they) are protected in the event of fire, flood or other damage to the property. You may also want to take out some extended insurance cover to protect yourself against other risks.
Finally, it is important to determine exactly what responsibilities you have regarding the property. A lease will often outline what the tenant is responsible for and what you are responsible for. Whilst your tenants may have responsibility for gas and electric safety you may have overall responsibility for maintenance of communal areas of the building. Always check the lease so both parties know where they stand.
About the Author:
Howard O'Gollegos writes for Just Commercial Mortgages the UK's No1 site for the latest commercial mortgage rates and commercial property finance news.
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