If you have any doubt on why you should become a landlord this guide should help you:
Quite often a major incentive for becoming a landlord is the potential to earn a large income. Every month, landlords receive enough money in rental payments to cover any outstanding mortgage repayments on their properties. This means that the bigger a landlord’s property portfolio, the larger their overall income. A landlord’s profits will be even more substantial when they have paid off all of their outstanding mortgages on these properties.
Of course, your income from rental properties largely depends on choosing reliable tenants who are able to pay their rent on time. When relying on somebody else to pay off your mortgage repayments, a missed payment could temporarily cause you some financial trouble! Additionally, rent payments must be substantial enough to cover the general expense of owning and maintaining a property, with enough left over for your own spending. As such, you should always get a valuation on the property and project your rental income before committing to a purchase. The most effective method to determine how profitable a property is, is to use a property investment calculator. They are so important we have secured an exclusive discount with the market leading software solution. Save time and remove uncertainty on your investment opportunity.
Professional landlords benefit from being their own bosses and not answering to anybody. If you manage to rent out several properties and build up a portfolio, then you will have complete control over your own income. This independence is an attractive aspect of the role for many landlords as they are able to work by their own hours, set their own goals, make all the final decisions, and manage their own business. However, having this many responsibilities may prove too much work for those with a full-time job. In such cases, renting out property involves spending a lot of time and money on top of maintaining a separate professional life – so it is certainly not for the faint-hearted!
In order to offset the fairly heavy taxes on a landlord’s income, the UK government offers relief in the form of expenses. These can take some pressure off your cash flow when renting a property as not all of your income will be subject to taxes. The expenses considered ‘allowable’ are those which are exclusively for the purpose of renting out your property, including maintenance costs, utility bills, agency fees, and insurance payments. Be wary that expenses are not considered allowable if they relate to mortgage repayments or personal spending. Furthermore, as of April 2017, landlords are no longer able to receive expenses on their mortgage interest payments (although there are still reliefs available at reduced rates).
You can learn more about landlord tax deductions here.
Despite minor fluctuations in house prices, buying property to let is generally considered a safe long term investment: it provides landlords with a reliable source of income that will last for years to come. Since house prices are projected to continue rising in the UK, a new rental property will likely become more and more profitable as time goes by. Plus, people always need somewhere to live, so owning a decent property in a good area will always draw in potential tenants regardless of what state the economy is in. Given the stability of the market and the potential profits involved, renting property can prove to be a secure way of saving money and building up wealth for you and your family.
A property investment calculator will enable you to quickly identify which property offers you the best ROI on your investment.